Document:

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                                                                  EXECUTION COPY

                            AAMES CAPITAL CORPORATION

                                   as Seller,

                      AAMES CAPITAL ACCEPTANCE CORPORATION

                                  as Depositor,

                             OCWEN FEDERAL BANK FSB

                                   as Servicer

                                       and

                    BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

                                   as Trustee

                         POOLING AND SERVICING AGREEMENT

                            Dated as of March 1, 2002
                           Aames Mortgage Trust 2002-1
                       Mortgage Pass-Through Certificates,
                                  Series 2002-1

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                                TABLE OF CONTENTS

                                    ARTICLE I

                                   DEFINITIONS

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<S>                <C>                                                                                        <C>
Section 1.01          Definitions.................................................................................1
Section 1.02          Interest Calculations......................................................................29

                                   ARTICLE II

            CONVEYANCE OF THE TRUST ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01          Conveyance of the Trust....................................................................29
Section 2.02          Conveyance of the Subsequent Mortgage Loans; Fixed Price Contract..........................32
Section 2.03          Acceptance by the Trustee; Repurchase or Substitution of Mortgage Loans....................35
Section 2.04          Representations and Warranties Regarding the Servicer and the Seller.......................38
Section 2.05          Representations and Warranties of the Seller Regarding the Mortgage Loans..................41
Section 2.05A         Representations and Warranties of the Depositor as to the Mortgage Loans...................51
Section 2.06          Execution and Authentication of Certificates...............................................52
Section 2.07          Reserved...................................................................................52
Section 2.08          Indemnification of the Trust...............................................................52

                                   ARTICLE III

       ADMINISTRATION AND SERVICING OF MORTGAGE LOANS; CERTIFICATE ACCOUNT

Section 3.01          The Servicer and the Sub-Servicers.........................................................52
Section 3.02          Collection of Certain Mortgage Loan Payments; Collection Account and Certificate
                      Account....................................................................................54
Section 3.03          Additional Servicing Responsibilities for the Adjustable Rate Mortgage Loans...............57
Section 3.04          Hazard Insurance Policies..................................................................57
Section 3.05          Enforcement of Due-on-Sale Clauses; Assumption and Modification Agreements.................58
Section 3.06          Realization upon Liquidated Mortgage Loans.................................................58
Section 3.07          Trustee to Cooperate; Release of Mortgage Files............................................60
Section 3.08          Servicing Compensation; Payment of Certain Expenses by the Servicer........................60
Section 3.09          Annual Statement as to Compliance..........................................................61
Section 3.10          Annual Independent Public Accountants' Servicing Report....................................61
Section 3.11          Access to Certain Documentation and Information Regarding the Mortgage Loans...............62
Section 3.12          Maintenance of Fidelity Bond and Errors and Omissions Policy...............................62
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<TABLE>
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<S>                <C>                                                                                        <C>
Section 3.13          Notices to the Rating Agencies and the Trustee.............................................62
Section 3.14          Reports of Foreclosures and Abandonment of Mortgaged Properties............................62
Section 3.15          Sub-Servicers and Sub-Servicing Agreements.................................................63
Section 3.16          Prefunding Account.........................................................................64
Section 3.17          Capitalized Interest Account...............................................................64
Section 3.18          [Reserved].................................................................................65
Section 3.19          [Reserved].................................................................................65
Section 3.20          [Reserved].................................................................................65
Section 3.21          Net Rate Cap Fund..........................................................................65
Section 3.22          Covenants and Representations Regarding Prepayment Charges.................................66
Section 3.23          Claims Upon the PMI Policy.................................................................66
Section 3.24          Advance Facility...........................................................................66

                                   ARTICLE IV

                                REMITTANCE REPORT

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

                                    ARTICLE V

                  PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS

Section 5.01          Distributions..............................................................................70
Section 5.02          Monthly Advances; Servicing Advances.......................................................72
Section 5.03          Statements to Certificateholders...........................................................74
Section 5.04          Allocation of Losses.......................................................................75

                                   ARTICLE VI

                                THE CERTIFICATES

Section 6.01          The Certificates...........................................................................76
Section 6.02          Registration of Transfer and Exchange of Certificates......................................76
Section 6.03          Mutilated, Destroyed, Lost or Stolen Certificates..........................................81
Section 6.04          Persons Deemed Owners......................................................................81
Section 6.05          Actions of Certificateholders..............................................................81

                                   ARTICLE VII

                   THE SERVICER, THE SELLER AND THE DEPOSITOR

Section 7.01          Liability of the Seller, the Depositor and the Servicer....................................82
Section 7.02          Merger or Consolidation of, or Assumption of the Obligations of the Seller, the
                      Depositor or Servicer......................................................................82
Section 7.03          Limitation on Liability of the Servicer and Others.........................................82
Section 7.04          Servicer Not to Resign.....................................................................83
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<TABLE>
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<S>                <C>                                                                                        <C>
Section 7.05          Merger or Consolidation of the Seller or Depositor.........................................84

                                  ARTICLE VIII

                                     DEFAULT

Section 8.01          Events of Default..........................................................................85
Section 8.02          Trustee to Act; Appointment of Successor...................................................86
Section 8.03          Notifications to Certificateholders........................................................87
Section 8.04          Assumption or Termination of Sub-Servicing Agreements by the Trustee or any
                      Successor Servicer.........................................................................87

                                   ARTICLE IX

                                   THE TRUSTEE

Section 9.01          Duties of the Trustee......................................................................88
Section 9.02          Certain Matters Affecting the Trustee......................................................89
Section 9.03          Trustee Not Liable for Certificates or Mortgage Loans......................................90
Section 9.04          Trustee May Own Certificates...............................................................90
Section 9.05          Payment of the Trustee's Fees and Expenses.................................................90
Section 9.06          Eligibility Requirements for the Trustee...................................................91
Section 9.07          Resignation or Removal of the Trustee......................................................91
Section 9.08          Successor Trustee..........................................................................92
Section 9.09          Merger or Consolidation of the Trustee.....................................................93
Section 9.10          Appointment of Co-Trustee or Separate Trustee..............................................93
Section 9.11          Compliance with REMIC Provisions...........................................................94
Section 9.12          Trustee May Enforce Claims Without Possession of Certificates..............................95
Section 9.13          Exercise of Trustee Powers by Certificateholders...........................................95
Section 9.14          Tax Returns................................................................................95
Section 9.15          Taxpayer Identification Number.............................................................96
Section 9.16          Miscellaneous REMIC Matters................................................................96

                                    ARTICLE X

                                   TERMINATION

Section 10.01         Termination Upon Purchase or Liquidation of All Mortgage Loans.............................98
Section 10.02         Additional Termination Requirements.......................................................100

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

Section 11.01         Amendment.................................................................................101
Section 11.02         Recordation of Agreement..................................................................102
Section 11.03         Limitation on Rights of Certificateholders................................................103
Section 11.04         Governing Law.............................................................................104
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<S>                   <C>                                                                                                    <C>
Section 11.05         Notices...................................................................................104
Section 11.06         Severability of Provisions................................................................104
Section 11.07         Assignment................................................................................104
Section 11.08         Certificates Nonassessable and Fully Paid.................................................104
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                             SCHEDULES AND EXHIBITS

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

                                       -v-

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         THIS POOLING AND SERVICING AGREEMENT (this "Agreement"), dated as of
March 1, 2002, by and among Aames Capital Corporation, as seller (in such
capacity, the "Seller"), Aames Capital Acceptance Corp., as depositor (the
"Depositor"), Ocwen Federal Bank FSB, as servicer (the "Servicer") and Bankers
Trust Company of California, N.A., as trustee (the "Trustee").

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

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

                                   ARTICLE I

                                   DEFINITIONS

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

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

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

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

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

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

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

         Applied Realized Loss Amounts: As to any Distribution Date, an amount
equal to the excess, if any, of (i) the aggregate of the Certificate Principal
Balances of the Offered

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Certificates, after giving effect to all distributions on such Distribution Date
over (ii) the Pool Balance as of the last day of the related Collection Period.

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

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

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

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

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

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

                  (v) on the Distribution Dates during and immediately following
         the Funding Period, the Capitalized Interest Requirement amount from
         the Capitalized Interest Account for the payment of interest on the
         Certificates; and

                  (vi) on the Distribution Date at or immediately following the
         end of the Funding Period, amounts remaining on deposit in the
         Prefunding Account.

         Available Funds Cap: A per annum rate equal to the weighted average Net
Loan Rate of the Mortgage Loans.

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

                                      -2-

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

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

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

                  (iv) any related amounts remaining in the Prefunding Account
         after the Funding Period.

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

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

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

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

         Capitalized Interest Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.17 and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 2002-1 Mortgage Pass-Through Certificates, Series 2002-1,
Capitalized Interest Account".

         Capitalized Interest Account Deposit: The amount deposited in the
Capitalized Interest Account for the benefit of the Offered Certificateholders,
which amount is $162,283.

         Capitalized Interest Requirement: With respect to each Prefunding
Distribution Date and each Class of Offered Certificates, an amount equal to (A)
interest on the remainder of the related allocated Prefunding Account Deposit at
the beginning of the related Collection Period at a rate equal to the related
Pass-Through Rate at the beginning of such Collection Period, net of
reinvestment interest at a rate of 1.25% per annum minus (B) 30 days' interest
on each Subsequent Mortgage Loan transferred during the related Collection
Period that has a due date during such Collection Period.

                                      -3-

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         Certificate: Any Class A-1, Class A-2, Class A-3, Class A-4, Class M-1,
Class M-2, Class B, Class C or Class R Certificate issued pursuant to this
Agreement.

         Certificate Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.02(e) and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
2002-1 Mortgage Pass-Through Certificates, Series 2002-1, Certificate Account".

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

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

         Certificate Principal Balance: With respect to any class of Offered
Certificates, the Initial Certificate Principal Balance of such Class as reduced
by all amounts in respect of principal actually distributed to the related
Certificateholders on all prior Distribution Dates, reduced in the case of any
Class of Subordinate Certificates by any Applied Realized Loss Amounts allocated
to such Class on prior Distribution Dates.

         Certificate Register: The register maintained pursuant to Section 6.02.

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

         Class A Certificates: The Class A-1, Class A-2, Class A-3 and Class A-4
Certificates.

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

         Class A-1 Certificate Principal Balance: As to any Distribution Date,
the Certificate Principal Balance for the Class A-1 Certificates.

         Class A-1 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 3.828% per annum,
and for each Interest Period thereafter, 4.328% per annum and (y) the Available
Funds Cap.

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

                                      -4-

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         Class A-2 Certificate Principal Balance: As to any Distribution Date,
the Certificate Principal Balance for the Class A-2 Certificates.

         Class A-2 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 5.378% per annum,
and for each Interest Period thereafter, 5.878% per annum and (y) the Available
Funds Cap.

         Class A-3 Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-1 hereto.

         Class A-3 Certificate Principal Balance: As to any Distribution Date,
the Certificate Principal Balance for the Class A-3 Certificates.

         Class A-3 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 6.896% per annum,
and for each Interest Period thereafter, 7.396% per annum and (y) the Available
Funds Cap.

         Class A-4 Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-1 hereto.

         Class A-4 Certificate Principal Balance: As to any Distribution Date,
the Certificate Principal Balance for the Class A-4 Certificates.

         Class A-4 Lockout Percentage: Means the following related percentage
with respect to each of the following respective distribution dates:

         Distribution Dates                     Class A-4 Lockout Percentage
         ------------------                     ----------------------------
              1-36                                           0%
             37-60                                          45%
             61-72                                          80%
             73-84                                         100%
             85 and thereafter                             300%

         Class A-4 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 6.409% per annum,
and for each Interest Period thereafter, 6.909% per annum and (y) the Available
Funds Cap.

         Class A-4 Principal Distribution Amount: Means as to any Distribution
Date the product of (x) the applicable Class A-4 Lockout Percentage for such
Distribution Date and (y) the Class A-4 Pro Rata Distribution Amount for such
Distribution Date, not to exceed the Senior Principal Distribution Amount.

         Class A-4 Pro Rata Distribution Amount: Means as to any Distribution
Date an amount equal to the product of (x) a fraction, the numerator of which
the Certificate Principal Balance of the Class A-4 Certificates immediately
prior to such Distribution Date and the denominator of which is the aggregate
Certificate Principal Balance of the Senior Certificates immediately prior

                                      -5-

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to such Distribution Date and (y) the Senior Principal Distribution Amount for
such Distribution Date.

         Class A-IO Certificate:  Not Applicable.

         Class A-IO Pass-Through Rate:  Not Applicable.

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

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

         Class B Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 7.801% per annum,
and for each Interest Period thereafter, 8.301% per annum and (y) the Available
Funds Cap.

         Class B Principal Distribution Amount: On any Distribution Date on and
after the Stepdown Date and so long as a Trigger Event is not in effect, an
amount equal to the excess of (1) the sum of (A) the aggregate Certificate
Principal Balance of the Class A Certificates (after giving effect to the
distribution of the Senior Principal Distribution Amount on such Distribution
Date), (B) the Certificate Principal Balance of the Class M-1 Certificates
(after giving effect to the distribution of the Class M-1 Principal Distribution
Amount on such Distribution Date), (C) the Certificate Principal Balance of the
Class M-2 Certificates (after giving effect to the distribution of the Class M-2
Principal Distribution Amount on such Distribution Date) and (D) the Certificate
Principal Balance of the Class B Certificates immediately prior to such
Distribution Date, over (2) the lesser of (A) 93.70% of the Pool Balance as of
the last day of the related Collection Period and (B) the Pool Balance as of the
last day of the related Collection Period minus the OC Floor, provided, however,
that after the Certificate Principal Balances of the Class A, Class M-1 and
Class M-2 Certificates are reduced to zero, the Class B Principal Distribution
Amount for such Distribution Date will equal 100% of the Principal Distribution
Amount.

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

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

                                      -6-

<PAGE>

         Class C Certificate Principal Balance: As to any Distribution Date, the
Certificate Principal Balance of the Class C Certificates.

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

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

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

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

         Class M-1 Certificate Principal Balance: As to any Distribution Date,
the Class Principal Balance for the Class M-1 Certificates.

         Class M-1 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 6.972% per annum,
and for each Interest Period thereafter, 7.472% per annum and (y) the Available
Funds Cap.

         Class M-1 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
Certificate Principal Balance of each Class of Class A Certificates has been
reduced to zero and a Trigger Event exists, or, if a Trigger Event is not in
effect, the excess of (1) the sum of (A) the aggregate Certificate Principal
Balance of the Class A Certificates (after giving effect to distributions of the
Senior Principal Distribution Amount for such Distribution Date) and (B) the
Certificate Principal Balance of the Class M-1 Certificates immediately prior to
such Distribution Date over (2) the lesser of (A) 76.70% of the Pool Balance as
of the last day of the related Collection Period and (B) the Pool Balance as of
the last day of the related Collection Period minus the OC Floor.

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

         Class M-2 Certificate Principal Balance: As to any Distribution Date,
the Certificate Principal Balance for the Class M-2 Certificates.

                                      -7-

<PAGE>

         Class M-2 Pass-Through Rate: The lesser of (x) with respect to each
Interest Period ending on or prior to the Clean-Up Call Date, 7.317% per annum,
and for each Interest Period thereafter, 7.817% per annum and (y) the Available
Funds Cap.

         Class M-2 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
aggregate Certificate Principal Balance of each of the Class A and Class M-1
Certificates has been reduced to zero and a Trigger Event exists, or, if a
Trigger Event is not in effect, the excess of (1) the sum of (A) the aggregate
Certificate Principal Balance of the Class A Certificates (after giving effect
to distributions of the Senior Principal Distribution Amount for such
Distribution Date), (B) the Certificate Principal Balance of the Class M-1
Certificates (after giving effect to distribution of the Class M-1 Principal
Distribution Amount for such Distribution Date) and (C) the Certificate
Principal Balance of the Class M-2 Certificates immediately prior to such
Distribution Date over (2) the lesser of (A) 85.70% of the Pool Balance as of
the last day of the related Collection Period and (B) the Pool Balance as of the
last day of the related Collection Period minus the OC Floor.

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

         Class P Certificate:  Not Applicable.

         Class P Certificate Principal Balance:  Not Applicable.

         Class P Deposit:  Not Applicable.

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

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

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

         Class R-II Certificate: Any one of the Certificates described in
Section 9.16 as representing the "residual interest" in REMIC II, as such term
is defined in Code Section

                                      -8-

<PAGE>

860G(a)(2). The Class R-II Certificate shall be certificated together with the
Class R-I Certificates, in the form of the Class R Certificate.

         Class R-III Certificate:  Not Applicable.

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

         Closing Date:  March 28, 2002.

         Closing Date Deposit:  $0.00.

         Code:  The Internal Revenue Code of 1986 as amended.

         Collection Account: The segregated account, which shall at all times be
an Eligible Account, established and maintained pursuant to Section 3.02(a) and
entitled "Ocwen Federal Bank FSB in trust for Bankers Trust Company of
California, N.A., and for the benefit of Holders of Aames Mortgage Trust 2002-1
Mortgage Pass-Through Certificates, Series 2002-1, Collection Account."
References herein to the Collection Account shall include any Sub-Servicing
Account as the context requires.

         Collection Period: As to the first Distribution Date, the period
beginning on and including March 2, 2002 and ending on and including April 1,
2002 (except that with respect to payments due and unpaid on or before March 1,
2002, only collections of principal are included). As to any Distribution Date
thereafter for collections of both interest and principal, the period beginning
on and including the second day of the calendar month immediately preceding the
month in which such Distribution Date occurs and ending on and including the
first day of the calendar month of such Distribution Date.

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

         Company:  Aames Capital Corporation, a California corporation.

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

                                      -9-

<PAGE>

         Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be principally administered, which office at the date of the execution of
this Agreement is located at 1761 East St. Andrew Place, Santa Ana, California
92705-4934, Attention: AA0201; Aames Mortgage Loan Pass-Through Certificates,
Series 2002-1.

         Cumulative Loss Event: For any Distribution Date, if Cumulative Net
Losses exceed (i) for the initial Distribution Date in each of the distribution
periods set forth below, the applicable Initial Percentage of the aggregate Pool
Balance as of the Cut-off Date and (ii) for each successive Distribution Date in
such distribution period, the applicable percentage for the previous
Distribution Date plus the related Monthly Increment for such distribution
period:

    Number of                          Initial                  Monthly
Distribution Dates                   Percentages               Increment
------------------                   -----------               ---------
    37-48                               3.50%                    0.135%
    49-60                               5.00%                    0.104%
    61-72                               6.25%                    0.063%
    73 and thereafter                   7.00%                    0.000%

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

         Cut-off Date: With respect to the Initial Mortgage Loans, the close of
business on March 1, 2002. With respect to the Subsequent Mortgage Loans, the
close of business on the Subsequent Cut-off Date.

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

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

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

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

         Delinquency Event: As to any Distribution Date, a Delinquency Event
shall have occurred if the Three Month Delinquency Rate exceeds 50% of the
Senior Enhancement Percentage.

         Deposit Date: As to any Distribution Date, the Business Day immediately
preceding such Distribution Date.

         Depositor: Aames Capital Acceptance Corporation, a Delaware
corporation.

                                      -10-

<PAGE>

         Depository: The initial depository shall be The Depository Trust
Company, the nominee of which is Cede & Co. The Depository shall at all times be
a "clearing corporation" as defined in Section 8102(3) of the Uniform Commercial
Code of the State of California, as amended, or any successor provisions
thereto.

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

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

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

         Distribution Date: The 25th day of each month or, if such day is not a
Business Day, the Business Day immediately following such 25th day, beginning
April 25, 2002.

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

                                      -11-

<PAGE>

Moody's. Any Eligible Accounts maintained with the Trustee shall conform to the
preceding clause (B).

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

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

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

         Event of Default:  As defined in Section 8.01.

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

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

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

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

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

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

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

          Class                             Final Scheduled Distribution Date
          -----                             ---------------------------------
        Class A-1                                      October 2020
        Class A-2                                      June 2029
        Class A-3                                      June 2032
        Class A-4                                      January 2032
        Class M-1                                      June 2032
        Class M-2                                      June 2032
        Class B                                        June 2032

                                      -12-

<PAGE>

        Class C                                        June 2032
        Class R                                        June 2032

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

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

         Funding Period: The period beginning on the Closing Date and ending on
the earlier of (a) the date on which the amount on deposit in the Prefunding
Account is zero and (b) the close of business on April 30, 2002.

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

         Holder:  A Certificateholder.

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

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

         Initial Certificate Principal Balance: As to the Class C Certificates,
$28.78, which is equal to the initial Overcollateralization Amount as of the
Closing Date. As to the Class R Certificates, $0. As to any other Class of
Offered Certificates, the respective amount set forth below opposite such Class:

                                                         Initial Certificate
                     Class                                Principal Balance
                     -----                                -----------------
            Class A-1 Certificates                           $65,500,000
            Class A-2 Certificates                           $50,000,000
            Class A-3 Certificates                           $21,500,000
            Class A-4 Certificates                           $11,750,000
            Class M-1 Certificates                           $11,375,000
            Class M-2 Certificates                           $ 7,875,000
            Class B Certificates                             $ 7,000,000

                                      -13-

<PAGE>

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

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

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

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

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

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

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

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

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

         Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under any
insurance policy or from any Mortgagor. Such expenses shall include, without
limitation, legal fees and expenses, real estate

                                      -14-

<PAGE>

brokerage commissions, any unreimbursed amount expended by the Servicer pursuant
to Section 3.06 with respect to the related Mortgage Loan (including, without
limitation, amounts voluntarily advanced to correct defaults on each mortgage
loan that is senior to such Mortgage Loan), any other related and previously
unreimbursed Servicing Advances and any related and previously unreimbursed
Property Protection Expenses.

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

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

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

         Loan-to-Value Ratio: The Original Principal Amount of a Mortgage Loan
as a percentage of the lesser of (a) the Appraised Value and (b) the sales
price, if applicable, of the related Mortgaged Property determined by the Seller
at the time of origination of such Mortgage Loan.

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

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

         Monthly Advance:  Defined in Section 5.02(a).

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

         Monthly Servicing Fee: With respect to any Collection Period, 1/12 of
the product of the Servicing Fee Rate and the aggregate Principal Balance of the
Mortgage Loans as of the beginning of the related Collection Period (or, in the
case of the first Collection Period, the aggregate Principal Balance of the
Mortgage Loans as of the Cut-off Date). The Monthly Servicing Fee shall be
payable to the Servicer out of collections of interest received on or in respect
of the Mortgage Loans for the related Collection Period.

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

                                      -15-

<PAGE>

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

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

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

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

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

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

         Mortgaged Property:  The underlying property securing a Mortgage Loan.

         Mortgagor:  The obligor under a Mortgage Note.

                                      -16-

<PAGE>

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

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

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

         Net Rate Cap Fund: The Net Rate Cap Fund established and maintained as
described in Section 3.21 and entitled "Bankers Trust Company of California,
N.A., as Trustee for Aames Mortgage Trust 2002-1, Mortgage Pass-Through
Certificates, Series 2002-1, Net Rate Cap Fund."

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

         Notional Amount:  Not Applicable.

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

         Offered Certificateholder:  A holder of an Offered Certificate.

         Offered Certificates: Collectively, the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class M-1
Certificates, Class M-2 Certificates and Class B Certificates.

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

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

         Original Pool Balance: Means the aggregate outstanding principal
amounts of each Initial Mortgage Loan as of the Cut-off Date, which amount is
$132,835,928.78.

                                      -17-

<PAGE>

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

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

         Pass-Through Rate: The Class A-1 Pass-Through Rate, the Class A-2
Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4 Pass-Through
Rate, the Class M-1 Pass-Through Rate, the Class M-2 Pass Through Rate or the
Class B Pass Through Rate, as applicable.

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

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

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

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

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

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

                  (C) federal funds, certificates of deposit, time and
                      demand deposits and
                                      -18-

<PAGE>

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

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

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

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

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

provided that (1) no investment described hereunder shall evidence either the
right to receive (i) only interest with respect to obligations underlying such
instrument or (ii) both principal and interest payments derived from obligations
underlying such instrument and the principal and interest payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity of the underlying obligations; (2) no instrument described
hereunder may be purchased at a price greater than par if such instrument may be
prepaid or called at a price less than its purchase price prior to stated
maturity; (3) no investment described hereunder shall contain options or
otherwise have voting rights with respect thereto (unless such voting rights are
relinquished upon the purchase of such investment); and (4) no investment shall
mature later than the latest Final Scheduled Distribution Date or be sold or
disposed of prior to maturity. Permitted Investments shall mature not later than
the Business Day prior to the date on which such monies will be needed to make
payments, or in the case of Permitted Investments held in the Prefunding
Account, shall be available on the Business Day next succeeding the date the
Trustee receives the Addition Notice that such monies will be needed.
Notwithstanding the foregoing, with respect to investment of amounts in any
account, any of the foregoing obligations, instruments or securities will not be
Permitted Investments to the extent that an investment therein will cause the
then outstanding principal amount thereof in which such funds are then invested
to exceed $25,000,000 (such investments being valued at par).

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

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

                                      -19-

<PAGE>

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

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

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

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

         Prefunding Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.16 and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
2002-1 Mortgage Pass-Through Certificates, Series 2002-1, Prefunding Account."

         Prefunding Account Deposit: The amount deposited in the Prefunding
Account on the Closing Date for the purchase of Subsequent Mortgage Loans, which
amount is $42,164,071.22.

         Prefunding Distribution Date: Each of the Distribution Dates during the
Funding Period and the Distribution Date in the month following the end of the
Funding Period.

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

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

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

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

                  (i) the Mortgage Loan identifying number;

                                      -20-

<PAGE>

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

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

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

                  (v) the term of the related Mortgage Loan;

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

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

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

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

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

         Prepayment Interest Shortfall: As to any Distribution Date, the amount,
if any, by which the amount described in clause (b) of the first sentence of the
definition of Compensating Interest for such Distribution Date exceeds one-half
of the Monthly Servicing Fee (calculated with a Servicing Fee Rate of 0.50% per
annum) for such related Collection Period.

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

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

                                      -21-

<PAGE>

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

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

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

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

         Prospectus Supplement: That certain Prospectus Supplement dated as of
March 13, 2002 relating to $175,000,000 principal amount of Mortgage
Pass-Through Certificates, Series 2002-1.

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

                                      -22-

<PAGE>

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

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

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

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

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

                                      -23-

<PAGE>

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

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

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

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

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

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

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

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

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

         Representative:  Greenwich Capital Markets, Inc.

         Required Overcollateralization Amount: As to any Distribution Date (a)
prior to the Stepdown Date, the product of (i) 3.15% and (ii) the Pool Balance
as of the Cut Off Date; and (b) on and after the Stepdown Date, the greater of
(i) the lesser of (x) the product of 3.15% of the Pool Balance as of the Cut Off
Date and (y) the product of 6.30% of the Pool Balance as of the end of the
related Collection Period and (ii) the OC Floor; provided, however, that on each
Distribution Date during the continuance of a Trigger Event, the Required
Overcollateralization Amount will equal the Required Overcollateralization
Amount in effect as of the Distribution Date immediately preceding the date on
which such Delinquency Event or Cumulative Loss Event first occurred.

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

                                      -24-

<PAGE>

         Restricted Mortgage Loan: A Mortgage Loan that as of the Closing Date
was 60 or more days contractually delinquent.

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

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

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

         Seller:  The Company.

         Senior Certificates: The Class A-1, Class A-2, Class A-3 and Class A-4
Certificates.

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

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

         Senior Principal Distribution Amount: As to (a) any Distribution Date
prior to the Stepdown Date or during the continuance of a Trigger Event, the
lesser of (i) 100% of the Principal Distribution Amount and (ii) the aggregate
Certificate Principal Balances of the Class A Certificates, and (b) any other
Distribution Date, an amount equal to the lesser of (x) the Principal
Distribution Amount and (y) the excess, if any, of (i) the aggregate Certificate
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date over (ii) the lesser of (x) the product of 63.70% and the Pool
Balance as of the last day of the related Collection Period and (y) the Pool
Balance as of the last day of the related Collection Period minus the OC Floor.

         Servicer: Ocwen Federal Bank FSB, a federally chartered savings bank,
or any successor servicer appointed as provided pursuant to this Agreement.

         Servicer Prepayment Charge Payment Amount:  Not Applicable.

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

         Servicing Advances: All reasonable and customary "out-of-pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligation, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, including without
limitation advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and, if applicable, flood insurance policies,
(ii) the prosecution or defense of any enforcement or judicial proceedings,
including foreclosures, (iii)

                                      -25-

<PAGE>

the management and liquidation of any REO Property, (iv) compliance with the
obligations under Section 3.04 and (v) expenditures relating to the correction
of a default on any Senior Lien pursuant to Section 3.06 in connection with the
liquidation of a Mortgage Loan.

         Servicing Fee Rate: With respect to each Collection Period, 0.50% per
annum.

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

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

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

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

         Statement to Certificateholders:  As defined in Section 5.03.

         Stepdown Date: The later to occur of (x) the earlier to occur of (i)
the Distribution Date in April 2005 and (ii) the Distribution Date on which the
aggregate Certificate Principal Balance of the Class A Certificates is reduced
to zero, and (y) the first Distribution Date on which the Pool Balance has been
reduced to 50% of the Pool Balance as of the Cut-off Date.

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

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

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

         Subordination Required Overcollateralization Amount:  Not Applicable.

         Subsequent Cut-off Date: With respect to any Subsequent Mortgage Loan,
the date specified as such in the related Subsequent Mortgage Loan Schedule.

                                      -26-

<PAGE>

         Subsequent Cut-off Date Principal Balance: As to any Subsequent
Mortgage Loan, the actual outstanding principal balance due thereunder from the
Mortgagor as specified in the related Addition Notice.

         Subsequent Mortgage Loan: A Mortgage Loan sold to the Trust pursuant to
Section 2.02 of this Agreement, which shall be listed on the Subsequent Mortgage
Loan Schedule attached to a Subsequent Transfer Agreement.

         Subsequent Mortgage Loan Schedule: As of any Subsequent Transfer Date,
the schedule of Subsequent Mortgage Loans as of the related Subsequent Cut-off
Date being transferred to the Trust on such Subsequent Transfer Date pursuant to
a Subsequent Transfer Agreement. Each Subsequent Mortgage Loan Schedule shall
contain information regarding the related Subsequent Mortgage Loans of the type
included in the Mortgage Loan Schedule attached hereto as Exhibit E.

         Subsequent Purchase Price: As of any Subsequent Transfer Date and with
respect to the Subsequent Mortgage Loans, an amount equal to 100% of the
Principal Balances as of the Subsequent Cut-off Date of such Subsequent Mortgage
Loans listed in the related Subsequent Transfer Agreement.

         Subsequent Transfer Agreement: With respect to any Subsequent Mortgage
Loan, the agreement pursuant to which such Subsequent Mortgage Loan is
transferred to the Trust, in substantially the form attached hereto as Exhibit
C.

         Subsequent Transfer Date: The date specified in each Subsequent
Transfer Agreement, but no later than April 30, 2002.

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

         Sub-Servicing Account: Any segregated account, which shall at all times
be an Eligible Account, established and maintained pursuant to Section 3.02(b)
and entitled "Bankers Trust Company of California, N.A., in trust for the
benefit of Holders of Aames Mortgage Trust 2002-1 Mortgage Pass-Through
Certificates, Series 2002-1, Collection Account". References herein to the
Collection Account shall include any Sub-Servicing Account as the context
requires.

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

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

                                      -27-

<PAGE>

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

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

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

         Trigger Event: The occurrence of either a Delinquency Event and/or a
Cumulative Loss Event.

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

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

         Trust Parties:  As defined in Section 5.04.

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

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

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

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

                                      -28-

<PAGE>

         Voting Interest: The portion of the voting interests of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Interests shall be allocated to the Class C
Certificates (such Voting Rights to be allocated among the Holders of
Certificates of such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Interests shall be allocated to the Class R
Certificates in the aggregate, or if separate Class R-I and Class R-II
Certificates are issued, 1/2% to each such Class (such Voting Interests to be
allocated among the Holders of Certificates of each such Class in accordance
with their respective Percentage Interests), and (c) the remaining Voting
Interests shall be allocated among Holders of the Classes of Offered
Certificates in proportion to the Certificate Principal Balances of their
respective Offered Certificates on such date. Each Certificateholder of a Class
will have a Voting Interest equal to the product of the Voting Interest to which
such Class is collectively entitled and the Percentage Interest in such Class
represented by such Holder's Certificates. With respect to any provision hereof
providing for action, consent or approval of each Class of Certificates or
specified Classes of Certificates, each Certificateholder of a Class will have a
Voting Interest in such Class equal to such Holder's Percentage Interest in such
Class.

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

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

ARTICLE II

                             CONVEYANCE OF THE TRUST
                        ORIGINAL ISSUANCE OF CERTIFICATES

         Section 2.01 Conveyance of the Trust. The Seller, concurrently with the
execution and delivery of this Agreement, does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Depositor, without
recourse (except as otherwise explicitly provided for herein), all of its right,
title and interest in and to the corpus of the Trust, including specifically,
without limitation, the Mortgage Loans, the Mortgages, the Mortgage Files and
the Mortgage Notes, including all interest and principal (whether in the form of
payments by Mortgagors or other proceeds) received or deemed to be received by
the Seller on or with respect to the Mortgage Loans on or after the related
Cut-off Date net of amounts in respect of interest accrued on the Mortgage Loans
in periods prior to the related Cut-off Date, (whether in the nature of amounts
held by the Seller for application on behalf of the related Mortgagor as a
Monthly Mortgage Payment that is due on any date on or after the related Cut-off
Date or otherwise), and all right, title and interest in and to the proceeds
received on or after the related Cut-off Date of any related insurance policies.
Such delivery of the Mortgage Loans, the Mortgages, Mortgage Files and the
Mortgage Notes shall be made against payment by the Depositor of the purchase
price, previously agreed to by the Seller and Depositor, for the Mortgage Loans.
In addition, on or prior to the Closing Date the Seller shall (i) cause the PMI
Policy to be delivered to the Depositor and (ii) deposit the Closing Date
Deposit with the Depositor for deposit in the Collection Account.

                                      -29-

<PAGE>

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

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

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

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

                                      -30-

<PAGE>

                  (a) The original Mortgage Note, with all intervening
         endorsements sufficient to show a complete chain of endorsement to the
         Person endorsing the Mortgage Note to the Trustee, endorsed (which
         endorsement may be by manual or facsimile signature) by the Person so
         endorsing without recourse to the order of the Trustee in the following
         form: "Pay to the order of Bankers Trust Company of California, N.A.,
         in trust for the benefit of holders of Aames Mortgage Trust 2002-1
         Mortgage Pass-Through Certificates, Series 2002-1, without recourse";

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

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

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

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

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

         As promptly as practicable subsequent to the Closing Date, and in any
event, within 30 days thereafter, the Company, in its capacity as initial
Sub-Servicer shall (i) affix the Trustee's name to each assignment of Mortgage,
as the assignee thereof in the following form: "Bankers Trust Company of
California, N.A., in trust for the benefit of holders of Aames Mortgage Trust
2002-1 Mortgage Pass-Through Certificates, Series 2002-1, without recourse",
(ii) cause such assignment to be in proper form for recording in the appropriate
public office for real property records, and (iii) cause to be delivered for
recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any
assignments of Mortgage as to which the Company, in its capacity as initial
Sub-Servicer, has not received the information required to prepare such
assignment in recordable form, the Company, in its capacity as initial
Sub-Servicer, shall be obligated to prepare and to deliver such assignment for
such recording as soon as practicable after receipt of such information and in
any event within 30 days after receipt thereof (and in no event more than one
year after the Closing Date) and that the Company need not cause to be recorded
any assignment that relates to a Mortgage Loan in any jurisdiction under the
laws of which, as evidenced by an Opinion of Counsel delivered to the Trustee at
Seller's expense to the effect that the recordation of such assignment is not
necessary to protect the Trustee's and the Certificateholders' interest in the
related Mortgage Loan.

                                      -31-

<PAGE>

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

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

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

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

                                      -32-

<PAGE>

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

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

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

         The amount released to or upon the order of the Depositor from the
Prefunding Account on any Subsequent Transfer Date (or from other amounts
payable to the Depositor on the Closing Date) in connection with any conveyance
of Subsequent Mortgage Loans to be included shall be equal to the aggregate of
the related Subsequent Purchase Prices for such related Subsequent Mortgage
Loans to be included, which related amounts, in the aggregate, shall not exceed
the allocated Prefunding Account Deposit. The amount so released to or upon the
order of the Depositor in connection with any conveyance of Subsequent Mortgage
Loans shall, for federal income tax purposes, be considered cash contributed to
REMIC II by the Depositor and

                                      -33-

<PAGE>

used by the Trustee to acquire the related Subsequent Mortgage Loans pursuant to
a fixed price contract established pursuant to this Section 2.02.

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

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

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

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

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

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

                  (f) the Funding Period shall not have expired; and

                  (g) the Subsequent Mortgage Loans shall satisfy the criteria
         set forth on page S-37 of the Prospectus Supplement and Exhibit Q
         hereto.

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

                  (A) the Depositor shall have confirmed to the Rating Agencies,
         the Representative and the Trustee, in the related Subsequent Transfer
         Agreement, the

                                      -34-

<PAGE>

         satisfaction of each condition precedent specified in this Section
         2.02;

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

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

                  (D) the Seller shall represent and warrant that the Subsequent
         Mortgage Loans satisfy the criteria set forth in on page S-37 of the
         Prospectus Supplement and Exhibit Q hereto; and

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

         On or prior to each Subsequent Transfer Date, the Seller or the
Depositor shall provide to the Trustee, the Servicer, the Rating Agencies and
the Representative a schedule of mortgage loans that are expected to be
Subsequent Mortgage Loans. Subsequent Mortgage Loans transferred to the Trust
shall be taken only from such schedule unless the Rating Agencies shall have
informed the Seller or the Trustee prior to the applicable Subsequent Transfer
Date that the inclusion of such Subsequent Mortgage Loans would result in the
downgrade or withdrawal of the ratings assigned to the Offered Certificates;
provided, however, if any such identified mortgage loans do not satisfy the
requirements of Subsequent Mortgage Loans as set forth in this Section 2.02 or
if any such mortgage loans are rejected as Subsequent Mortgage Loans by either
of the Rating Agencies, mortgage loans acceptable to the Rating Agency or Rating
Agencies may be substituted for such defective or rejected mortgage loans. The
Depositor shall certify that the Subsequent Mortgage Loans will be transferred
to the Trust in accordance with the foregoing and that such Subsequent Mortgage
Loans satisfy the requirements of Subsequent Mortgage Loans as set forth in this
Section 2.02 as of the Closing Date.

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

         Section 2.03 Acceptance by the Trustee; Repurchase or Substitution of
Mortgage Loans. The Trustee acknowledges the sale and assignment to the Trust
and receipt by it of the original Mortgage Notes, Assignments and Mortgages
pursuant to this Agreement and the delivery to it of the PMI Policy, and subject
to (i) the provisions of the penultimate paragraph of Section 2.01, (ii) the
review provided for in this Section of the documents referred to in clauses

                                      -35-

<PAGE>

(a) through (f) of Section 2.01 and (iii) delivery of the Officer's Certificates
pursuant to Section 2.01, declares that it will hold the Trust in trust upon the
terms herein set forth for the use and benefit of all present and future
Certificateholders. The Trustee agrees, for the benefit of Certificateholders,
to review each Mortgage File within 45 days after the Closing Date (or, 45 days
after the Subsequent Transfer Date, with respect to the Subsequent Mortgage
Loans) to determine whether the documents described in Section 2.01(a)-(c), (e)
and (f) have been executed and received, and whether such documents relate to
the Mortgage Loans identified in the Mortgage Loan Schedule, or the Subsequent
Mortgage Loan Schedule, as applicable, and in so doing the Trustee may rely on
the purported due execution and genuineness of any such document and on the
purported genuineness of any signature thereon. If within such 45-day period the
Trustee finds any document constituting a part of a Mortgage File not to have
been executed or received or to be unrelated to the Mortgage Loans identified in
the Mortgage Loan Schedule or the Subsequent Mortgage Loan Schedule, as
applicable, the Trustee shall promptly, but in no event later than 30 days
following such finding, notify the Seller of such findings. The Seller shall
have a period of 60 days from the date of such notice to correct or cure any
such defect. Notwithstanding the second paragraph of Section 9.01, the Trustee
shall be under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face.

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

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

         Payments received with respect to Qualified Replacement Mortgage Loans
in the Collection Period prior to the Deposit Date on which such substitution
occurs will not be part of

                                      -36-

<PAGE>

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

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

                                      -37-

<PAGE>

identifying the related defects or omissions. Thereafter, the Trustee shall
provide the Seller, the Depositor and the Servicer with monthly exception
reports indicating the status of any exceptions until all such exceptions have
been eliminated. Such monthly exception reports shall be distributed by the
Trustee on the related Distribution Date with the Statement to
Certificateholders.

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

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

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

                           (iii) There is no action, suit, proceeding or
                  investigation pending or, to the best of the Company's
                  knowledge, threatened against the Company other than that
                  certain litigation against the Company and one or more of its
                  subsidiaries

                                      -38-

<PAGE>

                  described in the Prospectus Supplement under "Risk
                  Factors-Litigation" that, either in any one instance or in the
                  aggregate, may result in any material adverse change in the
                  business, operations, financial condition, properties or
                  assets of the Company or in any material impairment of the
                  right or ability of the Company to carry on its business
                  substantially as now conducted, or in any material liability
                  on the part of the Company or that would draw into question
                  the validity of this Agreement or the Mortgage Loans or of any
                  action taken or to be taken in connection with the obligations
                  of the Company contemplated herein, or that would be likely to
                  impair the ability of the Company to perform under the terms
                  of this Agreement;

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

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

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

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

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

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

                                      -39-
<PAGE>

                  to which the Servicer is a party or which may be applicable to
                  the Servicer or any of its assets;

                           (iii) The Servicer has the full power and authority
                  to enter into and consummate all transactions contemplated by
                  this Agreement to be consummated by it, has duly authorized
                  the execution, delivery and performance of this Agreement, and
                  has duly executed and delivered this Agreement. This
                  Agreement, assuming due authorization, execution and delivery
                  by the other parties hereto, constitutes a valid, legal and
                  binding obligation of the Servicer, enforceable against it in
                  accordance with the terms hereof, except as such enforcement
                  may be limited by bankruptcy, insolvency, reorganization,
                  receivership, moratorium or other similar laws relating to or
                  affecting the rights of creditors generally, and by general
                  equity principles (regardless of whether such enforcement is
                  considered in a proceeding in equity or at law);

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

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

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

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

                                      -40-

<PAGE>

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

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

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

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

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

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

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

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

                           (v) As of the Cut-off Date, no Initial Mortgage Loan
                  has a Loan-to-Value Ratio in excess of 100%; and Mortgage
                  Loans representing not more than

                                      -41-

<PAGE>

                  2.80% of the Initial Mortgage Loans have Loan-to-Value Ratios
                  greater than 90% and less than or equal to 100%;

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

                           (vii) Each fixed rate Initial Mortgage Loan as of the
                  Cut-off Date bears interest at a fixed rate of at least 6.50%.
                  Each Hybrid Loan has a Minimum Rate of not less than 7.44% per
                  annum and a Mortgage Loan Rate as of the Cut-off Date of not
                  less than 7.44% per annum. The terms of each Hybrid Loan that
                  becomes an Adjustable Rate Mortgage Loan require that
                  adjustments in the related Mortgage Loan Rate be made
                  employing the related Index measured as of a date not more
                  than three months prior to the related adjustment date;

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

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

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

                                      -42-

<PAGE>

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

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

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

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

                           (xv) There is no offset, right of rescission,
                  counterclaim or defense, including the defense of usury, with
                  respect to any Mortgage Note or Mortgage, nor will the
                  operation of any of the terms of the Mortgage Note or the
                  Mortgage, or the exercise of any right thereunder, render
                  either the Mortgage Note or the Mortgage unenforceable in
                  whole or in part, or subject to any right to rescission,
                  set-off, counterclaim or defense, including the defense of
                  usury, and no such right of rescission, set-off, counterclaim
                  or defense has been asserted with respect thereto;

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

                           (xvii) To the best of the Seller's knowledge, each
                  Mortgage Loan at the time it was made complied in all material
                  respects with applicable local, state and federal laws and
                  regulations, including, without limitation, the federal
                  Truth-in-Lending Act and other consumer protection laws, real
                  estate settlement procedure, usury, equal credit opportunity,
                  disclosure and recording laws;

                           (xviii) With respect to each Mortgage Loan, a
                  lender's title insurance policy (issued in standard form by a
                  title insurance company authorized to transact business in the
                  state where the related Mortgaged Property is located), in an
                  amount at least equal to the Original Principal Amount of such
                  Mortgage Loan

                                      -43-

                                       1
<PAGE>

                  insuring the mortgagee's interest under the related Mortgage
                  Loan as the holder of a valid lien of record on the real
                  property described in the related Mortgage (subject only to
                  exceptions of the character referred to in paragraph (viii)
                  above), was effective on the date of the origination of such
                  Mortgage Loan, and, as of the Closing Date, such policy is in
                  full force and effect and thereafter such policy shall
                  continue in full force and effect and shall inure to the
                  benefit of the Certificateholders upon consummation of the
                  transactions contemplated by this Agreement;

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

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

                           (xxi) Each Mortgage and Mortgage Note is the legal,
                  valid and binding obligation of the maker thereof and is
                  enforceable in accordance with its terms, except only as such
                  enforcement may be limited by bankruptcy, insolvency,
                  reorganization, moratorium or other similar laws affecting the
                  enforcement of creditors' rights generally and by general
                  principles of equity (whether considered in a proceeding or
                  action in equity or at law), and all parties to each Mortgage
                  Loan had full legal capacity to execute all documents relating
                  to such Mortgage Loan and convey the estate therein purported
                  to be conveyed; with respect to each Mortgage Loan, only one
                  original Mortgage Note exists;

                           (xxii) The Seller has caused and will cause to be
                  performed any and all acts required to be performed to
                  preserve the rights and remedies of the Trustee in

                                      -44-

<PAGE>

                  any insurance policies applicable to each Mortgage Loan,
                  including any necessary notifications of insurers, assignments
                  of policies or interests therein, and establishment of
                  co-insured, joint loss payee and mortgagee rights in favor of
                  the Trustee;

                           (xxiii) As of the Cut-off Date, Initial Mortgage
                  Loans representing no more than 1% of the Initial Mortgage
                  Loans, by aggregate Principal Balance as of the Cut-off Date,
                  are secured by Mortgaged Properties located within any single
                  zip code area;

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

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

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

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

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

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

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

                           (xxxi) Each Mortgage Loan contains a provision for
                  the acceleration of the payment of the unpaid principal
                  balance of such Mortgage Loan in the event

                                      -45-

<PAGE>

                  the related Mortgaged Property is sold without the prior
                  consent of the mortgagee thereunder;

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

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

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

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

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

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

                           (xxxviii) Each Mortgage contains customary and
                  enforceable provisions that render the rights and remedies of
                  the holder thereof adequate for

                                      -46-
<PAGE>

                  the realization against the related Mortgaged Property of the
                  benefits of the security, including by trustee's sale and by
                  judicial foreclosure and there is no homestead or other
                  exemption available to the related Mortgagor that would
                  materially interfere with the right to sell the related
                  Mortgaged Property at a trustee's sale or the right to
                  foreclose upon the related Mortgaged Property;

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

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

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

                           (xlii) As of the Cut-off Date, at least 87.00% of the
                  Initial Mortgage Loans are secured by Mortgaged Properties
                  that are maintained by the related Mortgagors as primary
                  residences;

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

                           (xliv) To the best of the Seller's knowledge, all
                  parties that have had any interest in the Mortgage Loan,
                  whether as mortgagee, assignee, pledgee or otherwise during
                  the period in which they held and disposed of such interest,
                  were and either are now or, in the case of subclause (1) of
                  this clause, will be within 30 days of the Closing Date or
                  Subsequent Cut-off Date, as appropriate, (1) in compliance
                  with any and all applicable licensing requirements of the laws
                  of the state wherein the Mortgaged Property is located, and
                  (2) (A) organized under the laws of such state, or (B)
                  qualified to do business in such state, or (C) federal

                                      -47-

<PAGE>

                  savings and loan associations or national banks having
                  principal offices in such state, or (D) not doing business in
                  such state so as to require qualification or licensing;

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

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

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

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

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

                           (l) [Reserved];

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

                           (lii) With respect to each Hybrid Loan, all of the
                  terms of the Mortgage pertaining to interest rate adjustments,
                  payment adjustments and adjustments of the outstanding
                  principal balance are enforceable; such adjustments will not
                  affect the priority of the Mortgage lien and all of the
                  adjustments have been properly calculated, recorded, reported
                  and applied in accordance with the Mortgage and applicable
                  law;

                           (liii) All insurance policies, other than any primary
                  mortgage insurance policies purchased by the Seller or
                  Servicer or any of its affiliates, are the valid and binding
                  obligation of the insurer and contain a standard mortgagee
                  clause naming the originator, its successors and assigns, as
                  mortgagee. Such insurance policies require prior notice to the
                  insured of termination or cancellation and no

                                      -48-
<PAGE>

                  such notice has been received, each Mortgage obligates the
                  Mortgagor thereunder to maintain all such insurance at the
                  Mortgagor's cost and expense, and upon the Mortgagor's failure
                  to do so, authorizes the holder of the Mortgage to obtain and
                  maintain such insurance at the Mortgagor's cost and expense
                  and to seek reimbursement therefor from the Mortgagor;

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

                           (lv) At least 99.00% of the Initial Mortgage Loans
                  (by aggregate Principal Balance as of the Cut-off Date) have
                  Monthly Mortgage Payments due during the first Collection
                  Period during which such Mortgage Loan is included in the
                  Trust;

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

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

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

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

                           (lx) No Mortgage Loan is 60 days or more
                  contractually delinquent as of the Cut-off Date and no
                  Subsequent Mortgage Loan will be 60 days or more contractually
                  delinquent as of its Subsequent Transfer Date (and accordingly
                  there are no Restricted Mortgage Loans required to be listed
                  in Schedule II);

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

                           (lxii) As of the Closing Date with respect to each
                  Mortgage Loan that is subject to a PMI Policy, the Seller has
                  not taken any action, or omitted to take any

                                      -49-

<PAGE>

                  action, and there are no circumstances that would cause the
                  PMI Insurer to deny a claim with respect to such Mortgage;

                           (lxiii) As of the Cut-off Date, not more than 62.94%
                  of the Initial Mortgage Loans are "cash-out refinance"
                  Mortgage Loans (as such term is described under the Company's
                  underwriting guidelines);

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

                           (lxv) [Reserved];

                           (lxvi) [Reserved];

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

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

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

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

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

         Within 60 days of its discovery or its receipt of notice of such
breach, the Seller shall use all reasonable efforts to cure such breach in all
material respects. Unless, prior to the expiration

                                      -50-

<PAGE>

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

         Notwithstanding the foregoing, a substitution of a Mortgage Loan by the
Seller for a breach will not be made unless the Trustee receive an Officer's
Certificate of the Seller certifying that the Qualified Replacement Mortgage
Loan conforms to the requirements of this Agreement and an Opinion of Counsel
that such substitution will not be a "prohibited transaction" as defined in
Section 860F(a)(2) of the Code. Any substitution must be effected not later than
two years after the Closing Date, or within such longer period of time as may be
permitted under the REMIC Provisions for substitution of mortgage loans.

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

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

                                      -51-

<PAGE>

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

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

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

         Section 2.07 Reserved.

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

                                  ARTICLE III

                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
                               CERTIFICATE ACCOUNT

         Section 3.01 The Servicer and the Sub-Servicers. Acting directly or
through one or more Sub-Servicers as provided in Section 3.15, the Servicer, as
servicer, shall administer the Mortgage Loans with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable home equity mortgage loans that it services for itself or others. The
duties of the Servicer shall include collecting and posting of all payments,
responding to inquiries of Mortgagors or by federal, state or local government
authorities with respect to the Mortgage Loans, investigating delinquencies,
reporting tax information to Mortgagors in accordance with its customary
practices and accounting for collections and

                                      -52-

<PAGE>

furnishing monthly and annual statements to the Trustee with respect to
distributions and making Monthly Advances and Servicing Advances pursuant to
Section 5.02. The Servicer shall follow its customary standards, policies and
procedures in performing its duties as Servicer, to the extent not in conflict
with the provisions of this Agreement. Notwithstanding the appointment of any
Sub-Servicer, the Servicer shall remain liable for the performance of all of the
servicing obligations and responsibilities under this Agreement. The Servicer
shall maintain all licenses and qualifications necessary to perform its
servicing obligations hereunder in the jurisdictions in which it services
Mortgage Loans. If the Servicer commences directly to service a material number
or principal amount of Mortgage Loans with related Mortgaged Properties located
in any other state, the Servicer will use its reasonable efforts promptly to
obtain, and thereafter to maintain, all licenses and qualifications necessary to
perform its servicing obligations hereunder in each such state. Each
Sub-Servicer shall maintain all licenses and qualifications necessary to perform
its servicing obligations in the states where the Mortgaged Properties to which
the applicable Sub-Servicing Agreement relates are located. The Servicer shall
cooperate with the Trustee and furnish to the Trustee such information in its
possession as may be necessary or appropriate to enable the Trustee to perform
its tax reporting duties hereunder. The Trustee shall furnish the Servicer with
any powers of attorney and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties hereunder.

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

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

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

                                      -53-

<PAGE>

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

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

                  (a) The Servicer shall, to the extent such procedures shall be
         consistent with this Agreement, follow such collection procedures as it
         follows from time to time with respect to home equity mortgage loans in
         its servicing portfolio that are comparable to the Mortgage Loans;
         provided that the Servicer shall always at least follow collection
         procedures that are consistent with standard industry practices.
         Consistent with the foregoing, and subject to the limitations in
         Section 3.05, the Servicer may in its discretion (i) waive any
         assumption fees, late payment charges, charges for checks returned for
         insufficient funds, if any, Prepayment Charges, or other fees that may
         be collected in the ordinary course of servicing the Mortgage Loans,
         (ii) if a Mortgagor is in default or about to be in default because of
         a Mortgagor's financial condition, arrange with the Mortgagor a
         schedule for the payment of delinquent payments due on the related
         Mortgage Loan, or (iii) modify payments of monthly principal and
         interest on any Mortgage Loan becoming subject to the terms of the
         Relief Act in accordance with the Servicer's general policies for
         comparable home equity mortgage loans subject to such Act.

                  (b) The Servicer shall establish and maintain, or cause to be
         established and maintained, one or more Eligible Accounts in the name
         of the Servicer or the Trustee, in trust for the registered holders of
         Aames Mortgage Trust 2002-1 Mortgage Pass-Through Certificates, Series
         2002-1, that in the aggregate are the Collection Account. All amounts
         held in the Collection Account shall be invested by the depository
         institution or trust company then maintaining the account at the
         written direction of the Servicer in

                                      -54-

<PAGE>

         Permitted Investments that mature not later than the Deposit Date next
         succeeding the date of investment. No Permitted Investment shall be
         sold or disposed of prior to maturity. The Servicer shall not retain
         any cash or investment in the Collection Account for a period in excess
         of 12 months and cash therein shall be considered transferred to
         Certificate Account on a first-in, first-out basis. All net income
         realized from any such investment shall be for the benefit of the
         Servicer as additional servicing compensation and shall be subject to
         its withdrawal or order from time to time.

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

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

                           (ii) all Principal Payments;

                           (iii) all Payments Ahead;

                           (iv) all Net Liquidation Proceeds; and

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

                  provided, however, that with respect to each Collection
         Period, the Servicer shall be permitted to retain (x) from payments in
         respect of interest on a Mortgage Loan, the Monthly Servicing Fee for
         such Mortgage Loan and (y) any reimbursed Servicing Advances and
         Monthly Advances related thereto solely in accordance with Sections
         5.02(a) and (b).

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

                  The foregoing requirements respecting deposits to the
         Collection Account are exclusive, it being understood that, without
         limiting the generality of the foregoing, the Servicer need not deposit
         in the Collection Account amounts representing fees, late payment
         charges, Prepayment Charges, charges for checks returned for
         insufficient funds, if any, or extension or other administrative
         charges paid by Mortgagors or amounts received by the Servicer for the
         account of Mortgagors for application towards the payment of taxes,
         insurance premiums, assessments and similar items. The amounts

                                      -55-

<PAGE>

         deposited in the Collection Account are subject to withdrawal by the
         Servicer, from time to time, (i) to make deposits into the Certificate
         Account pursuant to Section 3.02(e), (ii) to pay itself the Monthly
         Servicing Fee pursuant to Section 3.08 and to make Servicing Advances
         or to reimburse itself for Servicing Advances, as applicable, in either
         case in accordance with Section 5.02(b), (iii) to make Monthly Advances
         or to reimburse itself for payments of Monthly Advances, as applicable,
         in either case in accordance with Section 5.02(a) and (iv) to reimburse
         itself for expenses reimbursable pursuant to Section 7.03 hereof. In
         addition, if the Servicer deposits in the Collection Account any amount
         not required to be so deposited or any amount in respect of payments by
         Mortgagors made by checks subsequently returned for insufficient funds
         or other reason for non-payment, it may at any time withdraw such
         amount from the Collection Account, any provision herein to the
         contrary notwithstanding.

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

                  (e) The Trustee shall establish and maintain the Certificate
         Account in the name of the Trustee, in trust for the registered holders
         of Aames Mortgage Trust 2002-1 Mortgage Pass-Through Certificates,
         Series 2002-1. The Certificate Account shall be an Eligible Account
         segregated on the books of the Trustee and held by the Trustee in
         trust, and the Certificate Account and the amounts deposited therein
         shall not be subject to any claim, liens or encumbrances of any
         creditors or depositors of the Trustee or the Company (whether made
         directly or indirectly through a liquidator, receiver or trustee in
         bankruptcy of the Trustee or the Company). At or before 2:00 p.m. New
         York City time on each Deposit Date, the Servicer shall withdraw from
         the Collection Account all amounts on deposit therein that constitute
         any portion of Available Funds for the related Distribution Date
         (including any amounts therein that are being held for distribution on
         a subsequent Distribution Date which are being applied toward the
         Monthly Advance for the related Distribution Date pursuant to Section
         5.02(a)) and remit such amounts to the Trustee for deposit in the
         Certificate Account. In addition, any Compensating Interest and Monthly
         Advances required to be made by the Servicer in respect of the related
         Distribution Date and any amounts required to be deposited into the
         Certificate Account in connection with a purchase or repurchase of any
         Mortgage Loans or any shortage on such Mortgage Loans by the Seller or
         the Servicer pursuant to Section 2.03, 2.05, 3.01, 3.06 or 10.01 or a
         substitution of a Qualified Replacement Mortgage Loan pursuant to
         Section 2.03 or 2.05, or in connection with a purchase of Mortgage
         Loans by the Servicer pursuant to Section 10.01 or in connection with
         the Servicer's failure to adjust the Mortgage Loan Rate on an
         Adjustable Rate Mortgage Loan, shall be remitted to the Trustee for
         deposit in the Certificate Account on the applicable Deposit Date. Any
         amounts held in the Certificate Account shall remain uninvested. Any
         interest paid on funds in the Certificate Account by the depository
         institution from the day that is one Business Day immediately preceding
         the related Distribution Date up to and including the related
         Distribution Date shall be for the benefit of the Trustee as additional
         trustee fee, and shall be subject to its withdrawal or order from time
         to time.

                                      -56-

<PAGE>

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

         Section 3.04 Hazard Insurance Policies. The Servicer shall cause to be
maintained for each Mortgage Loan (including Mortgage Loans as to which the
related Mortgaged Property has been acquired by the Trust upon foreclosure, by
deed in lieu of foreclosure or comparable conversion), hazard insurance
(including flood insurance coverage, if obtainable, to the extent such property
is located in a federally designated flood area in such amount as is required
under applicable FEMA guidelines) with extended coverage in an amount that is
not less than the least of (i) the maximum insurable value from time to time of
the improvements that are a part of such property, or (ii) the combined
principal balance of such Mortgage Loan and the principal balance of each
mortgage loan senior to such Mortgage Loan at the time of such foreclosure plus
accrued interest and the good-faith estimate of the Servicer of related
Liquidation Expenses to be incurred in connection therewith; provided, further
that such hazard insurance shall be in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each such hazard insurance policy shall contain
a standard mortgagee clause naming the originator, its successors and assigns,
as mortgagee and shall require prior notice to the insured of termination or
cancellation. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account or Certificate Account, as the case
may be, in accordance with Section 3.02 to the extent that they constitute Net
Liquidation Proceeds or Trust Insurance Proceeds. If the Servicer shall obtain
and maintain a blanket policy, issued by an insurer acceptable to each Rating
Agency, insuring against such hazard losses, it shall conclusively be deemed to
have satisfied its obligations as set forth in the first sentence of this
Section, it being understood and agreed that such policy may contain a
deductible clause that is in form and substance consistent with standard
industry practice, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section, and there shall have been a
loss that would have been covered by such policy, deposit in the Collection
Account in accordance with Section

                                      -57-

<PAGE>

3.02 the amount not otherwise payable under the blanket policy because of such
deductible clause.

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

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

         Section 3.06 Realization upon Liquidated Mortgage Loans. Subject to the
limitations set forth in this Section 3.06 with respect to Restricted Mortgage
Loans, the Servicer, on behalf of the Trust, shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.02(a); provided that if the Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances, then the Servicer shall not cause the Trust to
acquire title to such Mortgaged Property in a foreclosure or similar proceeding.
In connection with such foreclosure or other conversion, the Servicer shall
follow such practices (including, in the case of any default on a related Senior
Lien, the advancing of funds to correct such default) and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
first, second and third lien one- to four-family mortgage loan

                                      -58-

<PAGE>

servicing activities (including the procurement of a drive-by appraisal of the
related Mortgaged Property prior to foreclosure or other conversion). The
foregoing is subject to the proviso that neither the Servicer nor the Trustee
shall be required to expend its own funds in connection with any foreclosure or
towards the correction of any default on a related Senior Lien or restoration of
any Mortgaged Property unless, in the reasonable judgment of the Servicer, such
foreclosure, correction or restoration will increase Net Liquidation Proceeds
(taking into account any unreimbursed Monthly Advances made or expected to be
made with respect to such Mortgage Loan). Amounts expended by the Servicer under
this paragraph shall be considered Servicing Advances.

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

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

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

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

         In the event that the Trust acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, such Mortgaged Property shall be only held temporarily, actively
marketed for sale and disposed of by the Servicer on behalf of the Trust no
later than the last day of the third calendar year following the year in

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which the foreclosure occurred. The Servicer shall further ensure that the
Mortgaged Property is administered so that it constitutes "foreclosure property"
within the meaning of Code Section 860G(a)(8) at all times, that the sale of
such property does not result in the receipt by any REMIC Pool of any income
from non-permitted assets as described in Code Section 860F(a)(2)(B), and that
no REMIC Pool derives any "net income from foreclosure property" within the
meaning of Code Section 860G(c)(2) with respect to such property.

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

         Section 3.08 Servicing Compensation; Payment of Certain Expenses by the
Servicer. The Servicer shall be entitled to receive, by withdrawal by the
Servicer from the Collection Account, or retaining prior to deposit in the
Collection Account, out of collections of interest on the Mortgage Loans for the
related Collection Period, as servicing compensation for such Collection Period,
the Monthly Servicing Fee. Additional servicing compensation shall be assumption
fees, late payment charges, Prepayment Charges, charges for checks returned for
insufficient funds, or extension and other administrative charges received by
the Servicer and any earnings on investments by the Servicer of amounts held in
the Collection Account and escrow accounts established by the Servicer on behalf
of Mortgagors (any such investments to be made in compliance with applicable
law). The Servicer is obligated to pay Compensating Interest out of the related
Monthly Servicing Fee on each Deposit Date, to the extent of one-half

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of the amount of the Monthly Servicing Fee, and shall not be entitled to
reimbursement therefor. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment of
the fees and expenses relating to the Annual Independent Public Accountant's
Servicing Report described in Section 3.10, and all other fees and expenses not
otherwise expressly stated hereunder for the account of the Certificateholders)
and shall not be entitled to reimbursement therefor except as specifically
provided herein.

         Section 3.09 Annual Statement as to Compliance.

                  (a) The Servicer will deliver to the Trustee, the Seller, the
         Depositor and each Rating Agency, on or before May 31 of each year,
         beginning with May 31, 2003, an Officer's Certificate of the Servicer
         substantially in the form set forth in Exhibit F hereto stating that
         (a) a review of the activities of the Servicer during the preceding
         calendar year (or since the Closing Date in the case of the first such
         statement) and of its performance under this Agreement has been made
         under such officer's supervision and (b) to the best of such officer's
         knowledge, based on such review, the Servicer has fulfilled all its
         material obligations under this Agreement throughout such year (or
         since the Closing Date in the case of the first such statement), or, if
         there has been a default in the fulfillment of any such obligation,
         specifying each such default known to such officer and the nature and
         status thereof.

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

         Section 3.10 Annual Independent Public Accountants' Servicing Report.
On or before May 31 of each year, beginning with May 31, 2003, the Servicer at
its expense shall cause a firm of nationally recognized independent public
accountants (who may also render other services to the Servicer) to furnish a
report to the Trustee, the Seller, the Depositor and each Rating Agency to the
effect that such firm has examined certain documents and records relating to the
servicing activities of the Servicer for the period covered by such report, and
that such examination (which will have been conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers to
the extent that the procedures in such audit guide are applicable to the
servicing obligations set forth in this Agreement), has disclosed no exceptions
or errors in records relating to the servicing activities of the Servicer that,
in the opinion of such firm, are material, except for such exceptions as shall
be set forth in such report.

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

                  (a) The Servicer shall provide to Certificateholders that are
         federally insured savings associations and the FDIC and its supervisory
         agents and examiners access to the documentation regarding the Mortgage
         Loans required by applicable regulations of the Office of Thrift
         Supervision, and to the Trustee all documentation relating to the
         Mortgage Loans that is in the possession of the Servicer, such access
         being afforded

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<PAGE>

         without charge but only upon reasonable request and during normal
         business hours at the offices of the Servicer. The Servicer shall
         accurately and fully provide information regarding payment performance
         of the Mortgagors to the nationally recognized credit repositories.
         Nothing in this Section shall derogate from the obligation of the
         Servicer to observe any applicable law prohibiting disclosure of
         information regarding the Mortgagors and the failure of the Servicer to
         provide access as provided in this Section as a result of such
         obligation shall not constitute a breach of this Section.

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

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

         Section 3.13 Notices to the Rating Agencies. In addition to the other
notices required to be given to the Rating Agencies by the provisions of this
Agreement, the Trustee shall give notice to each Rating Agency, the Depositor
and the Seller of (a) any amendment to this Agreement, (b) the final
distribution on the Offered Certificates and (c) the occurrence of an Event of
Default actually known by the Trustee and the Seller or the Servicer shall give
notice to each Rating Agency, the Trustee, the Depositor and the Seller of (i)
the repurchase, purchase or substitution, as applicable, of any Mortgage Loan
pursuant to Section 2.03, 2.05 or 3.06 by the Seller or Servicer, as the case
may be and (ii) the occurrence of an Event of Default under Section 8.01.

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

         Section 3.15 Sub-Servicers and Sub-Servicing Agreements.

                  (a) The Servicer may enter into Sub-Servicing Agreements for
         any servicing and administration of Mortgage Loans with any institution
         that is in compliance with the laws of each state necessary to enable
         it to perform its obligations under such Sub-

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<PAGE>

         Servicing Agreement. The Servicer shall give notice to the Seller, the
         Trustee, the Depositor, the Rating Agencies and the PMI Insurer of the
         appointment of any Sub-Servicer. The Servicer shall not enter into any
         Sub-Servicing Agreement that does not provide for the servicing of the
         Mortgage Loans specified therein on a basis consistent with the terms
         of this Agreement or that otherwise violates the provisions of this
         Agreement. The Servicer may enter into, and make amendments to, any
         Sub-Servicing Agreement or enter into different forms of Sub-Servicing
         Agreements; provided, however, that any such amendments or forms shall
         be consistent with and not violate the provisions of this Agreement.

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

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

                  (d) The Servicer shall be entitled to terminate any
         Sub-Servicing Agreement and the rights and obligations of any
         Sub-Servicer pursuant to any Sub-Servicing Agreement in accordance with
         the terms and conditions of such Sub-Servicing Agreement. In the event
         of termination of any Sub-Servicer, all servicing obligations of such
         Sub-Servicer shall be assumed simultaneously by the Servicer without
         any act or deed on the part of such Sub-Servicer or the Servicer, and
         the Servicer either shall service directly the related Mortgage Loans
         or shall enter into a Sub-Servicing Agreement with a successor
         Sub-Servicer. The Servicer shall give written notice to the Trustee,
         the Depositor and the Seller of the termination of any Sub-Servicer.

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

         Section 3.16 Prefunding Account.

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<PAGE>

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

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

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

         Section 3.17 Capitalized Interest Account.

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

                  (b) The Capitalized Interest Account will be part of the Trust
         but not part of any REMIC Pool. Amounts held in the Capitalized
         Interest Account prior to the first Deposit Date shall be invested at
         the written direction of the Seller in Permitted Investments of the
         type specified in clause (f) of the definition of Permitted
         Investments, which Permitted Investments shall mature no later than the
         Deposit Date immediately following the end of the Funding Period. The
         Trustee shall not be liable for any losses on amounts invested in
         accordance with the provisions hereof. All interest and other

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<PAGE>

         investment earnings on amounts held in the Capitalized Interest Account
         (and any other amounts remaining on deposit therein in excess of the
         amounts to be so withdrawn and deposited into the Certificate Account)
         shall be paid or released by the Trustee to the Seller on the
         Distribution Date immediately following the end of the Funding Period.
         For federal and state income tax purposes the Seller shall be deemed to
         be the owner of the Capitalized Interest Account. Any losses realized
         in connection with any such investment shall be for the account of the
         Seller and the Seller shall deposit the amount of such loss (to the
         extent not offset by income from other investments) in the Capitalized
         Interest Account immediately upon the realization of such loss.

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

         Section 3.18 [Reserved]

         Section 3.19 [Reserved]

         Section 3.20 [Reserved]

         Section 3.21 Net Rate Cap Fund. The Trustee will establish the Net Rate
Cap Fund on the Closing Date. On the Closing Date, the Class C
Certificateholders will deposit, or cause to be deposited, into the Net Rate Cap
Fund $10,000. On each Distribution Date as to which there is a Net Rate Cap
Carryover, the Trustee has been directed by the Class C Certificateholders to,
and therefor will, deposit into the Net Rate Cap Fund the amounts described in
Section 5.01(c)(12), rather than distributing such amounts to the Class C
Certificateholders. On each such Distribution Date, the Trustee shall hold all
such amounts for the benefit of the Offered Certificateholders, and will
distribute such amounts to the applicable Certificateholders pursuant to Section
5.01(c)(12). If no Net Rate Cap Carryover is payable on a Distribution Date, the
Trustee shall deposit into the Net Rate Cap Fund on behalf of the Class C
Certificateholders an amount such that when added to other amounts already on
deposit in the fund, the aggregate amount on deposit therein is equal to
$10,000. For federal and state income tax purposes, the Class C
Certificateholders will be deemed to be the owners of the Net Rate Cap Fund and
all amounts deposited into the Net Rate Cap Fund (other than the initial $10,000
deposit) shall be treated as amounts distributed by REMIC I with respect to the
Class C Distribution Amount and Class C Carryforward Amount. Related amounts
held in the Net Rate Cap Fund and not distributable to any Offered
Certificateholders on any Distribution Date will be invested by the Trustee in
investments designated in writing by the Class C Certificateholders having
maturities on or prior to the next succeeding Distribution Date on which such
related amounts will be distributable to the applicable Class of
Certificateholders; provided, that, if no such designation is made by the Class
C Certificateholders, all such amounts shall remain uninvested. Upon the
termination of the Trust, or the payment in full of the Offered
Certificateholders, all amounts remaining on deposit in the Net Rate Cap Fund,
including any investment earnings remaining

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<PAGE>

therein, will be released from the lien of the Trust and distributed to the
Class C Certificateholders or their designees. The Net Rate Cap Fund will be
part of the Trust but not part of any REMIC Pool and any payments to the
applicable Offered Certificateholders of related Net Rate Cap Carryover will not
be payments with respect to a "regular interest" in a REMIC within the meaning
of Code Section 860G(a)(1).

         Section 3.22 Covenants and Representations Regarding Prepayment
Charges.

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

                  (b) Upon discovery by the Seller, the Depositor, the Servicer
         or a Responsible Officer of the Trustee of a breach of clause (a),
         which materially and adversely affects the right of the Servicer to any
         Prepayment Charge, the party discovering such breach shall give prompt
         written notice to the other parties. Within 60 days of the earlier of
         discovery by the Seller, or receipt of notice by the Seller of a
         breach of clause (a) above, then the Seller shall cure such breach in
         all material respects. If the representation in clause (a) above is
         breached, in addition to any rights the Trustee may have hereunder, the
         Seller must pay to the Servicer the amount of the scheduled Prepayment
         Charge, less any amount previously collected by the Servicer in respect
         of such Prepayment Charge.

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

         Section 3.24 Advance Facility.

                  (a) Notwithstanding anything to the contrary contained herein,
         the Servicer is hereby authorized to enter into a financing or other
         facility (an "Advance Facility") under which (l) the Servicer sells,
         assigns or pledges to another Person (an "Advancing Person") the
         Servicer's rights under this Agreement to be reimbursed for any Monthly
         Advances or Servicing Advances (collectively, "Advances") and/or (2) an
         Advancing Person agrees to fund some or all Monthly Advances or
         Servicing Advances required to be made by the Servicer pursuant to this
         Agreement. No consent of the Trustee, the Depositor, the Seller, the
         Certificateholders or any other party is required before the Servicer
         may enter into an Advance Facility. Notwithstanding the existence of
         any

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<PAGE>

         Advance Facility under which an Advancing Person agrees to fund Monthly
         Advances and/or Servicing Advances on the Servicer's behalf, the
         Servicer shall remain obligated pursuant to this Agreement to make
         Monthly Advances and Servicing Advances pursuant to and as required by
         this Agreement, and shall not be relieved of such obligations by virtue
         of such Advance Facility.

                  (b) Reimbursement amounts ("Reimbursement Amounts") shall
         consist solely of amounts in respect of Monthly Advances and/or
         Servicing Advances made with respect to the Mortgage Loans for which
         the Servicer would be permitted to reimburse itself in accordance with
         this Agreement, assuming the Servicer had made the related Monthly
         Advance(s) and/or Servicing Advance(s).

                  (c) The Servicer shall maintain and provide to any successor
         Servicer a detailed accounting on a loan-by-loan basis as to amounts
         advanced by, pledged or assigned to, and reimbursed to any Advancing
         Person. The successor Servicer shall be entitled to rely on any such
         information provided by the predecessor Servicer, and the successor
         Servicer shall not be liable for any errors in such information.

                  (d) An Advancing Person who purchases or receives an
         assignment or pledge of the rights to be reimbursed for Monthly
         Advances and/or Servicing Advances, and/or whose obligations hereunder
         are limited to the funding of Monthly Advances and/or Servicing
         Advances shall not be required to meet the criteria for qualification
         of a subservicer set forth in this Agreement.

                  (e) The documentation establishing any Advance Facility shall
         require that Reimbursement Amounts distributed with respect to each
         Mortgage Loan be allocated to outstanding unreimbursed Monthly Advances
         or Servicing Advances (as the case may be) made with respect to that
         Mortgage Loan on a "first-in, first out" (FIFO) basis. Such
         documentation shall also require the Servicer to provide to the related
         Advancing Person or its designee loan-by-loan information with respect
         to each Reimbursement Amount distributed to such Advancing Person or to
         a trustee or custodian (an "Advance Facility Trustee") on each
         Distribution Date, to enable the Advancing Person or Advance Facility
         Trustee to make the FIFO allocation of each Reimbursement Amount with
         respect to each Mortgage Loan. The Servicer shall remain entitled to be
         reimbursed by the Advancing Person or Advance Facility Trustee for all
         Monthly Advances and Servicing Advances funded by the Servicer to the
         extent the related rights to be reimbursed therefor have not been sold,
         assigned or pledged to an Advancing Person.

                  (f) Any amendment to this Section 3.24 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 3.24, including amendments to add provisions relating to a
         successor Servicer, may be entered into by the Trustee, the Depositor,
         the Seller and the Servicer without the consent of any
         Certificateholder, notwithstanding anything to the contrary in this
         Agreement.

                  (g) Prior to entering into an Advance Facility, the Servicer
         shall notify the lender under such facility in writing that: (a) the
         Advances financed by and/or pledged to

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<PAGE>

         the lender are obligations owed to the Servicer on a non-recourse basis
         payable only from the cash flows and proceeds received under this
         Agreement for reimbursement of such Advances only to the extent
         provided herein, and the Trustee is not otherwise obligated or liable
         to repay any Advances financed by the lender; (b) the Servicer will be
         responsible for remitting to the lender the applicable amounts
         collected by it as reimbursement for Advances funded by the lender,
         subject to the restrictions and priorities created in 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 the lender. The Servicer shall pay all costs and expenses
         of the Trustee in connection with any amendment of this Section 3.24.

                                   ARTICLE IV

                                REMITTANCE REPORT

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

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

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

                  (a) the total amount of payments in respect of or allocable to
         interest on the Mortgage Loans received from the related Mortgagors by
         the Servicer during such Collection Period (including any net income
         from REO Properties received during the related Collection Period);

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

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

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

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

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

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

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

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

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

                  (k) the related Monthly Servicing Fee;

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

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

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

                  (o) the number and Principal Balance of Mortgage Loans that,
         as of the end of the preceding calendar month were (i) 30 or more days
         contractually delinquent, (ii) 60 or more days contractually
         delinquent, (iii) 90 or more days contractually delinquent, (iv) in
         foreclosure, (v) as to which the Mortgagor is in bankruptcy to the
         knowledge of the Servicer, or (vi) as to which the related Mortgaged
         Property was an REO Property;

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

                                      -69-

<PAGE>

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

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

                                   ARTICLE V

                  PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS

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

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

                  (c) On each Distribution Date, after subtracting amounts
         payable toward the Trustee Fee, the Monthly Servicing Fee and the
         Primary Mortgage Insurance Premium, if any, the Trustee shall withdraw
         from the Certificate Account the balance of Available Funds for such
         Distribution Date, and make the following disbursements and transfers
         in the order of priority described below:

                  1. Concurrently, to each class of Senior Certificates, the
         related Class Interest Distribution for the applicable Distribution
         Date, allocated pro rata based on entitlement;

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

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<PAGE>

                  3. To the Class A Certificates, the Senior Principal
         Distribution Amount for the applicable Distribution Date, excluding any
         Subordination Increase Amount included in that amount, distributed in
         the following order of priority:

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

                           B. Sequentially, to the Class A-1, Class A-2, Class
                  A-3 and Class A-4 Certificates, in that order, until the
                  respective Certificate Principal Balances thereof have been
                  reduced to zero.

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

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

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

                  On each Distribution Date, any Excess Interest shall be paid
         in the following order of priority, in each case to the extent of the
         Excess Interest remaining undistributed:

                  7. To the Offered Certificates, the Subordination Increase
         Amount for the applicable Distribution Date, allocated in the order set
         forth in clauses 3 through 6 above.

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

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

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

                  11. To the Trustee, in an amount equal to its reasonable
         expenses, disbursements and advances payable to the Trustee pursuant to
         Section 9.05(b) and not otherwise reimbursed to the Trustee.

                  12. To fund a distribution to Class C Certificateholders of
         the Class C Distribution Amount plus any Class C Carryforward Amount;
         provided that, pursuant to Section 3.21 hereof, on any Distribution
         Date as to which there is any unpaid Net Rate Cap Carryover, the
         Trustee will deposit from amounts that would otherwise be

                                      -71-

<PAGE>

         distributable to the Class C Certificateholders funds into the Net Rate
         Cap Fund for immediate application pursuant to this clause of the
         distribution of the related Net Rate Cap Carryover to the applicable
         Class of Offered Certificates in the same order of priority as the
         respective Class Monthly Interest Amounts are payable pursuant to
         clauses 1 and 2 above. Such deposit will constitute payment in full of
         and satisfaction of all obligations hereunder to distribute amounts
         equal to the related Net Rate Cap Carryover to the Class C
         Certificateholders, including for purposes of Section 9.16, and the
         Trustee, the Servicer and the Class C Certificateholders agree hereby
         appropriately to report any deposit of Net Rate Cap Carryover as if
         corresponding distributions had been made to the Class C
         Certificateholders for federal income tax and accounting purposes with
         respect to the Class C Distribution Amount and Class C Carryforward
         Amount. (All distributions or deemed distributions with respect to the
         Class C Distribution Amount and Class C Carryforward Amount shall be
         applied first to the interest components of such amounts and second to
         reduce the Class C Certificate Principal Balance).

                  13. To the Class R Certificates, the remainder.

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

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

         Section 5.02 Monthly Advances; Servicing Advances.

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

                                      -72-

<PAGE>

         that the Servicer reasonably believes that the amount of such advance
         will not be recoverable from subsequent collections on the related
         Mortgage Loan or from Liquidation Proceeds from the related Mortgage
         Loan in the event such Mortgage Loan is liquidated. The Servicer shall
         not have any obligation to make Monthly Advances relating to Relief Act
         Shortfalls.

                  The Servicer shall be permitted to fund all or a portion of
         any Monthly Advance required to be made on a Deposit Date on any
         Business Day and to reimburse itself for any Monthly Advance paid from
         the Servicer's own funds out of amounts on deposit in the Collection
         Account in respect of collections on any Mortgage Loan that are not
         required to be deposited on such Deposit Date in the Certificate
         Account as any portion of Available Funds for the related Distribution
         Date; provided, however, that the Servicer shall be required to replace
         any such amounts by deposit to the Collection Account on or before the
         next Deposit Date to the extent constituting a portion of the Available
         Funds for the related Distribution Date. The Servicer may recover
         Monthly Advances made from its own funds (i) from the Mortgagor on
         whose behalf such Monthly Advance was made and from collections on the
         related Mortgage Loan, including Liquidation Proceeds, Insurance
         Proceeds and such other amounts as may be collected by the Servicer
         from the Mortgagor or otherwise relating to the Mortgage Loan and (ii)
         in the case of a Monthly Advance that the Servicer reasonably believes
         will not be recoverable from the related Mortgage Loan, from
         collections or recoveries on any Mortgage Loan, in each case prior to
         the payment of such amounts to the Collection Account or to any other
         party to this Agreement.

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

                                      -73-

<PAGE>

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

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

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

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

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

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

                  (f) the aggregate of the Principal Balances of all Mortgage
         Loans after giving effect to any payments of principal on such
         Distribution Date;

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

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

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

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

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

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

                  (m) the Basic Principal Amount with respect to the Mortgage
         Loans;

                                      -74-

<PAGE>

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

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

                  (p) the amount of any draw to be made on any PMI Policy on the
         related Distribution Date, and the amounts to be paid to the PMI
         Insurer, if any, as of such Distribution Date in respect of the PMI
         Insurer Premiums with respect to each PMI Mortgage Loan;

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

                  (r) the Certificate Principal Balance of each Class of
         Certificates then outstanding after giving effect to all payments or
         principal on such Distribution Date.

         In the case of information furnished pursuant to subclauses (a), (b),
(c) and (d) above, the amounts shall be expressed as a dollar amount per
Certificate with a $1,000 principal denomination.

         Within 90 days after the end of each calendar year, the Trustee shall
mail such report to Greenwich Capital Markets, Inc., 600 Steamboat Road,
Greenwich, Connecticut 06830, Attention: James Raezer (which report shall
include, in addition to the information contained in reports to others
hereunder, the total amount of interest on the Mortgage Loans for the period
covered by such report), and to each Person who at any time during the calendar
year was an Offered Certificateholder, a statement for each Certificateholder
containing the information set forth in subclauses (a) through (c) above,
aggregated for such calendar year or, in the case of each Person who was an
Offered Certificateholder for a portion of such calendar year, setting forth
such information for each month thereof for the portion of the year during which
such Person was a Certificateholder. The Servicer shall provide any other
information necessary in order to report income in respect of the
Certificateholders for federal income tax purposes.

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

                                      -75-

<PAGE>

                                   ARTICLE VI

                                THE CERTIFICATES

         Section 6.01 The Certificates.

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

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

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

                  Section 6.02 Registration of Transfer and Exchange of
         Certificates.

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

         Upon surrender for registration or transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose (as designated by
the Trustee from time to time) and upon satisfaction of the conditions set forth
in Section 6.02(b) and (c), the Trustee shall execute, authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Certificates of the same Class and of a like aggregate Percentage Interest. As
of the Closing

                                      -76-

<PAGE>

Date, the Trustee designates its office located on 648 Grassmere Park Road,
Nashville, TN 37211, Attn: Transfer Department for such purpose.

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

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

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

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

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

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

         No legal or beneficial interest in all or any of the Class R
Certificates may be transferred directly or indirectly to: (i) a Disqualified
Organization or an agent of a Disqualified Organization (including a broker,
nominee or middleman), (ii) an entity that holds REMIC residual securities as
nominee to facilitate the clearance and settlement of such securities through
electronic book-entry changes in accounts of participating organizations (a
"Book-Entry Nominee"), (iii) an individual, corporation, partnership or other
Person unless such transferee

                                      -77-

<PAGE>

(A) is not a Foreign Person or (B) is a Foreign Person that will hold such Class
R Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee with, and agrees
to periodically furnish in accordance with Treasury regulations, an effective
Internal Revenue Service Form W-8ECI (or any applicable successor form) or (C)
is a Foreign Person that has delivered (at the expense of the transferee) to
both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of the Class R Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of the Class R Certificate will not be
disregarded for federal income tax purposes (any such Person who is not covered
by clause (A), (B) or (C) above being referred to herein as a "Non-permitted
Foreign Holder") or (iv) to an ERISA Plan or an entity, including an insurance
company separate account or general account, whose underlying assets include
ERISA Plan assets by reason of an ERISA Plan's investment in the entity or a
Person investing the assets of an ERISA Plan or such an entity, whether as
nominee, trustee, agent or otherwise (such plan, entity or Person, an "ERISA
Prohibited Holder"), and any such purported transfer shall be void and have no
effect.

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

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

         Upon notice to the Servicer that any legal or beneficial interest in
any Class R Certificate has been transferred, directly or indirectly, to a
Disqualified Organization in contravention of the foregoing restrictions or to a
pass-through entity as defined in the REMIC Provisions an interest

                                      -78-

<PAGE>

of which is held by a Disqualified Organization, the Servicer agrees to furnish
to the Internal Revenue Service and to any transferor of the Class R Certificate
or such agent or such pass-through entity such information as may be required to
be delivered thereto by the Code as necessary to the application of Code Section
860E(e) and described in Treasury regulations ss.1.860D-1(b)(5)(ii), or any
successor provision, including, but not limited to, the present value of the
total anticipated excess inclusions with respect to the Class R Certificate (or
portion thereof) for periods after such transfer. Such information shall be
provided in the manner described in Treasury regulations ss.1.860E-2(a)(5), or
any successor provision. At the election of the Servicer, the cost to the
Servicer of computing and furnishing such information may be charged to the
transferor or such agent referred to above; provided, however, that the Servicer
shall in no event be excused from furnishing such information.

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

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

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

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

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

         (d) The Book-Entry Certificates shall, subject to Section 6.02(e), at
all times remain registered in the name of the Depository or its nominee and at
all times: (i) registration thereof may not be transferred by the Trustee except
to another Depository; (ii) the Depository shall maintain book-entry records
with respect to the Certificate Owners and with respect to ownership and
transfers of such Certificates; (iii) ownership and transfers of registration of
the Certificates issued in book-entry form on the books of the Depository shall
be governed by

                                      -79-

<PAGE>

applicable rules established by the Depository and the rights of Certificate
Owners with respect to Book-Entry Certificates shall be governed by applicable
law and agreements between such Certificate Owners and the Depository,
Depository Participants, and indirect participating firms; (iv) the Depository
may collect its usual and customary fees, charges and expenses from its
Depository Participants; (v) the Trustee shall deal with the Depository as the
authorized representative of the Certificate Owners of the Book-Entry
Certificates for all purposes including the making of payments due on the
Book-Entry Certificates and exercising the rights of Holders of Book-Entry
Certificates under this Agreement; (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository; (vii)
Certificate Owners shall not be entitled to certificates for the Book-Entry
Certificates and (viii) the Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by holders of
Book-Entry Certificates and give notice to the Depository of such record date.

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

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

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

         "Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of

                                      -80-

<PAGE>

transfer, exchange, or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein."

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

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

         Section 6.05 Actions of Certificateholders.

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

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

                                      -81-

<PAGE>

                  (c) Any request, demand, authorization, direction, notice,
         consent, waiver or other act by a Certificateholder shall bind every
         Holder of every Certificate issued upon the registration of transfer
         thereof or in exchange therefor or in lieu thereof, in respect of
         anything done, or omitted to be done, by the Trustee, the Seller, the
         Depositor or the Servicer in reliance thereon, whether or not notation
         of such action is made upon such Certificate.

                                  ARTICLE VII

                   THE SERVICER, THE SELLER AND THE DEPOSITOR

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

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

         Section 7.03 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of its directors, officers, employees or agents
shall be under any liability to the Trustee, the Trust or the Certificateholders
for any action taken or for refraining from the taking of any action by the
Servicer pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such person
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of the duties of the
Servicer or by reason of reckless disregard of the obligations and duties of the
Servicer hereunder. The Servicer and any director, officer, employee or agent of
the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Servicer and any director or officer or employee or agent of the
Servicer shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or negligence in the
performance of its duties hereunder or by reason of its reckless disregard of
obligations and duties hereunder. The Servicer shall not be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
duties to service the Mortgage Loans in accordance with this Agreement,

                                      -82-

<PAGE>

and that in its opinion may involve it in any expense or liability; provided,
however, the Servicer may undertake any such action which it may deem necessary
to protect itself, the rights of the other parties to the Agreement or the
interests of the Certificateholders. In such event, the Servicer shall be
entitled to receive prompt reimbursement of reasonable legal expenses and costs
for such action, and any liability resulting therefrom, from the Trust.

         Section 7.04 Servicer Not to Resign. Subject to the provisions of
Section 7.02 regarding the merger or consolidation of the Servicer into or with
another entity, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the performance of its
duties or obligations hereunder is no longer permissible under applicable law or
regulation or are in material conflict by reason of applicable law or regulation
with any other activities carried on by it at the date of this Agreement or (ii)
upon satisfaction of each of the following conditions: (a) the Servicer has
proposed a successor servicer in accordance with the limitations of Section 8.02
(an "Approved Servicer") to the Seller, the Depositor and the Trustee in writing
and such proposed Approved Servicer is reasonably acceptable to the Seller, the
Depositor and the Trustee, (b) the Approved Servicer shall undertake the duties
of the Servicer on the same terms and conditions as set forth herein or as
otherwise agreed to by the Seller, the Depositor and the Trustee and (c) each
Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the Approved Servicer stating that the proposed appointment of
such Approved Servicer as Servicer hereunder will not result in the reduction or
withdrawal of the then current ratings of the Offered Certificates; provided,
however, that no such resignation by the Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Approved Servicer
shall have assumed the Servicer's responsibilities and obligations hereunder or
the Trustee shall have designated a successor servicer in accordance with
Section 8.02. Any such resignation shall not relieve the Servicer of
responsibility for any of the obligations specified in Sections 8.01 and 8.02 as
obligations that survive the resignation or termination of the Servicer. Any
such determination permitting the resignation of the Servicer pursuant to clause
(i) above shall be evidenced by an Opinion of Counsel to such effect delivered
to the Seller, the Depositor and the Trustee. Each of the Rating Agencies shall
be given written notice of a resignation of the Servicer pursuant to this
Section.

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

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

         Any collections received by the Servicer after termination or
resignation shall be endorsed by it and remitted directly and immediately to the
Trustee or the successor servicer. The Servicer shall be entitled to be
reimbursed from the Trust at the time of termination or

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<PAGE>

resignation the Monthly Servicing Fee through the day on which it is terminated
or resigns as Servicer (which may be pro rated for a partial month).

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

         The Servicer agrees to cooperate reasonably with the successor servicer
in effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide to the successor servicer all
documents and records reasonably requested by it to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the successor
servicer all amounts that then have been or should have been deposited in the
Collection Account, or that are thereafter received with respect to the Mortgage
Loans. The successor servicer shall not be held liable by reason of any failure
to make, or any delay in making, any distribution hereunder or any portion
thereof caused by (i) the failure of the Servicer to deliver, or any delay in
delivering, cash, documents or records to it, or (ii) restrictions imposed by
any regulatory authority having jurisdiction over the Servicer.

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

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

                                      -84-

<PAGE>

                                  ARTICLE VIII

                                     DEFAULT

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

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

                  (b) Failure on the part of the Servicer duly to observe or
         perform in any material respect any other covenants or agreements of
         the Servicer set forth in the Certificates or in this Agreement, which
         failure (i) materially and adversely affects the Certificateholders and
         (ii) continues unremedied for a period of 30 days after the date on
         which written notice of such failure (which notice shall refer
         specifically to this Section), requiring the same to be remedied, shall
         have been given to the Servicer by the Trustee or to the Servicer and
         the Trustee by the Holders of Certificates evidencing Voting Interests
         represented by all Certificates aggregating not less than 51%;
         provided, however, that in the -------- ------- case of a failure that
         cannot be cured within thirty (30) days, the cure period may be
         extended if the Servicer can demonstrate to the reasonable satisfaction
         of the Trustee that the Servicer is diligently pursuing remedial
         action;

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

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

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

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<PAGE>

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

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

         Section 8.02 Trustee to Act; Appointment of Successor. (a)On and after
the time the Servicer receives a notice of termination pursuant to Section 8.01,
the Trustee shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall succeed to all the rights, powers and privileges
of the Servicer hereunder and be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, including without limitation, the obligation to make Monthly Advances
and to pay Compensating Interest. As compensation therefor, the Trustee shall be
entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
foregoing, if the Trustee shall be unwilling so to act, or the Trustee is
legally unable so to act, the Trustee with the consent of the Rating Agencies
may promptly appoint, or petition a court of competent jurisdiction to appoint
any established housing and home finance institution or any institution that
regularly services home equity loans that is then servicing a home equity loan
portfolio and having all licenses, permits and approvals required by applicable
law, and having a net worth of not less than $10,000,000 as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder; provided that any such
successor servicer shall be acceptable to the Rating Agencies, and, if such
successor servicer shall not have been appointed by the Trustee, the Trustee
shall be provided 5 Business Days' prior notice of any such appointment; and
provided further that the appointment of any such successor servicer will not
result in the

                                      -86-

<PAGE>

qualification, reduction or withdrawal of the rating assigned to any subclass of
Offered Certificates by any Rating Agency. Pending appointment of a successor to
the Servicer hereunder, unless the Trustee is prohibited by law from so acting,
the Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation shall
be in excess of that permitted the Servicer hereunder; and provided further
that, if due to market conditions, the parties thereto shall agree to
compensation in excess of that permitted the Servicer hereunder, the Trustee
shall not be responsible for any such amounts in excess thereof. Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. The appointment of a successor
servicer shall not affect any liability of the predecessor Servicer that may
have arisen under this Agreement prior to its termination as Servicer (including
without limitation, any liability for a deductible amount pursuant to the last
sentence of Section 3.04), nor shall any successor servicer be liable for any
acts or omissions of the predecessor Servicer or for any breach by such Servicer
or the Seller or Depositor of any of its representations or warranties contained
herein or in any related document or agreement. Each of the Rating Agencies
shall be given written notice of the appointment of a successor servicer
pursuant to this Section.

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

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

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

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

                                      -87-

<PAGE>

                                   ARTICLE IX

                                   THE TRUSTEE

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

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

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

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

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

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

                  (e) the Trustee shall not be required to expend or risk its
         own funds or otherwise incur financial liability in the performance of
         any of its duties hereunder, or in the exercise of any of its rights or
         powers, if there is reasonable ground for believing that

                                      -88-

<PAGE>

         the repayment of such funds or adequate indemnity against such risk or
         liability is not reasonably assured to it, and none of the provisions
         contained in this Agreement shall in any event require the Trustee to
         perform, or be responsible for the manner of performance of, any of the
         obligations of the Servicer under this Agreement, except during such
         time, if any, as the Trustee shall be the successor to, and be vested
         with the rights, duties, powers and privileges of, the Servicer in
         accordance with the terms of this Agreement.

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

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

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

                  (c) The Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Agreement, or to
         institute, conduct or defend any litigation hereunder or in relation
         hereto, at the request, order or direction of any of the
         Certificateholders, pursuant to the provisions of this Agreement,
         unless the Person so requesting, ordering or directing same shall have
         offered to the Trustee reasonable security or indemnity against the
         costs, expenses and liabilities that may be incurred therein or
         thereby; the right of the Trustee to perform any discretionary act
         enumerated in this Agreement shall not be construed as a duty, and the
         Trustee shall not be answerable for other than its negligence or
         willful misconduct in the performance of any such act; nothing
         contained herein shall, however, relieve the Trustee of the
         obligations, upon the occurrence of an Event of Default known to a
         Responsible Officer of the Trustee (which has not been cured), to
         exercise such of the rights and powers vested in it by this Agreement,
         subject to the provisions of Section 9.13, and to use the same degree
         of care and skill in their exercise as a prudent man would exercise or
         use under the circumstances in the conduct of his own affairs;

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

                  (e) Prior to the occurrence of an Event of Default and after
         the curing of all Events of Default that may have occurred, the Trustee
         shall not be bound to make any investigation into the facts or matters
         stated in any resolution, certificate, statement, instrument, opinion,
         report, notice, request, consent, order, approval, bond or other paper

                                      -89-

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         or documents, unless requested in writing to do so by the Holders of
         Certificates evidencing Voting Interests represented by all
         Certificates (or all affected Certificates, as appropriate) aggregating
         not less than 51%; provided, however, that if the payment within a
         reasonable time to the Trustee of the costs, expenses or liabilities
         likely to be incurred by it in the making of such investigation is, in
         the opinion of the Trustee, not reasonably assured to the Trustee by
         the security afforded to it by the terms of this Agreement, the Trustee
         may require reasonable indemnity against such cost, expense or
         liability as a condition to such proceeding; the reasonable expense of
         every such examination shall be paid by the Servicer or, if paid by the
         Trustee, shall be reimbursed by the Servicer upon demand; and nothing
         in this clause (e) shall derogate from the obligation of the Servicer
         to observe any applicable law prohibiting disclosure of information
         regarding the Mortgagors; and

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

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

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

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

                  (a) On each Distribution Date, the Trust shall pay to the
         Trustee pursuant to Section 5.01(b) an amount equal to the Trustee Fee
         described in the definition thereof (including any fees and expenses of
         a co-trustee or separate trustee appointed under Section 9.10) as
         compensation for all services rendered by the Trustee (and any such
         co-trustee or separate trustee) in the execution of the trusts hereby
         created and in the exercise and performance of any of the powers and
         duties hereunder of the Trustee (and any such co-trustee or separate
         trustee).

                  (b) The Trust shall pay or reimburse to the Trustee pursuant
         to clause 11 of Section 5.01(c) its reasonable expenses, disbursements
         and advances incurred or made by the Trustee in accordance with any of
         the provisions of this Agreement (including the

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         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 that is otherwise reimbursed to the Trustee pursuant to
         Section 9.05(c) or by the Seller pursuant to Section 9.05(d) below;
         provided, however, that, subject to Sections 9.01(e) and 9.02(c) and
         (e), the Trustee shall not refuse to perform any of its duties
         hereunder solely as a result of the failure of the Trust to pay or
         reimburse such expenses, disbursements or advances.

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

                  (d) The Seller agrees to indemnify the Trustee from, and hold
         it harmless against, any and all losses and liabilities, damages,
         claims or expenses (including reasonable attorneys' fees) incurred in
         connection with this Agreement or the Certificates except (i) to the
         extent such amounts are otherwise reimbursable to the Trustee by the
         Servicer pursuant to clause (c) above, and (ii) to the extent the
         negligence, bad faith or intentional misconduct of the Trustee
         contributes to the loss, liability, damage, claim or expense.

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

         Section 9.06 Eligibility Requirements for the Trustee. The Trustee
hereunder shall at all times be a bank or other depository institution doing
business under the laws of the United States or any state thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $100,000,000 and subject to supervision or examination
by federal or state authority and rated at least BBB by Standard & Poor's and
Baa2 by Moody's. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 9.07.

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

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

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

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

         Section 9.08 Successor Trustee. Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Servicer
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Seller, the Servicer, the Depositor and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations.

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

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

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successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Servicer.

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

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

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

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

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

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

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

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

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

         Section 9.11 Compliance with REMIC Provisions. The Trustee shall
neither knowingly nor intentionally take any action or omit to take any action
in the performance of its duties hereunder that would cause any REMIC Pool to
fail to qualify as a REMIC or that would cause the imposition of a tax on any
REMIC Pool. The Trustee shall: (a) prepare and file, or cause to be prepared and
filed, such federal, state and local income tax and information returns or
reports using the calendar year as the taxable year for each REMIC Pool when and
as required by the REMIC Provisions and other applicable federal, state and
local income tax laws, which returns or reports shall be signed by the Trustee
or such other person as may be required thereby; (b) make an election, on behalf
of each REMIC Pool, to be treated as a REMIC and make the appropriate
designations, if applicable, in accordance with Section 9.16 on the federal
income tax return of the REMIC Pool for its first taxable year, in accordance
with the REMIC Provisions; (c) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders all information reports, or furnish or
cause to be furnished by telephone, mail, publication or other appropriate
method such information, as and when required to be provided to them in
accordance with the Code; (d) exercise reasonable care not to allow the creation
of any "interests" in any REMIC Pool within the meaning of Code Section
860D(a)(2) other than the interests represented by the Certificates (other than
the Class R-II Interests) in the case of REMIC I, and the REMIC II Interests in
the case of REMIC II; and (e) within 30 days of the Startup Day, furnish or
cause to be furnished to the Internal Revenue Service, on Form 8811 or as may
otherwise be required by the Code, the name, title, address, and telephone
number of the person that Certificateholders may contact for tax information
relating to their Certificates (and the Trustee shall act as the

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representative of each REMIC Pool for this purpose), together with such
additional information as may be required by such Form, and shall update such
information at the time and in the manner required by the Code. Each Class R
Certificateholder shall designate the Servicer, if permitted by the Code and
applicable law, to act as "tax matters person" for the related REMIC Pool within
the meaning of Treasury regulations Section 1.860F-4(d), and the Servicer is
hereby designated as agent of each Class R Certificateholder for such purpose
(or if the Servicer is not so permitted, the Holder of the related Class R
Certificate shall be the tax matters person in accordance with the REMIC
Provisions).

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

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

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

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

                           (iii) the Trustee may take any other action deemed
                  proper by the Trustee that is not inconsistent with such
                  direction; provided, however, that the Trustee need not take
                  any action that it reasonably determines might involve it in
                  liability unless it has been satisfactorily indemnified and,
                  with respect to actions directed by Certificateholders, may be
                  unjustly prejudicial to the Holders not so directing.

         Section 9.14 Tax Returns. The Trustee shall maintain all information in
its possession as may be required in connection with the preparation of all
federal and, if applicable, state and local income tax and information returns
of each REMIC Pool (including, but not limited to, tax reporting under the REMIC
Provisions for each REMIC Pool) and shall prepare, execute and file as required
all such returns. The Trustee shall include in the first federal income tax
return the information required to be included therein under the REMIC
Provisions, including, but not limited to, Treasury regulation ss.1.860D-1(d)(2)
and Treasury regulation ss.1.860F-4(b)(2), or any successor provisions . The
Servicer shall report all required tax information to Mortgagors in

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accordance with applicable law. To the extent directly applicable, the
Prepayment Assumption used in pricing the Offered Certificates will be used in
preparing any reports concerning or touching on interest payments made or
original issue discount with respect to the Certificates.

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

         Section 9.16 Miscellaneous REMIC Matters. REMIC Pool, shall promptly
forward a copy of such notice to the Servicer.

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

         (b) REMIC II will be evidenced by (x) the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-M-1, Class II-M-2, Class II-B and Class
II-Q Interests (the "REMIC II Regular Interests"), which will be uncertificated
and non-transferable and are hereby designated as the "regular interests" in
REMIC II and (y) the Class R-II Certificates, which are hereby designated as the
single "residual interest" in REMIC II (the REMIC II Regular Interests, together
with the Class R-II Certificates, the "REMIC II Interests"). The REMIC II
Regular Interests shall be recorded on the records of REMIC II as being issued
to and held by the Trustee on behalf of REMIC I.

         The Basic Principal Amount shall be allocated 99% to the Class II-Q
Certificate and 1% to the Class II-A-1, Class II-A-2, Class II-A-3, Class
II-A-4, Class II-M-1, Class II-M-2 and Class II-B Interests until paid in full.
The aggregate amount of the Basic Principal Amount allocated to the Class
II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-M-1, Class II-M-2 and
Class II-B Interests shall be apportioned among such classes in the same manner
as such amount is payable with respect to the Class A-1, Class A-2, Class A-3,
Class A-4, Class M-1, Class M-2 and Class B Certificates, respectively. The
Excess Overcollateralization Amount shall be allocated entirely to the Class
II-Q Certificates until paid in full.

         On any Distribution Date, any interest paid with respect to the
Mortgage Loans that is allocable to payments of principal on the Certificates
pursuant to Section 5.01(c) (7) (the "Turbo Amount") will not be payable to the
REMIC II Regular Interests. Instead, a portion of the interest payable with
respect to the Class II-Q Interest which equals 1% of the Turbo Amount will be
payable as a reduction of the principal balances of the Class II-A-1, Class
II-A-2, Class II-A-3, Class II-A-4, Class II-M-1, Class II-M-2 and Class II-B
Interests in the same manner as the Turbo Amount is allocated among the Class
A-1, Class A-2, Class A-3, Class A-4, Class M-1, Class M-2 and Class B
Certificates, respectively (and will be accrued and added to principal on the
Class II-Q Interest).

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         Losses on the Mortgage Loans shall be applied such that after all
distributions have been made on such Distribution Date, the principal balances
of the Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-M-1,
Class II-M-2 and Class II-B Interests equal 1% of the principal balances of the
Class A-1, Class A-2, Class A-3, Class A-4, Class M-1, Class M-2 and Class B
Certificates, respectively, and the principal balance of the Class II-Q Interest
equals the Pool Balance less an amount equal to the aggregate principal balances
of the Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-M-1,
Class II-M-2 and Class II-B Interests.

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

                                     Pass-        Allocation         Allocation
REMIC II            Initial         Through           of                 of
Interests           Balance          Rate         Principal           Interest
---------           -------          ----         ---------           --------
 II-A-1           $    655,000        (1)            (3)              (4),(5)
 II-A-2           $    500,000        (1)            (3)              (4),(5)
 II-A-3           $    215,000        (1)            (3)              (4),(5)
 II-A-4           $    117,500        (1)            (3)              (4),(5)
 II-M-1           $    113,750        (1)            (3)              (4),(5)
 II-M-2           $     78,750        (1)            (3)              (4),(5)
 II-B             $     70,000        (1)            (3)              (4),(5)
 II-Q             $173,250,000        (1)            (3)              (4),(5)
 R-II             $          0         0%             N/A              N/A(6)

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

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

(2)      [Reserved].

(3)      Principal will be allocated to and apportioned among the Class A-1,
         Class A-2, Class A-3, Class A-4, Class M-1, Class M-2 and Class B
         Certificates, in the same proportion as principal is payable with
         respect to such Certificates, except that a portion of such principal
         in an amount up to the Excess Overcollateralization Amount shall first
         be allocated as a payment of interest to the Class C Certificates, and
         all principal will be allocated to the Class C Certificates after the
         principal balances of the Class A-1, Class A-2, Class A-3, Class A-4,
         Class M-1, Class M-2 and Class B Certificates have been reduced to
         zero.

(4)      Except as provided in note (5), interest with respect to this REMIC II
         Regular Interest will be allocated among the Class A-1, Class A-2,
         Class A-3, Class A-4, Class M-1, Class

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         M-2 and Class B Certificates in the same proportion as interest is
         payable on such Certificates.

(5)      Any interest with respect to this REMIC II Regular Interest in excess
         of the product of (i) 100 times the weighted average coupon of the
         Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-M-1,
         Class II-M-2, Class II-B and Class II-Q Interests, where each of such
         REMIC II Regular Interests, other than the Class II-Q Interest, is
         first subject to a cap and floor equal to the Class A-1, Class A-2,
         Class A-3, Class A-4, Class M-1, Class M-2 and Class B Pass-Through
         Rates, respectively, and the Class II-Q Interest is subject to a cap
         equal to 0%, and (ii) the principal balance of this REMIC II Regular
         Interest, shall not be allocated to the Class A-1, Class A-2, Class
         A-3, Class A-4, Class M-1, Class M-2 or Class B Certificates, but will
         be allocated to the Class C Certificates. However, the Class C
         Certificates shall be subordinated to the extent provided in Section
         5.01.

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

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

                  (d) The Closing Date is hereby designated as the "Startup Day"
         of each of REMIC I and REMIC II within the meaning of Section
         860G(a)(9) of the Code. The "latest possible maturity date", solely for
         purposes of Treasury regulation ss.1.860G-1(a)(4)(iii), of each of the
         REMIC II Regular Interests and each of the "regular interests" with
         respect to REMIC I is June 25, 2036.

                                   ARTICLE X

                                   TERMINATION

         Section 10.01 Termination Upon Purchase or Liquidation of All Mortgage
Loans. Subject to Section 10.02, the respective obligations and responsibilities
hereunder of the Servicer, the Seller, the Depositor and the Trustee (other than
the obligation of the Trustee to make certain payments to Certificateholders
after the final Distribution Date and the obligation of the Seller to send
certain notices as hereinafter set forth) and the Trust created hereby shall
terminate with respect to all Certificates upon the last action required to be
taken by the Trustee on the final Distribution Date pursuant to this Article
following the earlier of (a) the purchase by the Servicer of all Mortgage Loans
then remaining in the Trust and all property acquired by the Trust in respect of
any such Mortgage Loan at a price equal to the sum of (x) 100% of the

                                      -98-

<PAGE>

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

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

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

         If the termination of the Trust is in connection with a purchase of the
assets of the Trust by the Servicer pursuant to clause (a) of the first
paragraph in this Section, the Trustee shall

                                      -99-

<PAGE>

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

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

         Section 10.02 Additional Termination Requirements. In the event the
Servicer exercises its purchase option as provided in Section 10.01(a), each
REMIC Pool shall be terminated in accordance with the following additional
requirements, and the Trustee shall receive an Opinion of Counsel to the effect
that the termination of such REMIC Pool (i) will constitute a "qualified
liquidation" of each REMIC Pool within the meaning of Code Section
860F(a)(4)(A), and (ii) will not subject such REMIC Pool to tax or cause such
REMIC Pool to fail to qualify as a REMIC at any time that any Certificates are
outstanding.

                                     -100-

<PAGE>

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

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

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

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

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

                                      -101-

<PAGE>

case as the Servicer shall agree; provided that in all such cases the Trustee
has obtained written confirmation from each Rating Agency that any such
modifications to this Agreement will not result in a qualification, reduction or
withdrawal of the rating assigned to any Class of Offered Certificates by such
Rating Agency and has received an Opinion of Counsel to the effect that any such
modifications to this Agreement do not give rise to a risk that any REMIC Pool
or any of the Certificateholders will be subject to a tax caused by a transfer
to a Disqualified Organization; provided, further, that in all such cases such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.

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

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

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

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

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

         Section 11.02 Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable

                                     -102-

<PAGE>

jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Seller, at its expense but only upon, determination of the
Seller accompanied by an Opinion of Counsel to the effect that such recordation
is legally required to protect the Trustee's interest in the Mortgage Loans.

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

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

         Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the operation and management of the
Trust or any REMIC established pursuant to this Agreement, or the obligations of
the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.

         No Certificateholder, solely by virtue of its status as a
Certificateholder, shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Voting Interests represented by all
Certificates (or all affected Certificates, as appropriate) aggregating not less
than 51% shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.

                                     -103-

<PAGE>

         Section 11.04 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York (without regard to conflict of
laws principles and the application of the laws of any other jurisdiction), and
the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.

         Section 11.05 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (a) in the case of the Seller, at 350 South Grand Avenue, Los
Angeles, California 90070, Attn: Chief Financial Officer, with a copy to General
Counsel; (b) in the case of the Depositor, at 350 South Grand Avenue, Los
Angeles, California 90070, Attn: Chief Financial Officer, with a copy to General
Counsel; (c) in the case of the Trustee, at the Corporate Trust Office at 1761
East St. Andrew Place, Santa Ana, California 92705-4934, Attn: AA0201; Aames
Capital Corporation, Series 2001-4; (d) in the case of the Servicer, Ocwen
Federal Bank FSB, The Forum, Suite 1002, 1675 Palm Beach Lakes Boulevard, West
Palm Beach, Florida 33401, Attention: Secretary; (e) in the case of S&P, to
Standard & Poor's, 55 Water Street, 41st Floor, New York, New York 10041, Attn:
Mortgage Surveillance Group; (f) in the case of Moody's, to Moody's Investors
Service Inc., 99 Church Street, New York, New York 10007, Attn: Residential
Mortgage Pass-Through Monitoring; (g) in the case of the PMI Insurer [Not
Applicable] or, as to each party, at such other address as shall be designated
by such party in a written notice to each other party. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at its address shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice. Any notice or other document required to
be delivered or mailed by the Trustee to any Rating Agency shall be given on a
best efforts basis and only as a matter of courtesy and accommodation and the
Trustee shall have no liability for failure to deliver such notice or document
to any such Rating Agency.

         Section 11.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.

         Section 11.07 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in this Section and Sections 7.02, 7.04 and
7.05, this Agreement may not be assigned by the Seller, the Depositor or the
Servicer without the prior written consent of the Holders of Certificates
evidencing not less than 66% of the Voting Interests of all Certificates.

         Section 11.08 Certificates Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that Certificates upon execution, authentication
and delivery thereof by the Trustee pursuant to Section 2.06 are and shall be
deemed fully paid.

                               [SIGNATURES FOLLOW]

                                     -104-

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.

                                AAMES CAPITAL CORPORATION,
                                     as Seller

                                By: /s/ Rick Holguin
                                   --------------------------------------
                                   Name:  Rick Holguin
                                   Title: Vice President

                                AAMES CAPITAL ACCEPTANCE CORPORATION,
                                     as Depositor

                                By:  /s/ Rick Holguin
                                   --------------------------------------
                                   Name:  Rick Holguin
                                   Title: Vice President

                                BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                                   as Trustee and not in its individual capacity

                                By:  /s/ Barbara Rowe
                                   --------------------------------------
                                   Name:  Barbara Rowe
                                   Title: Associate

                                 OCWEN FEDERAL BANK FSB,
                                     as Servicer

                                By:  /s/ Richard Delgado
                                   --------------------------------------
                                   Name:  Richard Delgado
                                   Title  Vice President

                                      -105-

<PAGE>

State of California                )
                                   )      ss.:
County of Los Angeles              )

         On the 28th day of March in the year 2002, before me, the undersigned,
personally appeared ______________________, personally known to me or proved to
me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

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

[Notary Seal]

                                     -106-

<PAGE>

State of California                )
                                   )      ss.:
County of Los Angeles              )

         On the 28th day of March in the year 2002, before me, the undersigned,
personally appeared ______________________, personally known to me or proved to
me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

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

[Notary Seal]

                                     -107-

<PAGE>

State of ____________              )
                                   )      ss.:
County of ___________              )

         On the 28th day of March in the year 2002, before me, the undersigned,
personally appeared _____________________, personally known to me or proved to
me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her capacity, and that by his/her signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

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

[Notary Seal]

                                     -108-

<PAGE>

State of ____________              )
                                   )      ss.:
County of ___________              )

         On the 28th day of March in the year 2002, before me, the undersigned,
personally appeared ___________________, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her capacity, and that by his/her signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

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

[Notary Seal]

                                     -109-

<PAGE>

                                   Schedule I

                              List of Sub-Servicers

None.

<PAGE>

                                   Schedule II

                      Schedule of Restricted Mortgage Loans

None.

<PAGE>

                                                                     EXHIBIT A-1

                           FORM OF CLASS A CERTIFICATE

Date of Pooling and Servicing               Initial Certificate
Agreement and Cut-off Date:                 Balance:  $
March 1, 2002

First Distribution Date:                    CUSIP No.:
April 25, 2002

Denomination:  $                            Certificate No.:  A-_

                        Class A-_ Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2002-1
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                            SERIES 2002-1, CLASS A-_

         evidencing a percentage interest in the distributions allocable to the
         Class A-_ Certificates with respect to a Trust consisting primarily of
         a pool of conventional, closed-end, fixed and adjustable rate
         residential mortgage loans, sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL acceptance CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

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

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown above by the Initial Certificate
Principal Balance for such class) in a trust, the assets of which

                                     A-1-1

<PAGE>

consist primarily of a pool of conventional, closed-end, fixed and adjustable
rate residential mortgage loans (the "Mortgage Loans"), sold by Aames Capital
Acceptance Corp. (the "Depositor") into the Trust, serviced by Ocwen Federal
Bank FSB (the "Servicer," which term includes any successor Servicer under the
Agreement referred to below). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") among the
Depositor, Aames Capital Corporation, as seller (the "Seller"), the Servicer and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable
interest and principal distributable thereon, as more specifically set forth in
the Agreement.

         Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.

         This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2002-1 Mortgage Pass-Through Certificates,
Series 2002-1, Class A-_" (herein called the "Class A-_ Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

         The Class A-_ Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and that the Trustee in its individual
capacity is

                                     A-1-2

<PAGE>

not personally liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Depositor, the Servicer, and the rights of the Certificateholders
under the Agreement at any time by the Servicer and the Trustee and the Holders
of Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee located at 1761 East
St. Andrew Place, Santa Ana, CA 92705-4934, attn: Trust Administration, Aames
Mortgage Trust 2002-1 (AA0201), accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class of authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees. Certificates also may be surrendered at the office of the Trustee's
agent, DTC, located at DTC Transfer Agent Services, 55 Water Street, New York,
NY 10044.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

                                     A-1-3

<PAGE>

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Servicer to purchase being subject to the
Pool Balance at the time of purchase being less than 5% of the sum of the
Original Pool Balance and the Prefunding Account Deposit.

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                     A-1-4

<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March ___, 2002

                                      BANKERS TRUST COMPANY
                                          OF CALIFORNIA, N.A., as Trustee

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

CERTIFICATE OF AUTHENTICATION:
This is one of the Certificates referred to in
the within named Agreement

By:
   --------------------------------------------
    Authorized Officer of Bankers Trust Company
    of California, N.A., as Trustee

                                     A-1-5

<PAGE>

                                                                     EXHIBIT A-2

                           FORM OF CLASS M CERTIFICATE

Date of Pooling and Servicing             Original Class M-_ Certificate
Agreement and Cut-off Date:               Balance:  $
March 1, 2002

First Distribution Date:                  CUSIP No. :
April 25, 2002

Denomination:  $                          Certificate No.:  M-_

                        Class M-_ Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2002-1
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                            SERIES 2002-1, CLASS M-_

         evidencing a percentage interest in the distributions allocable to the
         Class M-_ Certificates with respect to a Trust consisting primarily of
         a pool of conventional, closed-end, fixed and adjustable rate
         residential mortgage loans, sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.

         THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.

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

                                      A-2-1

<PAGE>

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown above by the Original Class M-_
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the "Mortgage Loans"), deposited by Aames Capital Acceptance
Corp. (the "Depositor") into the Trust, serviced by Ocwen Federal Bank FSB (the
"Servicer," which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") among the Depositor, Aames
Capital Corporation, as seller (the "Seller"), the Servicer and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"), a summary of certain of
the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable
interest and principal distributable thereon, as more specifically set forth in
the Agreement.

         Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.

         This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2002-1 Mortgage Pass-Through Certificates,
Series 2002-1, Class M-_" (herein called the "Class M-_ Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

                                      A-2-2

<PAGE>

         The Class M-_ Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and that the Trustee
in its individual capacity is not personally liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee and the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee located at 1761 East
St. Andrew Place, Santa Ana, CA 92705-4934, attn: Trust Administration, Aames
Mortgage Trust 2002-1 (AA0201), accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class of authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees. Certificates also may be surrendered at the office of the Trustee's
agent, DTC, located at DTC Transfer Agent Services, 55 Water Street, New York,
NY 10044.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the

                                      A-2-3

<PAGE>

Depositor, the Trustee nor any of their respective agents shall be affected by
any notice to the contrary.

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Servicer to purchase being subject to the
Pool Balance at the time of purchase being less than 5% of the sum of the
Original Pool Balance and the Prefunding Account Deposit.

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                      A-2-4

<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March ___, 2002

                                             BANKERS TRUST COMPANY
                                               OF CALIFORNIA, N.A., as Trustee

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

CERTIFICATE OF AUTHENTICATION:

This is one of the Class M-_Certificates
referred to in the within named Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
   of California, N.A., as Trustee

                                      A-2-5

<PAGE>

                                                                     EXHIBIT A-3

Date of Pooling and Servicing             Original Class B-_ Certificate
Agreement and Cut-off Date:               Balance:  $
March 1, 2002

First Distribution Date:                  CUSIP No. :
April 25, 2002

Denomination:  $                          Certificate No.:  B-_

                         Class B Pass-Through Rate: __%
                           AAMES MORTGAGE TRUST 2002-1
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2002-1, CLASS B

         evidencing a percentage interest in the distributions allocable to the
         Class B Certificates with respect to a Trust consisting primarily of a
         pool of conventional, closed-end, fixed and adjustable rate residential
         mortgage loans, sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL acceptance CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

         THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.

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

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown

                                      A-3-1

<PAGE>

above by the Original Class B Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate residential mortgage loans (the "Mortgage Loans"), deposited
by Aames Capital Acceptance Corp. (the "Depositor") into the Trust, serviced by
Ocwen Federal Bank FSB (the "Servicer," which term includes any successor
Servicer under the Agreement referred to below). The Trust was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Depositor, Aames Capital Corporation, as seller (the "Seller"), the
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 25th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable
interest and principal distributable thereon, as more specifically set forth in
the Agreement.

         Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.

         This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 2002-1 Mortgage Pass-Through Certificates,
Series 2002-1, Class B" (herein called the "Class B Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be required
by the Agreement to be identified as deposited in the Collection and/or
Certificate Account or invested in Permitted Investments in accordance with the
Agreement, all rights under any insurance policy covering a Mortgage Loan or the
related Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.

         The Class B Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely

                                      A-3-2

<PAGE>

to the funds on deposit in the Certificate Account and that the Trustee in its
individual capacity is not personally liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee and the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee located at 1761 East
St. Andrew Place, Santa Ana, CA 92705-4934, attn: Trust Administration, Aames
Mortgage Trust 2002-1 (AA0201), accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class of authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees. Certificates also may be surrendered at the office of the Trustee's
agent, DTC, located at DTC Transfer Agent Services, 55 Water Street, New York,
NY 10044.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

                                      A-3-3

<PAGE>

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Servicer to purchase being subject to the
Pool Balance at the time of purchase being less than 5% of the sum of the
Original Pool Balance and the Prefunding Account Deposit.

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                      A-3-4

<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March ___, 2002

                                             BANKERS TRUST COMPANY
                                                OF CALIFORNIA, N.A., as Trustee

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

CERTIFICATE OF AUTHENTICATION:
This is one of the Class B Certificates
referred to in the within named Agreement

By:
    -------------------------------------------
    Authorized Officer of Bankers Trust Company
    of California, N.A., as Trustee

                                      A-3-5

<PAGE>

                                                                     EXHIBIT A-4

                                   [RESERVED]

                                      A-4-1

<PAGE>

                                                                     EXHIBIT B-1

                           FORM OF CLASS C CERTIFICATE

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET FORTH IN
THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02(c) OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS TO THE TRANSFEROR AND THE TRUSTEE THAT SUCH TRANSFEREE IS
NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE"), OR A PERSON ACTING ON BEHALF OF A PLAN OR USING THE
ASSETS OF A PLAN TO EFFECT SUCH PURCHASE AND IS NOT AN INSURANCE COMPANY
PURCHASING SUCH CERTIFICATE OR INTEREST FROM FUNDS IN A GENERAL ACCOUNT OR
SEPARATE ACCOUNT (WITH CERTAIN LIMITATIONS).

                                      B-1-1

<PAGE>

Date of Pooling and Servicing            Percentage Interest: __%
Agreement and Cut-off Date:
March 1, 2002                            Certificate No.:

First Distribution Date:
April 25, 2002

                           AAMES MORTGAGE TRUST 2002-1
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2002-1, CLASS C

         evidencing a percentage interest in the distributions allocable to the
         Class C Certificate with respect to a Trust consisting primarily of a
         pool of conventional, closed-end, fixed and adjustable rate residential
         mortgage loans sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

         This certifies that ______________________ is the registered owner of
the Percentage Interest specified on the face of this Class C Certificate. This
Class C Certificate is one series of Certificates issued by a trust, the assets
of which consist primarily of a pool of conventional, closed-end, fixed rate and
adjustable rate residential mortgage loans (the "Mortgage Loans"), deposited by
Aames Capital Acceptance Corp. (the "Depositor") into the Trust, serviced by
Ocwen Federal Bank FSB (the "Servicer," which term includes any successor
Servicer under the Agreement referred to below). The Trust was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Depositor, Aames Capital Corporation, as seller (the "Seller"), the
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned to such terms in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

         No transfer of a Class C Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is

                                      B-1-2

<PAGE>

to be made, the Trustee shall require the Holder to deliver an Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer is exempt (describing the applicable exemption
and the basis therefor) from or is being made pursuant to the registration
requirements of the Act and of any applicable state securities laws. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor, the Seller and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws. In connection with any such
transfer, the Trustee will also require an affidavit, in the form as described
in the Agreement, stating the matters set forth on the legend of this Class C
Certificate.

         The Class C Certificates are entitled to the Class C Distribution
Amount on each Distribution Date. The Class C Certificates are not entitled to
any payments on and collections in respect of the Mortgage Loans on any
Distribution Date until all other distributions on the Offered Certificates for
such Distribution Date and reimbursements of certain advances have been made in
accordance with the Agreement. The Holder of this Certificate, by its acceptance
of this Certificate, agrees that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Servicer and the Trustee and the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

         The Certificates are issuable only as registered Certificates without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for a new Certificate evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee located at 1761 East
St. Andrew Place, Santa Ana, CA 92705-4934, attn: Trust Administration, Aames
Mortgage Trust 2002-1 (AA0201), accompanied by a written instrument of transfer
in form satisfactory to the Servicer, the Trustee, and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing together with an affidavit in the form as described in the Agreement,
and thereupon a new Certificate evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
Certificates also may be surrendered at the office of the Trustee's agent, DTC,
located at DTC Transfer Agent Services, 55 Water Street, New York, NY 10044.

                                      B-1-3

<PAGE>

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of all Mortgage Loans in the Trust will result in
early retirement of the Certificates, the right of the Servicer to purchase
being subject to the Pool Balance at the time of purchase being less than 5% of
the sum of the Original Pool Balance and the Prefunding Account Deposit..

         This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                      B-1-4

<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March __, 2002

                                              BANKERS TRUST COMPANY
                                                 OF CALIFORNIA, N.A., as Trustee

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

CERTIFICATE OF AUTHENTICATION:
This is one of the Class C Certificates referred
to in the within named Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
   of California, N.A., as Trustee

                                      B-1-5

<PAGE>

                                                                     EXHIBIT B-2

                           FORM OF CLASS R CERTIFICATE

         THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.

         THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02(b) OF THE AGREEMENT REFERRED TO
HEREIN.

         FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"RESIDUAL INTEREST" IN EACH OF TWO "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G(A)(2) AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). A TRANSFEREE OF THIS
CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN SECTION
6.02(b) OF THE POOLING AND SERVICING AGREEMENT, AND SHALL BE REQUIRED TO FURNISH
AN AFFIDAVIT TO THE TRANSFEROR AND THE TRUSTEE TO THE EFFECT THAT (I) IT IS NOT
(i) A DISQUALIFIED ORGANIZATION, AS SUCH TERM IS DEFINED IN CODE SECTION
860E(e)(5), OR AN AGENT (INCLUDING A BROKER, NOMINEE OR OTHER MIDDLEMAN) FOR
SUCH DISQUALIFIED ORGANIZATION, (ii) AN ENTITY THAT HOLDS REMIC RESIDUAL
SECURITIES AS NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH
SECURITIES THROUGH BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS
(A "BOOK-ENTRY NOMINEE"), (iii) AN INDIVIDUAL, CORPORATION, PARTNERSHIP OR OTHER
PERSON UNLESS SUCH TRANSFEREE (A) IS NOT A FOREIGN PERSON OR (B) IS A FOREIGN
PERSON THAT WILL HOLD SUCH CLASS R CERTIFICATE IN CONNECTION WITH THE CONDUCT OF
A TRADE OR BUSINESS WITHIN THE UNITED STATES AND HAS FURNISHED THE TRANSFEROR
AND THE TRUSTEE WITH AN EFFECTIVE INTERNAL REVENUE SERVICE FORM 4224 OR (C) IS A
FOREIGN PERSON THAT HAS DELIVERED TO BOTH THE TRANSFEROR AND THE TRUSTEE AN
OPINION OF A NATIONALLY RECOGNIZED TAX COUNSEL TO THE EFFECT THAT THE TRANSFER
OF THE CLASS R CERTIFICATE TO IT IS IN ACCORDANCE WITH THE REQUIREMENTS OF THE
CODE AND THE REGULATIONS PROMULGATED THEREUNDER AND THAT SUCH TRANSFER OF THE
CLASS R CERTIFICATE WILL NOT BE DISREGARDED FOR FEDERAL INCOME TAX PURPOSES (ANY
SUCH PERSON WHO IS NOT COVERED BY CLAUSE (A), (B) OR (C) ABOVE BEING REFERRED TO
HEREIN AS A "NON-

                                      B-2-1

<PAGE>

PERMITTED FOREIGN HOLDER") OR (iv) ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR ANY PERSON WHICH IS AN INDIVIDUAL RETIREMENT ACCOUNT
OR EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO SECTION 4975 OF THE CODE
(AN "ERISA PLAN") OR AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT
OR GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE ERISA PLAN ASSETS BY REASON
OF AN ERISA PLAN'S INVESTMENT IN THE ENTITY, OR ANY PERSON INVESTING THE ASSETS
OF AN ERISA PLAN OR SUCH AN ENTITY, WHETHER AS NOMINEE, TRUSTEE, AGENT OR
OTHERWISE, (II) IT HAS NO INTENT OR PURPOSE TO IMPEDE THE ASSESSMENT OR
COLLECTION OF ANY FEDERAL, STATE OR LOCAL INCOME TAXES LEGALLY REQUIRED TO BE
PAID WITH RESPECT TO THE CLASS R CERTIFICATE, AND (III) IT HAS AGREED TO SUCH
AMENDMENTS TO FURTHER EFFECTUATE THE RESTRICTIONS ON TRANSFERS TO DISQUALIFIED
ORGANIZATIONS, AGENTS THEREOF, BOOK-ENTRY NOMINEES, NON-PERMITTED FOREIGN
HOLDERS OR ERISA PLANS. THE TERM "FOREIGN PERSON" MEANS A PERSON WHO IS NOT ONE
OF THE FOLLOWING: A CITIZEN OR RESIDENT OF THE UNITED STATES, A CORPORATION OR
PARTNERSHIP (OR OTHER ENTITY CLASSIFIED AS A CORPORATION OR PARTNERSHIP FOR U.S.
FEDERAL INCOME TAX PURPOSES) CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE
UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF, AN ESTATE THAT IS SUBJECT TO
U.S. FEDERAL INCOME TAX REGARDLESS OF THE SOURCE OF ITS INCOME, OR TRUST IF (i)
A COURT WITHIN THE UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER
THE ADMINISTRATION OF THE TRUST, AND (ii) ONE OR MORE UNITED STATES PERSONS HAVE
THE AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST.

         THE HOLDER OF THIS CLASS R CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED
TO HAVE AGREED TO THE DESIGNATION OF THE SERVICER AS ITS AGENT TO ACT AS "TAX
MATTERS PERSON" TO PERFORM THE FUNCTIONS OF A "TAX MATTERS PARTNER" FOR PURPOSES
OF SUBCHAPTER C OF CHAPTER 63 OF SUBTITLE F OF THE CODE, OR, IF SO REQUESTED BY
THE SERVICER, TO ACT AS TAX MATTERS PERSON.

                                      B-2-2

<PAGE>

Date of Pooling and Servicing              Percentage Interest: __%
Agreement and Cut-off Date:
March 1, 2002                              Certificate No.: __

First Distribution Date:
April 25, 2002

                           AAMES MORTGAGE TRUST 2002-1
                       MORTGAGE PASS-THROUGH CERTIFICATE,
                             SERIES 2002-1, CLASS R

         evidencing a percentage interest in the distributions allocable to the
         Class R Certificate with respect to a Trust consisting primarily of a
         pool of conventional, closed-end, fixed rate and adjustable rate
         residential mortgage loans sold by Aames Capital Corporation.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION, AAMES CAPITAL ACCEPTANCE CORP. OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT
A DEPOSIT, AND NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

         This certifies that ___________________________ is the registered owner
of the Percentage Interest specified on the face of this Class R Certificate.
This Class R Certificate is one series of Certificates issued by a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
rate and adjustable rate residential mortgage loans (the "Mortgage Loans"),
deposited by Aames Capital Acceptance Corp. (the "Depositor") into the Trust,
serviced by Ocwen Federal Bank FSB (the "Servicer," which term includes any
successor Servicer under the Agreement referred to below). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among the Depositor, Aames Capital Corporation, as seller (the
"Seller"), the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned to such terms in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

         No transfer of a Class R Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is

                                      B-2-3

<PAGE>

to be made, the Trustee shall require the Holder to deliver an
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Trustee and the Depositor that such transfer is exempt (describing the
applicable exemption and the basis therefor) from or is being made pursuant to
the registration requirements of the Act and of any applicable state securities
laws. The Holder hereof desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Depositor and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws. In connection with any such
transfer, the Trustee will also require an affidavit, in the form as described
in the Agreement, stating the matters set forth on the legend of this Class R
Certificate.

          The Holder of the Class R Certificate, by acceptance hereof, is deemed
to have designated the Servicer, if permitted by the Code and applicable law, to
act as the "tax matters person", to perform the functions of a "tax matters
partner" for purposes of Subchapter C of Chapter 63 of Subtitle F of the Code
and if not so permitted, the Holder of the Class R Certificate, is deemed to
have agreed to act as such "tax matters person".

         The Class R Certificate is not entitled to any payments on and
collections in respect of the Mortgage Loans on any Distribution Date until all
other distributions for such Distribution Date have been made in accordance with
the Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.

         This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Servicer, and the Trustee and the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of the Certificates.

         This Certificate is issuable only as a registered Certificate without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, the
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee located at 1761 East
St. Andrew Place, Santa Ana, CA 92705-4934, attn: Trust Administration, Aames
Mortgage Trust 2002-1 (AA0201), accompanied by a written instrument of transfer
in form satisfactory to the Servicer, the Trustee, and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing together with an affidavit in

                                      B-2-4

<PAGE>

the form as described in the Agreement, and thereupon a new Certificate
evidencing the same aggregate Percentage Interest will be issued to the
designated transferee or transferees. Certificates also may be surrendered at
the office of the Trustee's agent, DTC, located at DTC Transfer Agent Services,
55 Water Street, New York, NY 10044.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Depositor, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.

         The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Servicer to purchase being subject to the
Pool Balance at the time of purchase being less than 5% of the sum of the
Original Pool Balance and the Prefunding Account Deposit.

         This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.

                                      B-2-5

<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  March __, 2002

                                             BANKERS TRUST COMPANY
                                                OF CALIFORNIA, N.A., as Trustee

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

CERTIFICATE OF AUTHENTICATION:

This is one of the Certificates referred
to in the within named Agreement

By:
   -------------------------------------------
   Authorized Officer of Bankers Trust Company
   of California, N.A., as Trustee

                                      B-2-6

<PAGE>

                                                                     EXHIBIT B-3

                                   [RESERVED]

                                      B-3-1

<PAGE>

                                                                       EXHIBIT C

                      FORM OF SUBSEQUENT TRANSFER AGREEMENT

         Pursuant to this Subsequent Transfer Agreement, dated as of
[___________ , ___] by and between Aames Capital Corporation (the "Seller"),
Aames Capital Acceptance Corporation (the "Depositor") and Bankers Trust Company
of California, N.A., in its capacity as trustee for Aames Mortgage Trust 2002-1
(the "Trustee"), and pursuant to that certain Pooling and Servicing Agreement,
dated as of March 1, 2002 (the "Pooling and Servicing Agreement"), by and among
the Seller, as seller, the Trustee, as trustee, the Depositor, as depositor, and
Ocwen Federal Bank FSB, as servicer, the Seller, the Depositor and the Trustee
agree to the sale by the Seller and the purchase by the Depositor and the
immediate sale by the Depositor and the purchase by the Trustee of additional
mortgage loans (the "Subsequent Mortgage Loans") as listed on the Mortgage Loan
Schedule attached hereto as Schedule A.

         Capitalized terms used and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.

         Section 1.  Purchase and Conveyance of Subsequent Mortgage Loans.

         (a) The Seller does hereby sell, transfer, assign, set over and convey
to the Depositor, and the Depositor does hereby sell, transfer, assign, set over
and convey to the Trustee:

         (i)      all right, title and interest in and to the Subsequent
                  Mortgage Loans owned by it and listed on Schedule A hereto,
                  including without limitation, the related Mortgages, Mortgage
                  Files and Mortgage Notes, and all payments on, and proceeds
                  with respect to, such Subsequent Mortgage Loans received on
                  and after the Subsequent Cut-off Date except such payments and
                  proceeds as the Servicer is entitled to retain pursuant to the
                  express provisions of the Pooling and Servicing Agreement;

         (ii)     all right, title and interest in the Mortgages on the
                  properties securing the Subsequent Mortgage Loans, including
                  any related Mortgaged Property acquired by or on behalf of the
                  Trust by foreclosure or deed in lieu of foreclosure or
                  otherwise;

         (iii)    all right, title and interest in and to any rights in or
                  proceeds from any insurance policies (including title
                  insurance policies) covering the Subsequent Mortgage Loans,
                  the related Mortgaged Properties or Mortgagors and any amounts
                  recovered from third parties in respect of any Subsequent
                  Mortgage Loans that became Liquidated Mortgage Loans; and

         (iv)     the proceeds of all of the foregoing.

         (b) With respect to each Subsequent Mortgage Loan, the Seller and the
Depositor, contemporaneously with the delivery of this Agreement, have delivered
or caused to be delivered

                                       C-1

<PAGE>

to the Trustee, each item set forth in Section 2.01 of the Pooling and Servicing
Agreement. The transfer to the Trustee by the Seller and the Depositor of the
Subsequent Mortgage Loans identified on the Schedule A hereto shall be absolute
and is intended by the Seller, the Depositor, the Servicer, the Trustee and the
Certificateholders to constitute and to be treated as a sale by the Seller and
the Depositor.

         (c) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans, this Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller.

         (d) Additional terms of the sale, including the purchase price, are set
forth on Attachment A hereto.

         Section 2.  Representations and Warranties; Conditions Precedent.

         (a) The Seller hereby affirms the representations and warranties set
forth in Section 2.05 of the Pooling and Servicing Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. The Seller and the Depositor
hereby confirm that each of the conditions set forth in Section 2.02 of the
Pooling and Servicing Agreement (except such conditions that are required to be
satisfied as of the end of the Funding Period) are satisfied as of the date
hereof.

         (b) All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified and confirmed; provided however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Pooling and Servicing Agreement.

         Section 3.  Recordation of Agreement.

         This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer and at its expense in the event such recordation
materially and beneficially affects the interests of Certificateholders.

         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 4.  Governing Law.

         This Agreement shall be construed in accordance with the laws of the
State of New York (without regard to conflict of laws principles and the
application of the laws of any other jurisdiction), and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.

         Section 5.  Successors and Assigns.

         This Agreement shall inure to the benefit of and be binding upon the
Seller, the Depositor and the Trustee and their respective successors and
assigns.

                                     B-3-2

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.

                                          AAMES CAPITAL CORPORATION,
                                           as Seller

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

                                          AAMES CAPITAL CORPORATION,
                                            as Depositor

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

                                          BANKERS TRUST COMPANY
                                          OF CALIFORNIA, N.A., as Trustee
                                          for Aames Mortgage Trust 2002-1, and
                                         not in its individual capacity

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

                                     B-3-3

<PAGE>

                                   SCHEDULE A

                        SUBSEQUENT MORTGAGE LOAN SCHEDULE

                                  ATTACHMENT A

Subsequent Transfer Date:

Subsequent Cut-off Date:

Aggregate of the Principal Balances of

Subsequent Mortgage Loans:

Aggregate of the Purchase Prices of

Subsequent Mortgage Loans:

Number of Subsequent Mortgage Loans:

                                     B-3-4

<PAGE>

                                                                       EXHIBIT D

                                   [RESERVED]

                                       D-1

<PAGE>

                                                                       EXHIBIT E

                             MORTGAGE LOAN SCHEDULE

                        [On file with Seller and Trustee]

                                       E-1

<PAGE>

                                                                       EXHIBIT F

                    FORM OF ANNUAL STATEMENT AS TO COMPLIANCE

         The undersigned,                  ,                    of Ocwen Federal
Bank FSB (the "Servicer"), in its capacity as Servicer under that certain
Pooling and Servicing Agreement dated as of March 1, 2002 (the "Pooling and
Servicing Agreement") among Aames Capital Corporation, as seller, Aames Capital
Acceptance Corp., as depositor, Ocwen Federal Bank FSB, as servicer and Bankers
Trust Company of California, N.A., as trustee, does hereby certify pursuant to
Section 3.09 of the Pooling and Servicing Agreement that as of the ___ day of
____________, ____:

          (a)     a review of the activities of the Servicer for the year ended
                  March 31, ____ and of its performance under the Pooling and
                  Servicing Agreement has been made under my supervision, and

          (b)     to the best of my knowledge, based on such review, the
                  Servicer has fulfilled all of its material obligations under
                  the Pooling and Servicing Agreement throughout such year.

         IN WITNESS WHEREOF, I have hereunto signed my name as of this ____day
of ___________, ____.

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

                                      F-1

<PAGE>

                                                                       EXHIBIT G

                FORM OF AFFIDAVIT PURSUANT TO SECTION 860E(e)(4)
                OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED

STATE OF_______________________________ )
                                        ) ss.:
COUNTY OF______________________________ )

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

         1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ] [the United States], on behalf of which he
makes this affidavit. Capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Agreement as defined in the Class R
Certificate.

         2. That the Investor's Taxpayer Identification Number is [___________].

         3. That the Investor is not a "Disqualified Organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), or an agent of a Disqualified Organization (including a broker,
nominee or middleman) and will not be a "Disqualified Organization" as of [date
of transfer], and that the Investor is not acquiring a Class R Certificate of
the Aames Mortgage Trust 2002-1 Mortgage Pass-Through Certificates, Series
2002-1 (the "Class R Certificate") for the account of, or as an agent (including
a broker, nominee or middleman) of any entity as to which the Investor has not
received an affidavit substantially in the form of this affidavit. For these
purposes, a "Disqualified Organization" means the United States, any state or
political subdivision thereof, any foreign government, any international
organization, any agency or instrumentality of any of the foregoing (other than
an instrumentality if all of its activities are subject to tax and a majority of
its board of directors is not selected by such governmental entity), any
cooperative organization furnishing electrical energy or providing telephone
service to persons in rural areas as described in Code Section 1381(a)(2)(c), or
any organization (other than a farmers' cooperative described in Code Section
521) that is exempt from federal income tax unless such organization is subject
to the tax on unrelated business income imposed by Code Section 511.

         4. That the Investor is not (i) an entity that holds Class R
Certificates as nominee to facilitate the clearance and settlement of such Class
R Certificates through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee"), (ii) an individual,
corporation, partnership or other person unless such transferee (A) is not a
Foreign Person or (B) is a Foreign Person that will hold such Class R
Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee with an effective
Internal Revenue Service Form 4224 or (C) is a Foreign Person that has delivered
to both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of a Class R Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Class R Certificate will

                                      G-1

<PAGE>

not be disregarded for federal income tax purposes (any such person who is not
covered by clause (A), (B) or (C) above being referred to herein as a
"Non-permitted Foreign Holder") or (iii) a Person that is an employee benefit
plan within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, or any Person that is an individual retirement
account or employee benefit plan, trust or account subject to Section 4975 of
the Code (an "ERISA Plan") or an entity, including an insurance company separate
account or general account, whose underlying assets include ERISA Plan assets by
reason of an ERISA Plan's investment in the entity or a Person investing the
assets of an ERISA Plan or such an entity, whether as nominee, trustee, agent or
otherwise (an "ERISA Prohibited Holder").

         5. That the Investor agrees to any such amendments of the Pooling and
Servicing Agreement as may be required to further effectuate the restrictions on
transfer of the Class R Certificate to such a Disqualified Organization or a
Book-Entry Nominee or a Non-permitted Foreign Holder or an ERISA Prohibited
Holder.

         6. That the Investor has no intent or purpose to impede the assessment
or collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificate and will not transfer the Class R
Certificate to any Person that it has reason to believe has the intention to
impede the assessment or collection of such taxes and that the Investor
understands that, as the holder of the Class R Certificate, it may incur tax
liabilities in excess of any cash flows generated by the Class R Certificates.

         7. The Investor has been advised of, understands and acknowledges that
under the Code, a substantial tax would be imposed on a "pass-through entity"
holding a Class R Certificate if at any time during the taxable year of the
pass-through entity a Person that is a Disqualified Organization is the record
holder of an interest in such entity. (For this purpose, a "pass-through entity"
includes a regulated investment company, a real estate investment trust or
common trust fund, a partnership, trust or estate, and certain cooperatives and,
except as may be provided in Treasury Regulations, persons holding interests in
pass through entities as a nominee for another Person). A pass-through entity
shall be relieved of liability for the tax if it had received from such Person
an affidavit (in substantially the same form as this affidavit) that such Person
is not a Disqualified Organization and the entity had no actual knowledge that
the affidavit was false. The Investor will advise the Trustee and the Servicer
if it becomes a pass-through entity or if it is a pass-through entity, if any of
the interest holders are or become Disqualified Persons.

         8. The Investor has reviewed the provisions of Section 6.02 of the
Agreement and understands the legal consequences of the acquisition of a Class R
Certificate including, without limitation, the restrictions on subsequent
transfers. The Investor expressly agrees to be bound by and to abide by the
provisions of Section 6.02 of the Agreement, as such Section may be amended from
time to time.

         9. The Investor agrees to require an affidavit substantially similar to
this affidavit from any Person to whom the Investor attempts to transfer its
Class R Certificate including any Person with respect to which the Investor is
then acting as nominee, trustee or agent, and in connection with any transfer by
a Person for whom the Investor is acting as nominee, trustee or

                                      G-2

<PAGE>

agent, and the Investor will not transfer its Class R Certificate to be
transferred to any Person that the Investor knows is a Disqualified
Organization.

         10. The Investor is acquiring the Class R Certificate either (i) for
its own account or (ii) as nominee, trustee or agent for another Person and has
attached hereto an affidavit from such Person in substantially the same form as
this affidavit. If clause (ii) of the preceding sentence is applicable, such
Person is not a Disqualified Organization and the Investor has no knowledge that
any such affidavit from such Person is false.

                                      G-3

<PAGE>

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

                                       [NAME OF INVESTOR]

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

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

         Subscribed and sworn before me this _____day of ___________, ____.

NOTARY PUBLIC

COUNTY OF___________________________________

STATE OF____________________________________

My Commission expires the ____ day of ________, ____.

                                      G-4

<PAGE>

                                                                       EXHIBIT H

                    FORM OF NOTICE REGARDING PAYMENT IN FULL
                      OF PRINCIPAL BALANCE OF MORTGAGE LOAN

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705
         Re:      Aames Mortgage Trust 2002-1
                  Mortgage Pass-Through Certificates, Series 2002-1

Ladies and Gentlemen:

         Reference is made to Section 3.07 of the Pooling and Servicing
Agreement dated as of March 1, 2002 (the "Pooling and Servicing Agreement")
among Aames Capital Corporation, as Seller, Aames Capital Acceptance Corp., as
Depositor, Ocwen Federal Bank FSB, as Servicer and Bankers Trust Company of
California, N.A., as Trustee. All capitalized terms used but not defined herein
shall have the meanings given to such terms in the Pooling and Servicing
Agreement.

         The undersigned hereby certifies that the Principal Balance of the
Mortgage Loan(s) listed on Schedule A annexed hereto has been paid in full and
that all amounts received in connection with the payment of such Mortgage
Loan(s) that were required to be deposited or credited in the Certificate
Account pursuant to Section 3.02 of the Pooling and Servicing Agreement have
been so deposited or credited.

         The undersigned further certifies that he is a Servicing Officer of the
Servicer holding the office set forth beneath his signature and that he is duly
authorized to execute this certificate on behalf of the Servicer.

                                       OCWEN FEDERAL BANK FSB

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

                                      H-1

<PAGE>

                                                                       EXHIBIT I

                           FORM OF LIQUIDATION REPORT

1.  Type of Liquidation (REO disposition/charge-off/short pay-off)
             o  Date Last Paid
             o  Date of Foreclosure
             o  Date of REO
             o  Date of REO Disposition
             o  Property Sale Price; Estimated Market Value at Disposition

2.  Liquidation Proceeds

             o  Principal Prepayment                               $
                                                                    ------------
             o  Property Sale Proceeds
                                                                    ------------
             o  Insurance Proceeds
                                                                    ------------
             o  Other (itemize)
                                                                    ------------
             o  TOTAL                                              $
                                                                    ============

    Liquidation Expenses
             o  Servicing Advances                                 $
                                                                    ------------
             o  Monthly Advances
                                                                    ------------
             o  Contingency Fees
                                                                    ------------
             o  Servicing Fees
                                                                    ------------
             o  Annual Expense Escrow Amount
                                                                    ------------
             o  Supplemental Fee (if any)
                                                                    ------------
             o  Additional Interest (if any)
                                                                    ------------
             o  Monthly Seller Fee (if any)
             o  TOTAL                                              $
                                                                    ============

3.  Net Liquidation Proceeds*
    (Total of Item 2 minus total of Item 3)                        $
                                                                    ------------

4.  Accrued and Unpaid Interest on Mortgage Loan                   $
                                                                    ------------

5.  Principal Balance of Mortgage Loan                             $
                                                                    ------------

6.  Realized Loss on Mortgage Loan (Item 4 plus Item 5 minus
    Item 3, with a Realized Loss resulting only if the total
    of this calculation is a positive number) $                    $
                                                                    ------------

*Applied first to Item 4 and then to Item 5.

                                      I-1

<PAGE>

                                                                       EXHIBIT J

                              OFFICER'S CERTIFICATE

         I, _____________________, hereby certify that I am the duly elected
_____________________ of Ocwen Federal Bank FSB acting as servicer pursuant to a
Pooling and Servicing Agreement dated as of March 1, 2002 by and among the Aames
Capital Corporation, as Seller, Aames Capital Acceptance Corp., as Depositor,
Ocwen Federal Bank FSB and Bankers Trust Company of California, N.A., as
Trustee, and further certify, to the best of my knowledge and after due inquiry
that the following, including the attached Liquidation Report, is a summary of
the facts and circumstances surrounding the "charge-off" of any Mortgage Loans
during the Collection Period from _____ 1 through _____ 30/31, ____;

[Insert the following information for each "charged-off" Mortgage Loan]

         Loan #
         Borrower Name
         Property Address
         Date of "charge-off"
         Original Principal Balance
         Outstanding Principal Balance
         Mortgage Loan Rate
         Accrued Interest at time of "charge off"
         Unreimbursed Servicing Advances at time of "charge off"
         Unreimbursed Delinquency Advances at time of "charge off"
         # of days in default at time of "charge off"
         Original Appraised Value
         Current appraised value based upon "drive by"
         Amount of outstanding first lien
         Estimate of Foreclosure Costs
                  Broker Fees
                  Legal Fees
                  Repair and Miscellaneous Expenses
         Projected Marketing Period
         Estimate of Loss on Foreclosure and Liquidation

Capitalized terms not otherwise defined herein have the meanings set forth in
the Pooling and Servicing Agreement.

                                      J-1

<PAGE>

         IN WITNESS WHEREOF, I have hereunto signed by name and affixed the seal
of the Servicer.

Dated:
      -----------------------              -------------------------------------
                                           Name:
                                           Title:

                                      J-2

<PAGE>

                                                                       EXHIBIT K

                          FORM OF TRANSFEROR AFFIDAVIT
                           [LETTERHEAD OF TRANSFEROR]

                             ----------------, ----

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705
         Re:      Aames Mortgage Trust 2002-1
                  Mortgage Pass-Through Certificates, Series 2002-1

Ladies and Gentlemen:

         We have reviewed the attached affidavit of [NAME OF TRANSFEREE] and
have no actual knowledge that such affidavit is not true and has no reason to
believe that the requirements set forth in paragraph 3, paragraph 4(i) or
paragraph 4(ii) are not satisfied and have no reason to believe that the
transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to a
Class R Certificate. In addition, we have conducted a reasonable investigation
at the time of the transfer and found that the transferee had historically paid
its debts as they came due and found no significant evidence to indicate that
the transferee will not continue to pay its debts as they become due.

                                          Very truly yours,

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

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

                                      K-1

<PAGE>

                                                                       EXHIBIT L

                                   [RESERVED]

                                      L-1

<PAGE>

                                                                       EXHIBIT M

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705
         Re:      Aames Mortgage Trust 2002-1,
                  Mortgage Pass-Through Certificates,
                  Series, 2002-1, Class [  ] (the "Certificates")

Ladies and Gentlemen:

         In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act and (c)
with respect to our disposition of the Certificates, we have no knowledge that
the transferee is not a permitted transferee.

                                     Very truly yours,

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

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

                                      M-1

<PAGE>

                                                                     EXHIBIT N-1

                    FORM OF INVESTMENT LETTER [NON-RULE 144A]

                                     [DATE]

Aames Capital Corporation, as Seller
350 South Grand Avenue
Los Angeles, California 90071

Aames Capital Acceptance Corporation, as Depositor
350 South Grand Avenue
Los Angeles, California 90071

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705

         Re:      Aames Mortgage Trust 2002-1,
                  Mortgage Pass-Through Certificates,
                  Series, 2002-1, Class [  ] (the "Certificates")

Ladies and Gentlemen:

         In connection with our acquisition of the above-captioned Certificates,
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the Seller
and the Depositor concerning the purchase of the Certificates and all matters
relating thereto or any additional information deemed necessary to our decision
to purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or (ii) the
purchaser is an insurance company which is purchasing such certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, (e) we are acquiring the Certificates for investment for our
own account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or

                                     N-1-2

<PAGE>

negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.

                                         Very truly yours,

                                         [NAME OF TRANSFEREE]

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

                                     N-1-2

<PAGE>

                                                                     EXHIBIT N-2

                            FORM OF RULE 144A LETTER

                                     [DATE]

Aames Capital Corporation, as Seller
350 South Grand Avenue
Los Angeles, California 90071

Aames Capital Acceptance Corporation, as Depositor
350 South Grand Avenue
Los Angeles, California 90071

Bankers Trust Company of California, N.A.,
  as Trustee
1761 East St. Andrew Place
Santa Ana, California  92705
         Re:      Aames Mortgage Trust 2002-1,
                  Mortgage Pass-Through Certificates,
                  Series, 2002-1, Class [  ] (the "Certificates")

Ladies and Gentlemen:

         In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Seller and the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (c) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (d) we have not, nor has
anyone acting on our behalf offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security from, or otherwise approached or negotiated with
respect to the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Act or that would render the disposition of the Certificates a violation of
Section 5 of the Act or require registration pursuant thereto, nor will act, nor
has authorized or will authorize any person to act, in such manner with respect
to the Certificates, (e) we are a "qualified institutional buyer" as that term
is defined in Rule 144A under the Act and have completed either of the forms of

                                     N-2-1

<PAGE>

certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates for our own account or for resale pursuant to Rule 144A and
further, understand that such Certificates may be resold, pledged or transferred
only (i) to a person reasonably believed to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Act.

                                       Very truly yours,

                                       [NAME OF TRANSFEREE]

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

                                     N-2-2

<PAGE>

                                                          ANNEX 1 TO EXHIBIT N-2

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

          The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

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

         (b) In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $        (1) in securities (except for
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.

            ___   Corporation, etc. The Buyer is a corporation (other than a
                  bank, savings and loan association or similar institution),
                  Massachusetts or similar business trust, partnership, or
                  charitable organization described in Section 501(c)(3) of the
                  Internal Revenue Code of 1986, as amended.

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

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

---------------
(1)  Buyer must own and/or invest on a discretionary basis at least $100,000,000
     in securities unless Buyer is a dealer, and, in that case, Buyer must own
     and/or invest on a discretionary basis at least $10,000,000 in securities.

                                     N-2-3

<PAGE>

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

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

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

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

            ___   Investment Advisor. The Buyer is an investment advisor
                  registered under the Investment Advisors Act of 1940.

            ___   Small Business Investment Company. Buyer is a small business
                  investment company licensed by the U.S. Small Business
                  Administration under Section 301(c) or (d) of the Small
                  Business Investment Act of 1958.

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

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

         (d) For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

                                     N-2-4

<PAGE>

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

         (f) Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                       Print Name of Buyer

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

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

                                     N-2-5

<PAGE>

                                                          ANNEX 2 TO EXHIBIT N-2

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

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

         (b) In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

                                     N-2-6

<PAGE>

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

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

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

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

         (e) The Buyer is familiar with Rule 144A and under-stands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

         (f) Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.

                                         Print Name of Buyer

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

                                         IF AN ADVISER:

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

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

                                     N-2-7

<PAGE>

                                                                       EXHIBIT O

               Mortgage Guaranty Insurance Corporation PMI Policy

                   [Available from Aames Capital Corporation]

                                      O-1

<PAGE>

                                                                       EXHIBIT P

                           List of PMI Mortgage Loans

                   [Available from Aames Capital Corporation]

                                      P-1

<PAGE>

                                                                       EXHIBIT Q

                        SUBSEQUENT MORTGAGE LOAN CRITERIA

LOAN-TO-VALUE RATIO

o   Weighted average Loan-to-Value Ratio of no greater than 80.00 on the
    Subsequent Mortgage Loans;

o   Maximum Loan-to-Value Ratio of 100.00;

o   None of the Subsequent Mortgage Loans will have subordinate second liens;

o   No more than 80.00% of the Subsequent Mortgage Loans will have
    Loan-to-Value Ratios equal to or in excess of 80.00;

INTEREST RATE

o   Weighted average minimum interest rate of no less than 6.75%;

BALANCE

Maximum Loan Balance of $632,000;

LOAN TYPE

No more than 12.67% of the Subsequent Mortgage Loans will be Hybrid Loans.

                                      Q-1

<PAGE>

                                                                       EXHIBIT R

                           Prepayment Charge Schedule

                   [Available from Aames Capital Corporation]

                                      R-1<PAGE>

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

                   MORGAN STANLEY DEAN WITTER CAPITAL I INC.,

                                   Depositor,

                               THE PROVIDENT BANK,

                                    Servicer,

                             NC CAPITAL CORPORATION,

                               Responsible Party,

                                       and

                         U.S. BANK NATIONAL ASSOCIATION,

                                    Trustee,

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

                         POOLING AND SERVICING AGREEMENT

                            Dated as of March 1, 2002

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

            MORGAN STANLEY DEAN WITTER CAPITAL I INC. TRUST 2002-NC1

                       MORTGAGE PASS-THROUGH CERTIFICATES,
                                 SERIES 2002-NC1

--------------------------------------------------------------------------------
<PAGE>

                                TABLE OF CONTENTS

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

                                                  DEFINITIONS

                                                   ARTICLE II

                                         CONVEYANCE OF MORTGAGE LOANS;
                                         REPRESENTATIONS AND WARRANTIES

Section 2.01     Conveyance of Mortgage Loans...............................................................31
Section 2.02     Acceptance by the Trustee of the Mortgage Loans............................................33
Section 2.03     Representations, Warranties and Covenants of the Responsible Party and the Servicer........34
Section 2.04     The Depositor and the Mortgage Loans.......................................................37
Section 2.05     Delivery of Opinion of Counsel in Connection with Substitution and Repurchase,
                     Non-Qualified Mortgages................................................................37
Section 2.06     Execution and Delivery of Certificates.....................................................37
Section 2.07     REMIC Matters..............................................................................38
Section 2.08     Representations and Warranties of the Depositor............................................38

                                                  ARTICLE III

                                          ADMINISTRATION AND SERVICING
                                               OF MORTGAGE LOANS

Section 3.01     Servicer to Service Mortgage Loans.........................................................39
Section 3.02     Subservicing Agreements Between the Servicer and Subservicers..............................41
Section 3.03     Successor Subservicers.....................................................................42
Section 3.04     Liability of the Servicer..................................................................42
Section 3.05     No Contractual Relationship Between Subservicers and the Trustee...........................42
Section 3.06     Assumption or Termination of Subservicing Agreements by Trustee............................43
Section 3.07     Collection of Certain Mortgage Loan Payments...............................................43
Section 3.08     Subservicing Accounts......................................................................46
Section 3.09     Collection of Taxes, Assessments and Similar Items; Escrow Accounts........................46
Section 3.10     Collection Account.........................................................................47
Section 3.11     Withdrawals from the Collection Account....................................................48
Section 3.12     Investment of Funds in the Collection Account..............................................49
Section 3.13     Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage.............50
Section 3.14     Enforcement of Due-On-Sale Clauses Assumption Agreements...................................52
</TABLE>

                                                      -i-
<PAGE>

<TABLE>
<CAPTION>
<S>              <C>                                                                                     <C>
Section 3.15     Realization Upon Defaulted Mortgage Loans..................................................53
Section 3.16     Release of Mortgage Files..................................................................54
Section 3.17     Title, Conservation and Disposition of REO Property........................................55
Section 3.18     Notification of Adjustments................................................................57
Section 3.19     Access to Certain Documentation and Information Regarding the Mortgage Loans...............57
Section 3.20     Documents, Records and Funds in Possession of the Servicer to be Held for the Trustee......57
Section 3.21     Servicing Compensation.....................................................................58
Section 3.22     Annual Statement as to Compliance..........................................................58
Section 3.23     Annual Independent Public Accountants' Servicing Statement; Financial Statements...........59
Section 3.24     Trustee to Act as Servicer.................................................................59
Section 3.25     Compensating Interest......................................................................60
Section 3.26     Credit Reporting; Gramm-Leach-Bliley Act...................................................60

                                                   ARTICLE IV

                                               DISTRIBUTIONS AND
                                            ADVANCES BY THE SERVICER

Section 4.01     Advances...................................................................................60
Section 4.02     Priorities of Distribution.................................................................61
Section 4.03     Monthly Statements to Certificateholders...................................................65
Section 4.04     Certain Matters Relating to the Determination of LIBOR.....................................67
Section 4.05     Allocation of Applied Realized Loss Amounts................................................68

                                                   ARTICLE V

                                                THE CERTIFICATES

Section 5.01     The Certificates...........................................................................68
Section 5.02     Certificate Register; Registration of Transfer and Exchange of Certificates................69
Section 5.03     Mutilated, Destroyed, Lost or Stolen Certificates..........................................74
Section 5.04     Persons Deemed Owners......................................................................74
Section 5.05     Access to List of Certificateholders' Names and Addresses..................................74
Section 5.06     Maintenance of Office or Agency............................................................75

                                                   ARTICLE VI

                                         THE DEPOSITOR AND THE SERVICER

Section 6.01     Respective Liabilities of the Depositor and the Servicer...................................75
Section 6.02     Merger or Consolidation of the Depositor or the Servicer...................................75
Section 6.03     Limitation on Liability of the Depositor, the Servicer and Others..........................76
</TABLE>

                                                     -ii-
<PAGE>

<TABLE>
<CAPTION>
<S>              <C>                                                                                     <C>
Section 6.04     Limitation on Resignation of the Servicer..................................................77
Section 6.05     Additional Indemnification by the Servicer; Third Party Claims.............................77

                                                  ARTICLE VII

                                                    DEFAULT

Section 7.01     Events of Default..........................................................................77
Section 7.02     Trustee to Act; Appointment of Successor...................................................79
Section 7.03     Notification to Certificateholders.........................................................80

                                                  ARTICLE VIII

                                             CONCERNING THE TRUSTEE

Section 8.01     Duties of the Trustee......................................................................80
Section 8.02     Certain Matters Affecting the Trustee......................................................81
Section 8.03     Trustee Not Liable for Certificates or Mortgage Loans......................................82
Section 8.04     Trustee May Own Certificates...............................................................83
Section 8.05     Trustee's Fees and Expenses................................................................83
Section 8.06     Eligibility Requirements for the Trustee...................................................84
Section 8.07     Resignation and Removal of the Trustee.....................................................84
Section 8.08     Successor Trustee..........................................................................85
Section 8.09     Merger or Consolidation of the Trustee.....................................................85
Section 8.10     Appointment of Co-Trustee or Separate Trustee..............................................86
Section 8.11     Tax Matters................................................................................87
Section 8.12     Periodic Filings...........................................................................89
Section 8.13     Tax Classification of the Excess Reserve Fund Account......................................90

                                                   ARTICLE IX

                                                  TERMINATION

Section 9.01     Termination upon Liquidation or Purchase of the Mortgage Loans.............................90
Section 9.02     Final Distribution on the Certificates.....................................................90
Section 9.03     Additional Termination Requirements........................................................92

                                                   ARTICLE X

                                            MISCELLANEOUS PROVISIONS

Section 10.01    Amendment..................................................................................92
Section 10.02    Recordation of Agreement; Counterparts.....................................................94
Section 10.03    Governing Law..............................................................................94
Section 10.04    Intention of Parties.......................................................................94
</TABLE>

                                                     -iii-
<PAGE>

<TABLE>
<CAPTION>
<S>              <C>                                                                                     <C>
Section 10.05    Notices....................................................................................95
Section 10.06    Severability of Provisions.................................................................96
Section 10.07    Assignment.................................................................................96
Section 10.08    Limitation on Rights of Certificateholders.................................................96
Section 10.09    Inspection and Audit Rights................................................................97
Section 10.10    Certificates Nonassessable and Fully Paid..................................................97
</TABLE>

                                                     -iv-

<PAGE>

SCHEDULES

Schedule I      Mortgage Loan Schedule

Schedule II     Representations and Warranties of the Servicer

Schedule III    Representations and Warranties as to the Mortgage Loans

Schedule IV     Representations and Warranties as to the Responsible Party

EXHIBITS

Exhibit A       Form of Class A, Class M, Class B-1 Certificate

Exhibit B       Form of Class P Certificate

Exhibit C       Form of Class R Certificate

Exhibit D       Form of Class X Certificate

Exhibit E       Form of Initial Certification of Trustee

Exhibit F       Form of Document Certification and Exception Report of Trustee

Exhibit G       Form of Transfer Affidavit

Exhibit H       Form of Transferor Certificate

Exhibit I       Form of Rule 144A Letter

Exhibit J       Form of Request for Release

Exhibit K       Form of Contents for Each Mortgage File

                                      -v-
<PAGE>

     THIS POOLING AND SERVICING AGREEMENT, dated as of March 1, 2002, among
MORGAN STANLEY DEAN WITTER CAPITAL I INC., a Delaware corporation, as depositor
(the "Depositor"), THE PROVIDENT BANK, an Ohio banking corporation, as servicer
(the "Servicer"), NC CAPITAL CORPORATION, a California corporation, as
responsible party ("Responsible Party") and U.S. BANK NATIONAL ASSOCIATION, a
national banking association, as trustee (the "Trustee"),

                              W I T N E S S E T H:

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

                              PRELIMINARY STATEMENT

     The Trustee shall elect that two segregated asset pools within the Trust
Fund be treated for federal income tax purposes as comprising two REMICs (each a
"REMIC" or, in the alternative, the Lower Tier REMIC and the Upper Tier REMIC,
respectively). Each Certificate, other than the Class P and Class R
Certificates, represents ownership of a regular interest in the Upper Tier REMIC
for purposes of the REMIC Provisions. The Class R Certificate represents
ownership of the sole class of residual interest in each of the Lower Tier REMIC
and the Upper Tier REMIC for purposes of the REMIC Provisions. The Startup Day
for each REMIC described herein is the Closing Date. The latest possible
maturity date for each Certificate is the latest date referenced in Section
9.01. The Upper Tier REMIC shall hold as assets the several classes of
uncertificated Lower Tier Regular Interests, set out below. Each such Lower Tier
Regular Interest is hereby designated as a regular interest in the Lower Tier
REMIC. Class LT-A1, Class LT-A2, Class LT-M-1, Class LT-M-2 and Class LT-B-1 are
hereby designated the LT Accretion Directed Classes. The Class P Certificate
represents beneficial ownership of the Prepayment Charges, which portion of the
Trust Fund shall be treated as a grantor trust.

<TABLE>
<CAPTION>

        LOWER TIER           LOWER TIER INTEREST               INITIAL LOWER TIER               CORRESPONDING UPPER
     CLASS DESIGNATION               RATE                       PRINCIPAL AMOUNT                  TIER REMIC CLASS
     -----------------               ----                       ----------------                  ----------------

<S>                          <C>                <C>                                                 <C>
Class LT-A-1                         (1)        1/2 initial Corresponding Upper Tier REMIC             A-1
                                                initial principal balance

Class LT-A-2                         (1)        1/2 initial Corresponding Upper Tier REMIC             A-2
                                                initial principal balance

Class LT-M-1                         (1)        1/2 initial Corresponding Upper Tier REMIC             M-1
                                                initial principal balance

Class LT-M-2                         (1)        1/2 initial Corresponding Upper Tier REMIC             M-2
                                                initial principal balance

Class LT-B-1                         (1)        1/2 initial Corresponding Upper Tier REMIC             B-1
                                                initial principal balance

Class LT-Accrual                     (1)        1/2 Pool Balance plus1/2Subordinated Amount

Class LT-R                           (2)                              (2)
</TABLE>

(1)  The interest rate with respect to any Distribution Date for these interests
     is a per annum variable rate equal to the WAC Cap.

                                        1
<PAGE>

(2)  The Class LT-R Interest is the sole class of residual interest in the Lower
     Tier REMIC and it does not have a principal amount or an interest rate.

     The Lower Tier REMIC shall hold as assets all of the assets included in the
Trust Fund other than Prepayment Charges, the Excess Reserve Fund Account, and
the Lower Tier Regular Interests.

     On each Distribution Date, 50% of the increase in the Subordinated Amount
will be payable as a reduction of the principal balances of the LT Accretion
Directed Classes (each such Class will be reduced by an amount equal to 50% of
any increase in the Subordinated Amount that is attributable to a reduction in
the principal balance of its Corresponding Class) and will be accrued and added
to the principal balance of the LT Accrual Class. On each Distribution Date, the
increase in the principal balance of the LT Accrual Class may not exceed
interest accruals for such Distribution Date for the LT Accrual Class. In the
event that: (i) 50% of the increase in the Subordinated Amount exceeds (ii)
interest accruals on the LT Accrual Class for such Distribution Date, the excess
for such Distribution Date (accumulated with all such excesses for all prior
Distribution Dates) will be added to any increase in the Subordinated Amount for
purposes of determining the amount of interest accrual on the LT Accrual Class
payable as principal on the LT Accretion Directed Classes on the next
Distribution Date pursuant to the first sentence of this paragraph. All payments
of scheduled principal and prepayments of principal generated by the Mortgage
Loans shall be allocated 50% to the LT Accrual Class, and 50% to the LT
Accretion Directed Classes (principal payments shall be allocated among such LT
Accretion Directed Classes in an amount equal to 50% of the principal amounts
allocated to their respective Corresponding Classes), until paid in full.
Notwithstanding the above, principal payments allocated to the Class X
Certificates that result in the reduction in the Subordinated Amount shall be
allocated to the LT Accrual Class (until paid in full). Realized losses shall be
applied so that after all distributions have been made on each Distribution Date
(i) the principal balances of each of the LT Accretion Directed Class is equal
to 50% of the principal balance of their Corresponding Class, and (ii) the LT
Accrual Class is equal to 50% of the aggregate principal balance of the Mortgage
Pool plus 50% of the Subordinated Amount.

     The Upper Tier REMIC shall issue the following classes of interests and
each Upper Tier Interest, other than the Class UT-R Interest, is hereby
designated as a regular interest in the Upper Tier REMIC.

   UPPER TIER         UPPER TIER      INITIAL UPPER TIER        CORRESPONDING
CLASS DESIGNATION    INTEREST RATE     PRINCIPAL AMOUNT          CERTIFICATE
-----------------    -------------     ----------------          -----------
Class A-1                (1)           $    286,626,000         Class A-1(6)
Class A-2                (2)           $    198,696,000         Class A-2(6)
Class M-1                (3)           $     35,552,000         Class M-1(6)
Class M-2                (3)           $     32,589,000         Class M-2(6)
Class B-1                (3)           $     28,145,000         Class B-1(6)
Class X                  (4)                         (5)        Class X(4)
Class UT-R               (5)                                    Class R

(1)  The Class A-1 Interests will bear interest during their initial Interest
     Accrual Period at 2.325% per annum. The Class A-1 Interests will bear
     interest during each Interest Accrual Period thereafter at a per annum rate
     equal to (a) on or prior to the Optional Termination Date, the least of (i)
     LIBOR plus 0.425%, (ii) 16%,

                                      -2-
<PAGE>

     (iii) the Loan Group I Cap and (iv) the WAC Cap or (b) after the Optional
     Termination Date, the least of (i) LIBOR plus 0.850%, (ii) 16%, (iii) the
     Loan Group I Cap and (iv) the WAC Cap.

(2)  The Class A-2 Interests will bear interest during their initial Interest
     Accrual Period at 2.250% per annum. The Class A-2 Interests will bear
     interest during each Interest Accrual Period thereafter at a per annum rate
     equal to (a) on or prior to the Optional Termination Date, the least of (i)
     LIBOR plus 0.350%, (ii) 16%, (iii) the Loan Group II Cap and (iv) the WAC
     Cap or (b) after the Optional Termination Date, the least of (i) LIBOR plus
     0.700%, (ii) 16%, (iii) the Loan Group II Cap and (iv) the WAC Cap.

(3)  The Class M-1, Class M-2 and Class B-1 Interests will bear interest during
     their initial Interest Accrual Period at 2.700%, 3.300% and 4.200%,
     respectively, per annum. The Class M-1, Class M-2 and Class B-1 Interests
     will bear interest during each Interest Accrual Period thereafter at a per
     annum rate equal to (a) on or prior to the Optional Termination Date, the
     least of (i) LIBOR plus 0.800%, 1.400% and 2.300%, respectively, (ii) 16%,
     and (iii) the WAC Cap or (b) after the Optional Termination Date, the least
     of (i) LIBOR plus 1.200%, 2.100% and 3.450%, respectively, (ii) 16%, and
     (iii) the WAC Cap.

(4)  The Class X Interest has an initial principal balance of $10,370,214, but
     it will not accrue interest on such balance but will accrue interest on a
     notional principal balance. As of any Distribution Date, the Class X
     Interest shall have a notional principal balance equal to the aggregate of
     the principal balances of the Lower Tier Regular Interests as of the first
     day of the related Interest Accrual Period. With respect to any Interest
     Accrual Period, the Class X Interest shall bear interest at a rate equal to
     the excess, if any, of the WAC Cap over the product of (i) 2 and (ii) the
     weighted average Pass-Through Rate of the Lower Tier REMIC Interests, where
     the LT Accrual Class is subject to a cap equal to zero and each LT
     Accretion Directed Class is subject to a cap equal to the Pass-Through Rate
     on its Corresponding Class. With respect to any Distribution Date, interest
     that so accrues on the notional principal balance of the Class X Interest
     shall be deferred in an amount equal to any increase in the Subordinated
     Amount on such Distribution Date. Such deferred interest shall not itself
     bear interest.

(5)  The Class UT-R Interest is the sole class of residual interest in the Upper
     Tier REMIC. The Class UT-R Interest does not have an interest rate.

(6)  Each of these Certificates will represent not only the ownership of the
     Corresponding Class of Upper Tier Regular Interest but also the right to
     receive payments from the Excess Reserve Fund Account in respect of any
     Basis Risk CarryForward Amounts. For federal income tax purposes, the
     Trustee will treat a Certificateholder's right to receive payments from the
     Excess Reserve Fund Account as payments made pursuant to an interest rate
     cap contract written by the Class X Certificateholder.

     The minimum denomination for each Class of Certificates, other than the
Class P, Class R and the Class X Certificates, will be $25,000 with integral
multiples of $1 in excess thereof. The Class P, Class R and the Class X
Certificates will each represent a 100% Percentage Interest in such class.

     Set forth below are designations of Classes of Certificates to the
categories used herein:

Book-Entry Certificates.............  All Classes of Certificates other than the
                                      Physical Certificates.

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

Subordinated Certificates...........  Class M-1, Class M-2 and Class B
                                      Certificates.

Delay Certificates..................  None.

                                      -3-
<PAGE>

ERISA-Restricted
   Certificates.....................  Class R Certificates, Class P Certificate
                                      and Class X Certificate; any certificate
                                      with a rating below the lowest applicable
                                      permitted rating under the Underwriters'
                                      Exemption.

Floating Rate Certificates..........  Class A and Subordinated Certificates.

LIBOR Certificates..................  Class A and Subordinated Certificates.

Non-Delay Certificates..............  Class A, Class X and Subordinated
                                      Certificates.

Offered Certificates................  All Classes of Certificates other than the
                                      Private Certificates.

Physical Certificates...............  Class P, Class X and Class R Certificates.

Private Certificates................  Class A-1, Class M-1, Class M-2, Class P,
                                      Class X and Class R Certificates.

Rating Agencies.....................  Moody's, Fitch and Standard & Poor's.

Regular Certificates................  All Classes of Certificates other than the
                                      Class P and Class R Certificates.

Residual Certificates...............  Class R Certificates.

                                      -4-
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

         Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:

         60+ Day Delinquent Loan: Each Mortgage Loan with respect to which any
portion of a Scheduled Payment is, as of the last day of the prior Due Period,
two months or more past due (without giving effect to any grace period), each
Mortgage Loan in foreclosure, all REO Property and each Mortgage Loan for which
the Mortgagor has filed for bankruptcy.

         Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices set forth in Section 3.01 of this Agreement.

         Accrued Certificate Interest Distribution Amount: With respect to any
Distribution Date for each Class of Certificates (other than the Class X
Certificate), the amount of interest accrued during the related Interest Accrual
Period at the applicable Pass-Through Rate on the related Class Certificate
Balance immediately prior to such Distribution Date, as reduced by such Class's
share of Net Prepayment Interest Shortfalls and Relief Act Interest Shortfalls
for the related Due Period allocated to such Class pursuant to Section 4.02.

         Adjustable Rate Mortgage Loan: An adjustable rate Mortgage.

         Adjusted Mortgage Rate: As to each Mortgage Loan and at any time, the
per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.

         Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any time,
the per annum rate equal to the Mortgage Rate less the Expense Fee Rate.

         Adjustment Date: As to any Mortgage Loan, the first Due Date on which
the related Mortgage Rate adjusts as set forth in the related Mortgage Note and
each Due Date thereafter on which the Mortgage Rate adjusts as set forth in the
related Mortgage Note.

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

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

         Amount Held for Future Distribution: As to the Certificates on any
Distribution Date, the aggregate amount held in the Collection Account at the
close of business on the related Determination Date on account of (i) Principal
Prepayments and Liquidation Proceeds on the Mortgage Loans received after the
end of the related Prepayment Period and (ii) all Scheduled Payments on the
Mortgage Loans due after the end of the related Due Period.

                                      -5-
<PAGE>

         Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which the aggregate Class Certificate Balance of the
Regular Certificates after distributions of principal on such Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the immediately preceding Due Period.

         Appraised Value: The value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the Mortgaged
Property.

         Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, (other than the assignee's
name and recording information not yet returned from the recording office),
reflecting the sale of the Mortgage to the Trustee.

         Available Funds: With respect to any Distribution Date and the Mortgage
Loans to the extent received by the Trustee (x) the sum of (i) all scheduled
installments of interest (net of the related Expense Fees) and principal due on
the Due Date on such Mortgage Loans in the related Due Period and received prior
to the related Determination Date, together with any P&I Advances in respect
thereof; (ii) all Condemnation Proceeds, Insurance Proceeds and Liquidation
Proceeds during the related Prepayment Period (in each case, net of unreimbursed
expenses incurred in connection with a liquidation or foreclosure and
unreimbursed Servicing Advances, if any); (iii) all partial or full prepayments
on the Mortgage Loans received during the related Prepayment Period together
with all Compensating Interest thereon; and (iv) amounts received with respect
to such Distribution Date as the Substitution Adjustment Amount or purchase
price in respect of a Deleted Mortgage Loan or a Mortgage Loan repurchased by
the Responsible Party as of such Distribution Date; reduced by (y) amounts in
reimbursement for P&I Advances and Servicing Advances previously made with
respect to the Mortgage Loans and other amounts as to which the Servicer is
entitled to be reimbursed pursuant to the Agreement.

         Balloon Loan: Any Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its stated maturity
date.

         Basic Principal Distribution Amount: With respect to any Distribution
Date, the excess of (i) the Principal Remittance Amount for such Distribution
Date over (ii) the Excess Subordinated Amount, if any, for such Distribution
Date.

         Basis Risk CarryForward Amount: With respect to each Class of Regular
Certificates, as of any Distribution Date, the sum of (A) if on such
Distribution Date the Pass-Through Rate for any Class of Regular Certificates is
based upon a Loan Group Cap or the WAC Cap, the excess of (i) the amount of
interest such Class of Certificates would otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of LIBOR and the
applicable Pass-Through Margin on such Class of Certificates for such
Distribution Date, up to 16% over (ii) the amount of interest payable on such
Class of Certificates at, with respect to the Class A-1 Certificates, the lesser
of (x) the Loan Group I Cap or (z) the WAC Cap, with respect to the Class A-2
Certificates, the lesser of (x) the Loan Group II Cap or (z) the WAC Cap, and
with respect to each other Class of Regular Certificates, the WAC Cap, as
applicable, for such Distribution Date and (B) the Basis Risk CarryForward
Amount for such Class of Certificates for all previous Distribution Dates not
previously paid, together with interest thereon

                                      -6-
<PAGE>

at a rate equal to the sum of LIBOR and the applicable Pass-Through Margin for
such Class of Certificates for such Distribution Date, up to 16%.

         Basis Risk Payment: For any Distribution Date, an amount equal to any
Basis Risk CarryForward Amount, provided, however, that with respect to any
Distribution Date, the payment cannot exceed the sum of the amounts otherwise
distributable on the Class X Certificates.

         Best's: Best's Key Rating Guide, as the same shall be amended from time
to time.

         Book-Entry Certificates: As specified in the Preliminary Statement.

         Business Day: Any day other than (i) Saturday or Sunday, or (ii) a day
on which banking and savings and loan institutions, in (a) the State of New
York, New Jersey, Minnesota and Florida, (b) the state in which the Servicer's
servicing operations are located, or (c) the State in which the Trustee's
operations are located, are authorized or obligated by law or executive order to
be closed.

         Certificate: Any one of the Certificates executed by the Trustee in
substantially the forms attached hereto as exhibits.

         Certificate Balance: With respect to any Class of Certificates, other
than the Class P or Class R Certificates, at any date, the maximum dollar amount
of principal to which the Holder thereof is then entitled hereunder, such amount
being equal to the Denomination thereof minus all distributions of principal
previously made with respect thereto and in the case of any Subordinated
Certificates, reduced by any Applied Realized Loss Amounts applicable to such
Class of Subordinated Certificates.

         Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Book-Entry Certificate.

         Certificate Register: The register maintained pursuant to Section 5.02.

         Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or any affiliate of the Depositor shall be deemed not to
be Outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect such consent has been obtained; provided, however, that if
any such Person (including the Depositor) owns 100% of the Percentage Interests
evidenced by a Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof that requires the consent of
the Holders of Certificates of a particular Class as a condition to the taking
of any action hereunder. The Trustee is entitled to rely conclusively on a
certification of the Depositor or any affiliate of the Depositor in determining
which Certificates are registered in the name of an affiliate of the Depositor.

                                      -7-
<PAGE>

         Class: All Certificates bearing the same class designation as set forth
in the Preliminary Statement.

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

         Class A Principal Allocation Percentage: For any Distribution Date is
the percentage equivalent of a fraction, determined as follows: (A) with respect
to the Class A-1 Certificates, the numerator of which is (x) the portion of the
Principal Remittance Amount for that Distribution Date that is attributable to
the principal received or advanced on the Group I Mortgage Loans and the
denominator of which is (y) the Principal Remittance Amount for that
Distribution Date and; (B) with respect to the Class A-2 Certificates, the
numerator of which is (x) the portion of the Principal Remittance Amount for
that Distribution Date that is attributable to the principal received or
advanced on the Group II Mortgage Loans and the denominator of which is (y) the
Principal Remittance Amount for that Distribution Date.

         Class A Principal Distribution Amount: With respect to any Distribution
Date, the excess of (i) the aggregate Class Certificate Balances of the Class A
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 64.00%, of the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (B) the Stated Principal Balances
of the Mortgage Loans as of the last day of the related Due Period minus
$2,959,891.

         Class A-1 Certificates: All Certificates bearing the class designation
of "Class A-1 Certificates".

         Class A-2 Certificates: All Certificates bearing the class designation
of "Class A-2 Certificates".

         Class B Certificates: All Certificates bearing the class designation of
"Class B Certificates".

         Class B-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account distribution of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class Certificate Balance of the Class M-2
Certificates (after taking into account distribution of the Class M-2 Principal
Distribution Amount for such Distribution Date), and (D) the Class Certificate
Balance of the Class B-1 Certificates immediately prior to such Distribution
Date over (ii) the lesser of (A) 96.50% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(B) the Stated Principal Balances of the Mortgage Loans as of the last day of
the related Due Period minus $2,959,891, provided, however, that with respect to
any Distribution Date on which the Class Certificate Balances of the Class A,
Class M-1 and Class M-2 Certificates have been reduced to zero, the Class B-1
Principal Distribution Amount is the lesser of (x) the Class Certificate Balance
of the Class B-1 Certificates and (y) the Principal Distribution Amount.

                                      -8-
<PAGE>

         Class Certificate Balance: With respect to any Class and as to any date
of determination, the aggregate of the Certificate Balances of all Certificates
of such Class as of such date.

         Class M-1 Certificates: All Certificates bearing the class designation
of "Class M-1 Certificates".

         Class M-2 Certificates: All Certificates bearing the class designation
of "Class M-2 Certificates".

         Class M-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account
distribution of the Class A Principal Distribution Amount on such Distribution
Date), and (B) the Class Certificate Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (ii) the lesser of (A) 76.00%
of the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period and (B) the Stated Principal Balances of the
Mortgage Loans as of the last day of the related Due Period minus $2,959,891.

         Class M-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account
distribution of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account distribution of the Class M-1 Principal Distribution Amount
on such Distribution Date) and (C) the Class Certificate Balance of the Class
M-2 Certificates immediately prior to such Distribution Date over (ii) the
lesser of (A) 87.00% of the aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the related Due Period and (B) the Stated Principal
Balances of the Mortgage Loans as of the last day of the related Due Period
minus $2,959,891.

         Class X Distributable Amount: On any Distribution Date, the sum of (i)
the amount of interest that has accrued on the Class X Regular Interest and not
applied as an Extra Principal Distribution Amount on such Distribution Date,
plus any such accrued interest remaining undistributed from prior Distribution
Dates, and (ii) any portion of the principal balance of the Class X Regular
Interest which is distributable as a Subordination Reduction Amount, less any
amounts paid as a Basis Risk Payment.

         Closing Date: March 27, 2002.

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

         Collection Account: As defined in Section 3.10(a).

         Compensating Interest: For any Distribution Date, the lesser of (a) the
Prepayment Interest Shortfall, if any, for the Distribution Date, and (b) the
amount of the Servicing Fee payable to the Servicer for such Distribution Date.

                                      -9-
<PAGE>

         Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation.

         Corporate Trust Office: The designated office of the Trustee in the
State of Minnesota at which at any particular time its corporate trust business
with respect to this Agreement is administered, which office at the date of the
execution of this Agreement is located at 180 East Fifth Street, St. Paul,
Minnesota 55101, Attn: Structured Finance/MSDW 2002-NC1, facsimile no. (651)
244-1797 and which is the address to which notices to and correspondence with
the Trustee should be directed.

         Corresponding Class: The class of interests in any REMIC created under
this Agreement that correspond to the Class of interests in another such REMIC
or to a Class of Certificates in the manner set out below:

              LOWER TIER             UPPER TIER        CORRESPONDING
           CLASS DESIGNATION          INTEREST          CERTIFICATE
           -----------------          --------          -----------
              Class LT-A-1           Class A-1           Class A-1

              Class LT-A-2           Class A-2           Class A-2

              Class LT-M-1           Class M-1           Class M-1

              Class LT-M-2           Class M-2           Class M-2

              Class LT-M-3           Class B-1           Class B-1

         Cumulative Loss Percentage: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Applied Realized Loss Amounts incurred from the Cut-off Date to the
last day of the preceding calendar month and the denominator of which is the
Scheduled Principal Balance of the Mortgage Loans as of the Cut-off Date.

         Custodial File: With respect to each Mortgage Loan, the file retained
by the Trustee consisting of items (a) - (h) as listed on Exhibit K hereto.

         Cut-off Date: March 1, 2002.

         Cut-off Date Pool Principal Balance: The aggregate Stated Principal
Balances of all Mortgage Loans as of the Cut-off Date.

         Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the Cut-off Date.

         Data Tape Information: The information provided by the Responsible
Party as of March 1, 2002 to the Depositor setting forth the following
information with respect to each Mortgage Loan: (1) the Mortgagor's name; (2) as
to each Mortgage Loan, the Scheduled Principal Balance as of the Cut-Off Date;
(3) the Mortgage Rate Cap; (4) the Index; (5) a code indicating whether the
Mortgaged Property is owner-occupied; (6) the type of Mortgaged Property; (7)
the first date on which the Monthly Payment was due on the Mortgage Loan and, if
such date is not consistent with the Due Date currently in effect, such Due
Date; (8) the "paid

                                      -10-
<PAGE>

through date" based on payments received from the related Mortgagor; (9) the
original principal amount of the Mortgage Loan; (10) with respect to Adjustable
Rate Mortgage Loans, the Maximum Mortgage Rate; (11) the type of Mortgage Loan
(i.e., fixed or adjustable); (12) a code indicating the purpose of the loan
(i.e., purchase, rate and term refinance, equity take-out refinance); (13) a
code indicating the documentation style (i.e., full, asset verification, income
verification and no documentation); (14) the credit risk score (FICO score);
(15) the loan credit grade classification (as described in the Underwriting
Guidelines); (16) with respect to each Adjustable Rate Mortgage Loan, the
Minimum Mortgage Rate; (17) the Mortgage Rate at origination; (18) with respect
to each Adjustable Rate Mortgage Loan, the first Adjustment Date immediately
following the Cut-off Date; (19) the Value of the Mortgaged Property; (20) a
code indicating the type of Prepayment Charges applicable to such Mortgage Loan,
if any; and (21) with respect to each Adjustable Rate Mortgage Loan, the
Periodic Mortgage Rate Cap. With respect to the Mortgage Loans in the aggregate,
the Data Tape Information shall set forth the following information, as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current aggregate
outstanding principal balance of the Mortgage Loans; (3) the weighted average
Mortgage Rate of the Mortgage Loans; and (4) the weighted average maturity of
the Mortgage Loans.

         Debt Service Reduction: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction in a proceeding under the Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan which became final and
non-appealable, except such a reduction resulting from a Deficient Valuation or
any reduction that results in a permanent forgiveness of principal.

         Deficient Valuation: With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the Bankruptcy Code.

         Definitive Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).

         Delay Certificates: As specified in the Preliminary Statement.

         Deleted Mortgage Loan: As defined in Section 2.03.

         Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Certificate Balance of this Certificate" or the
Percentage Interest appearing on the face thereof.

         Depositor: Morgan Stanley Dean Witter Capital I Inc. a Delaware
corporation, or its successor in interest.

         Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as 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.

                                      -11-
<PAGE>

         Depository Institution: Any depository institution or trust company,
including the Trustee, that (a) is incorporated under the laws of the United
States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations that
are rated P-1 by Moody's, F1+ by Fitch and A-1 by Standard & Poor's.

         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 each Remittance Date, the Business
Day immediately preceding such Remittance Date.

         Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(d) in the name of the Trustee
for the benefit of the Certificateholders and designated "U.S. Bank National
Association in trust for registered holders of Morgan Stanley Dean Witter
Capital I Inc. Mortgage Pass-Through Certificates, Series 2002-NC1". Funds in
the Distribution Account shall be held in trust for the Certificateholders for
the uses and purposes set forth in this Agreement.

         Distribution Account Deposit Date: As to any Distribution Date, 12:30
p.m. Central time on the Business Day immediately preceding such Distribution
Date.

         Distribution Date: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such day is not a Business Day, the
next succeeding Business Day, commencing in April 2002.

         Document Certification and Exception Report: The report attached to
Exhibit F hereto.

         Due Date: The day of the month on which the Scheduled Payment is due on
a Mortgage Loan, exclusive of any days of grace.

         Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month preceding the month of the Remittance Date and
ending on the first day of the month of the Remittance Date.

         Eligible Account: Either (i) an account maintained with a federal or
state chartered depository institution or trust company the short-term unsecured
debt obligations of which (or, in the case of a depository institution or trust
company that is a subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated "A-1" by Standard & Poor's and
"P-1" by Moody's (or a comparable rating if another Rating Agency is specified
by the Depositor by written notice to the Servicer) at the time any amounts are
held on deposit therein, (ii) an account or accounts the deposits in which are
fully insured by the FDIC, (iii) a trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity or (iv) any other account acceptable to each

                                      -12-
<PAGE>

Rating Agency. Eligible Accounts may bear interest, and may include, if
otherwise qualified under this definition, accounts maintained with the Trustee.

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

         ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of Prohibited
Transaction Exemption ("PTE") 97-34, 62 Fed. Reg. 39021 (1997), as amended by
PTE 2000-58, 65 Fed. Reg. 67,765 (2000) (or any successor thereto), or any
substantially similar administrative exemption granted by the U.S. Department of
Labor.

         ERISA-Restricted Certificate: As specified in the Preliminary
Statement.

         Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.09(b).

         Escrow Payments: As defined in Section 3.09(b) of this Agreement.

         Event of Default: As defined in Section 7.01.

         Excess Reserve Fund Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Sections 3.07(b) and 3.07(c) in the name
of the Trustee for the benefit of the Regular Certificateholders and designated
"U.S. Bank National Association in trust for registered holders of Morgan
Stanley Dean Witter Capital I Inc. Trust 2002-NC1, Mortgage Pass-Through
Certificates, Series 2002-NC1". Funds in the Excess Reserve Fund Account shall
be held in trust for the Regular Certificateholders for the uses and purposes
set forth in this Agreement.

         Excess Subordinated Amount: With respect to any Distribution Date, the
excess, if any, of (a) the Subordinated Amount on such Distribution Date over
(b) the Specified Subordinated Amount for such Distribution Date.

         Expense Fees: As to each Mortgage Loan, the sum of the Servicing Fee
and Trustee Fee.

         Expense Fee Rate: As to each Mortgage Loan, the sum of the Servicing
Fee Rate and Trustee Fee Rate.

         Extra Principal Distribution Amount: As of any Distribution Date, the
lesser of (x) the related Total Monthly Excess Spread for such Distribution Date
and (y) the Subordination Deficiency for such Distribution Date.

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

         Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie Mae
Servicers' Guide and all amendments or additions thereto.

                                      -13-
<PAGE>

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

         FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

         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 Responsible Party as contemplated by this Agreement), a determination
made by the Servicer 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 Servicer shall maintain records, prepared by a Servicing Officer,
of each Final Recovery Determination made thereby.

         Final Scheduled Distribution Date: The Final Scheduled Distribution
Date for each Class of Certificates is the Distribution Date in each of the
following months:

                                                           FINAL SCHEDULED
                                                          DISTRIBUTION DATE
                                                          -----------------

Class A-1 Certificates................................... February 25, 2032
Class A-2 Certificates................................... February 25, 2032
Class M-1 Certificates................................... February 25, 2032
Class M-2 Certificates................................... February 25, 2032
Class B-1 Certificates................................... February 25, 2032
Class X Certificates..................................... February 25, 2032
Class P Certificates..................................... February 25, 2032
Class R Certificates..................................... February 25, 2032

         Fitch: Fitch Ratings, or any successor thereto. If Fitch is designated
as a Rating Agency in the Preliminary Statement, for purposes of Section
10.05(b) the address for notices to Fitch shall be Fitch Ratings, One State
Street Plaza, New York, New York 10004, Attention: MBS Monitoring - Morgan
Stanley Dean Witter Capital I Inc. 2002-NC1, or such other address as Fitch may
hereafter furnish to the Depositor and the Servicer.

         Fixed Rate Mortgage Loan: A fixed rate Mortgage Loan purchased pursuant
to the Purchase Agreement.

         Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note to be added to
the applicable Index to determine the Mortgage Rate.

         Group I Mortgage Loans: The Mortgage Loans identified on the Mortgage
Loan Schedule as Group I Mortgage Loans.

         Group II Mortgage Loans: The Mortgage Loans identified on the Mortgage
Loan Schedule as Group II Mortgage Loans.

                                      -14-
<PAGE>

         Index: As to each Adjustable Rate Mortgage Loan, the index from time to
time in effect for the adjustment of the Mortgage Rate set forth as such on the
related Mortgage Note.

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

         Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.

         Interest Accrual Period: With respect to each Class of Non-Delay
Certificates and the Corresponding Class of Lower Tier Regular Interests and any
Distribution Date, the period from the Distribution Date preceding the month of
the applicable Distribution Date (or in the case of the first Distribution Date,
the Closing Date) through the day before the applicable Distribution Date. For
purposes of computing interest accruals on each Class of Non-Delay Certificates,
each Interest Accrual Period has the actual number of days in such month and
each year is assumed to have 360 days.

         Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the Mortgage
Loan Schedule, on which the Mortgage Rate is adjusted.

         Late Collections: With respect to any Mortgage Loan and any Due Period,
all amounts received subsequent to the Determination Date immediately following
such Due Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
collections of principal and/or interest due (without regard to any acceleration
of payments under the related Mortgage and Mortgage Note) but delinquent for
such Due Period and not previously recovered.

         LIBOR: With respect to any Interest Accrual Period for the LIBOR
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.

         LIBOR Certificates: As specified in the Preliminary Statement.

                                      -15-
<PAGE>

         LIBOR Determination Date: With respect to any Interest Accrual Period
(other than the initial Interest Accrual Period) for the LIBOR Certificates, the
second London Business Day preceding the commencement of such Interest Accrual
Period.

         Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified (in accordance with this Agreement) that it has received
all amounts it expects to receive in connection with the liquidation of such
Mortgage Loan including the final disposition of an REO Property.

         Liquidation Event: With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from coverage under this Agreement by reason of its being purchased,
sold or replaced pursuant to or as contemplated by this Agreement. With respect
to any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property; or (ii) such REO Property is
removed from coverage under this Agreement by reason of its being purchased
pursuant to this Agreement.

         Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale
or otherwise.

         Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the original outstanding principal amount
of the Mortgage Loan as of the Cut-off Date (unless otherwise indicated), to the
lesser of (a) the Appraised Value of the Mortgaged Property at origination, and
(b) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the purchase price of the Mortgaged Property.

         London Business Day: Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.

         Loan Group Cap: The Loan Group I Cap or the Loan Group II Cap, as
applicable.

         Loan Group I Cap: With respect to the Group I Mortgage Loans as of any
Distribution Date, the product of (i) the weighted average of the Adjusted Net
Mortgage Rates then in effect on the beginning of the related Due Period on the
Group I Mortgage Loans and (ii) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days in the Interest Accrual Period
related to such Distribution Date.

         Loan Group II Cap: With respect to the Group II Mortgage Loans as of
any Distribution Date, the product of (i) the weighted average of the Adjusted
Net Mortgage Rates then in effect on the beginning of the related Due Period on
the Group II Mortgage Loans and (ii) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days in the Interest
Accrual Period related to such Distribution Date.

                                      -16-
<PAGE>

         Lower Tier Regular Interest: Each of the Class LT-A-1, Class LT-A-2,
Class LT-M-1, Class LT-M-2, Class LT-B-1 and Class LT-Accrual Interests as
described in the Preliminary Statement.

         Lower Tier REMIC: As described in the Preliminary Statement

         Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the maximum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be increased during the
lifetime of such Mortgage Loan.

         Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the minimum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be decreased during the
lifetime of such Mortgage Loan.

         Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.03.

         Moody's: Moody's Investors Service, Inc. If Moody's is designated as a
Rating Agency in the Preliminary Statement, for purposes of Section 10.05(b) the
address for notices to Moody's shall be Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007, Attention: Residential Mortgage
Pass-Through Group, or such other address as Moody's may hereafter furnish to
the Depositor and the Servicer.

         Mortgage: The mortgage, deed of trust or other instrument identified on
the Mortgage Loan Schedule as securing a Mortgage Note.

         Mortgage File: The items pertaining to a particular Mortgage Loan
contained in either the Servicing File or Custodial File.

         Mortgage Loans: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes,
without limitation, the Mortgage File, the Scheduled Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan, excluding
replaced or repurchased Mortgage Loans.

         Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto as
Schedule I, such schedule setting forth the following information with respect
to each Mortgage Loan: (1) the Seller's Mortgage Loan number; (2) the city,
state and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, PUD or condominium; (4) the
current Mortgage Interest Rate; (5) the current net Mortgage Interest Rate; (6)
the current Monthly Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after

                                      -17-
<PAGE>

deduction of payments of principal due on or before the Cut-off Date whether or
not collected; (11) the Loan-to-Value Ratio; (12) the next Interest Rate
Adjustment Date; (13) the lifetime Mortgage Interest Rate Cap; (14) whether the
Mortgage Loan is convertible or not; (15) a code indicating the mortgage
guaranty insurance company; (16) the Servicing Fee and (17) if such Mortgage
Loan is a Group I Mortgage Loan or a Group II Mortgage Loan.

         Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.

         Mortgage Rate: The annual rate of interest borne on a Mortgage Note,
which shall be adjusted from time to time with respect to Adjustable Rate
Mortgage Loans.

         Mortgage Rate Caps: With respect to an Adjustable Rate Mortgage Loan,
the Periodic Mortgage Rate Cap, the Maximum Mortgage Rate, and the Minimum
Mortgage Rate for such Mortgage Loan.

         Mortgaged Property: The real property (or leasehold estate, if
applicable) identified on the Mortgage Loan Schedule as securing repayment of
the debt evidenced by a Mortgage Note.

         Mortgagor: The obligor(s) on a Mortgage Note.

         Net Monthly Excess Cash Flow: For any Distribution Date the amount
remaining for distribution pursuant to subsection 4.02(iii) (before giving
effect to distributions pursuant to such subsection).

         NCCC Purchase Agreements: The Mortgage Loan Purchase Agreement, dated
as of January 1, 2002, by and between the Responsible Party and the Purchaser,
Mortgage Loan Purchase Agreement, dated as of January 1, 2002, by and between
the Responsible Party and the Purchaser and the Mortgage Loan Purchase
Agreement, dated as of February 1, 2002, by and between the Responsible Party
and the Purchaser.

         Net Prepayment Interest Shortfall: For any Distribution Date, the
amount by which the sum of the Prepayment Interest Shortfalls exceeds the sum of
the Compensating Interest payments made on such Distribution Date.

         NIMs Trust: Morgan Stanley Dean Witter Capital I Inc. NIM Trust
2002-NC1N, a Delaware business trust.

         Non-Delay Certificates: As specified in the Preliminary Statement.

         Nonrecoverable Advance: Any Servicing Advances previously made or
proposed to be made in respect of a Mortgage Loan or REO Property, which, in the
good faith business judgment of the Servicer, will not or, in the case of a
proposed Servicing Advance, would not, be ultimately recoverable from related
Insurance Proceeds, Liquidation Proceeds or otherwise. The determination by the
Servicer that it has made a Nonrecoverable Advance or that any proposed
Servicing Advances, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by an Officers' Certificate delivered to the Trustee.

                                      -18-
<PAGE>

         Nonrecoverable P&I Advance: Any P&I Advance previously made or proposed
to be made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Servicer, will not or, in the case of a proposed P&I
Advance, would not be ultimately recoverable from related late payments,
Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property
as provided herein.

         Notice of Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the Certificates
shall be made only upon presentation and surrender thereof.

         Offered Certificates: As specified in the Preliminary Statement.

         Officer's Certificate: A certificate signed by an officer of the
Servicer with responsibility for the servicing of the Mortgage Loans and listed
on a list delivered to the Trustee pursuant to this Agreement.

         Opinion of Counsel: A written opinion of counsel, who may be in-house
counsel for the Servicer or the Subservicer, reasonably acceptable to the
Trustee, provided that any Opinion of Counsel relating to (a) qualification of
the Mortgage Loans in a REMIC or (b) compliance with the REMIC Provisions, must
be (unless otherwise stated in such Opinion of Counsel) an opinion of counsel
who (i) is in fact independent of the Servicer of the Mortgage Loans, (ii) does
not have any material direct or indirect financial interest in the Servicer of
the Mortgage Loans or in an affiliate of either and (iii) is not connected with
the Servicer of the Mortgage Loans as an officer, employee, director or person
performing similar functions.

         Optional Termination Date: The Distribution Date on which the assets of
the Trust Fund decline to 10% or less of the Cut-off Date Pool Principal
Balance.

         OTS: Office of Thrift Supervision, and 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:

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

         (ii) 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 Due Date, a Mortgage Loan with a
Stated Principal Balance greater than zero which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.

         Ownership Interest: As to any Residual 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.

                                      -19-
<PAGE>

         P&I Advance: As to any Mortgage Loan or REO Property, any advance made
by the Servicer in respect of any Remittance Date representing the aggregate of
all payments of principal and interest, net of the Servicing Fee, that were due
during the related Due Period on the Mortgage Loans and that were delinquent on
the related Determination Date, plus certain amounts representing assumed
payments not covered by any current net income on the Mortgaged Properties
acquired by foreclosure or deed in lieu of foreclosure as determined pursuant to
Section 4.01.

         Pass-Through Margin: With respect to each Class of Regular
Certificates, the following percentages: Class A-1 Certificates, 0.425%; Class
A-2 Certificates, 0.350%, Class M-1 Certificates, 0.800%; Class M-2
Certificates, 1.400%; and Class B-1 Certificates, 2.300%. On the first
Distribution Date after the Optional Termination Date, the Pass-Through Margins
shall increase to: Class A-1 Certificates, 0.850%, Class A-2 Certificates,
0.700%, Class M-1 Certificates, 1.200%, Class M-2 Certificates, 2.100% and Class
B-1 Certificates, 3.450%.

         Pass-Through Rate: For each Class of Certificates and each Lower Tier
Regular Interest, the per annum rate set forth or calculated in the manner
described in the Preliminary Statement.

         Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.

         Periodic Mortgage Rate Cap: With respect to an Adjustable Rate Mortgage
Loan, the periodic limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.

         Permitted Investments: Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued by the Servicer, the Trustee or any of their respective
Affiliates:

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

         (ii) demand and time deposits in, certificates of deposit of, or
     bankers' acceptances (which shall each have an original maturity of not
     more than 90 days and, in the case of bankers' acceptances, shall in no
     event have an original maturity of more than 365 days or a remaining
     maturity of more than 30 days) denominated in United States dollars and
     issued by, any Depository Institution and rated F1+ by Fitch;

         (iii) repurchase obligations with respect to any security described in
     clause (i) above entered into with a Depository Institution (acting as
     principal);

                                      -20-
<PAGE>

         (iv) securities bearing interest or sold at a discount that are issued
     by any corporation incorporated under the laws of the United States of
     America or any state thereof and that are rated by each Rating Agency that
     rates such securities in its highest long-term unsecured rating categories
     at the time of such investment or contractual commitment providing for such
     investment;

         (v) commercial paper (including both non-interest-bearing discount
     obligations and interest-bearing obligations payable on demand or on a
     specified date not more than 30 days after the date of acquisition thereof)
     that is rated by each Rating Agency that rates such securities in its
     highest short-term unsecured debt rating available at the time of such
     investment;

         (vi) units of money market funds, including money market funds advised
     by the Depositor or the Trustee or an Affiliate thereof, that have been
     rated "Aaa" by Moody's, "AAA" by Standard & Poor's and, if rated by Fitch,
     at least "AA" by Fitch; and

         (vii) if previously confirmed in writing to the Trustee, any other
     demand, money market or time deposit, or any other obligation, security or
     investment, as may be acceptable to the Rating Agencies as a permitted
     investment of funds backing "Aaa" or "AAA" rated securities;

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.

     Permitted Transferee: Any person other than (i) the United States, any
State or political subdivision thereof, 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)
which 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 U.S.
Person, (vi) an "electing large partnership" within the meaning of section 775
of the Code and (vii) any other Person so designated by the Depositor based upon
an Opinion of Counsel that the Transfer of an Ownership Interest in a Residual
Certificate to such Person may cause the REMIC hereunder to fail to qualify as a
REMIC at any time that the 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 the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.

                                      -21-
<PAGE>

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

     Physical Certificates: As specified in the Preliminary Statement.

     Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances of the Mortgage Loans on the last day of the
related Due Period which were Outstanding Mortgage Loans on such day.

     Prepayment Charge: Any prepayment premium, penalty or charge collected by
the Servicer with respect to a Mortgage Loan from a Mortgagor in connection with
any voluntary Principal Prepayment in full pursuant to the terms of the related
Mortgage Note.

     Prepayment Interest Shortfall: With respect to any Remittance Date, the sum
of, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment that was applied by the Servicer to reduce the
outstanding principal balance of such Mortgage Loan on a date preceding the Due
Date in the succeeding Prepayment Period, an amount equal to the product of (a)
the Mortgage Rate net of the Servicing Fee Rate for such Mortgage Loan, (b) the
amount of the Principal Prepayment for such Mortgage Loan, (c) 1/360 and (d) the
number of days commencing on the date on which such Principal Prepayment was
applied and ending on the last day of the related Prepayment Period.

     Prepayment Period: With respect to any Remittance Date, the calendar month
preceding the calendar month in which such Remittance Date occurs.

     Principal Distribution Amount: For any Distribution Date, the sum of (i)
the Basic Principal Distribution Amount for such Distribution Date and (ii) the
Extra Principal Distribution Amount for such Distribution Date.

     Principal Prepayment: Any full or partial payment or other recovery of
principal on a Mortgage Loan (including upon liquidation of a Mortgage Loan)
which is received in advance of its scheduled Due Date, excluding any prepayment
penalty or premium thereon and which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.

     Principal Prepayment in Full: Any Principal Prepayment made by a Mortgagor
of the entire principal balance of a Mortgage Loan.

     Principal Remittance Amount: With respect to any Distribution Date, the
amount equal to the sum of the following amounts (without duplication) with
respect to the related Due Period: (i) each payment of principal on a Mortgage
Loan received or advanced by the Servicer during such Due Period (including the
portion of Insurance Proceeds or Condemnation Proceeds allocable to principal),
including all Principal Prepayments received during the related Prepayment
Period, (ii) the Liquidation Proceeds on the Mortgage Loans allocable to
principal actually collected by the Servicer during the related Prepayment
Period, (iii) the portion of the purchase price with respect to each Deleted
Mortgage Loan, the repurchase obligation for which

                                      -22-
<PAGE>

arose during the related Prepayment Period that was repurchased during the
period from the prior Distribution Date through the business day prior to the
current Distribution Date, (iv) the principal portion of any Substitution
Adjustment Amounts in connection with a substitution of a Mortgage Loan as of
such Distribution Date, and (v) the allocable portion of the proceeds received
with respect to the termination of the Trust Fund (to the extent such proceeds
relate to principal).

     Private Certificates: As specified in the Preliminary Statement.

     Prospectus Supplement: The Prospectus Supplement, dated March 20, 2002,
relating to the Offered Certificates.

     PTCE 95-60: As defined in Section 5.02(b).

     PUD: Planned Unit Development.

     Purchaser: Morgan Stanley Dean Witter Mortgage Capital Inc. as purchaser of
the Mortgage Loans under the NCCC Purchase Agreements.

     Qualified Insurer: A mortgage guaranty insurance company duly qualified as
such under the laws of the state of its principal place of business and each
state having jurisdiction over such insurer in connection with the insurance
policy issued by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states and to write the
insurance provided by the insurance policy issued by it, approved as a FNMA- or
FHLMC-approved mortgage insurer or having a claims paying ability rating of at
least "AA" or equivalent rating by a nationally recognized statistical rating
organization. Any replacement insurer with respect to a Mortgage Loan must have
at least as high a claims paying ability rating as the insurer it replaces had
on the Closing Date.

     Rating Agency: Each of the Rating Agencies specified in the Preliminary
Statement. If such organization or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, as is designated by the Depositor,
notice of which designation shall be given to the Trustee. References herein to
a given rating or rating category of a Rating Agency shall mean such rating
category without giving effect to any modifiers. For purposes of Section
10.05(b), the addresses for notices to each Rating Agency shall be the address
specified therefor in the definition corresponding to the name of such Rating
Agency, or such other address as either such Rating Agency may hereafter furnish
to the Depositor and the Servicer.

     Record Date: With respect to any Distribution Date, the close of business
on the Business Day immediately preceding such Distribution Date; provided,
however, that for any Certificate issued in Definitive Form, the Record Date
shall be the close of business on the last Business Day of the month preceding
the month in which such applicable Distribution Date occurs.

     Reference Bank: As defined in Section 4.04.

                                      -23-
<PAGE>

     Regular Certificates: As specified in the Preliminary Statement.

     Relief Act Interest Shortfall: With respect to any Distribution Date and
any Mortgage Loan, any reduction in the amount of interest collectible on such
Mortgage Loan for the most recently ended Due Period as a result of the
application of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended.

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

     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
regulations promulgated thereunder, as the foregoing may be in effect from time
to time as well as provisions of applicable state laws.

     Remittance Date: The Business Day immediately preceding each Distribution
Date.

     REO Disposition: The final sale by the Servicer of any REO Property.

     REO Imputed Interest: As to any REO Property, for any period, an amount
equivalent to interest (at the Mortgage Rate net of the Servicing Fee Rate that
would have been applicable to the related Mortgage Loan had it been outstanding)
on the unpaid principal balance of the Mortgage Loan as of the date of
acquisition thereof (as such balance is reduced pursuant to Section 3.17 by any
income from the REO Property treated as a recovery of principal).

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

     Repurchase Price: With respect to any Mortgage Loan, an amount equal to the
sum of (i) the unpaid principal balance of such Mortgage Loan as of the date of
repurchase, (ii) interest on such unpaid principal balance of such Mortgage Loan
at the Mortgage Rate from the last date through which interest has been paid and
distributed to the Trustee to the date of repurchase, (iii) all unreimbursed
Servicing Advances and (iv) all expenses reasonably incurred by the Servicer or
the Trustee, as the case may be, in respect of a breach or defect, including,
without limitation, expenses arising out of the Servicer's or Trustee's, as the
case may be, enforcement of the Responsible Party's repurchase obligation, to
the extent not included in (iii).

     Request for Release: The Request for Release submitted by the Servicer to
the Trustee, substantially in the form of Exhibit J.

     Residual Certificates: As specified in the Preliminary Statement.

     Responsible Officer: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, any Assistant Secretary, any Assistant
Treasurer, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers who at such time shall be officers to whom, with respect

                                      -24-
<PAGE>

to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Agreement.

     Responsible Party: NC Capital Corporation, a California corporation, and
its successors and assigns, in its capacity as responsible party hereunder.

     Rule 144A Letter: As defined in Section 5.01(b).

     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 which,
unless otherwise specified herein, shall give effect to any related Debt Service
Reduction and any Deficient Valuation that affects the amount of the monthly
payment due on such Mortgage Loan.

     Scheduled Principal Balance: With respect to any Mortgage Loan: (a) as of
the Cut-off Date, the outstanding principal balance of such Mortgage Loan as of
such date, net of the principal portion of all unpaid Monthly Payments, if any,
due on or before such date; (b) as of any Due Date subsequent to the Cut-off
Date up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such Mortgage Loan, the Scheduled
Principal Balance of such Mortgage Loan as of the Cut-off Date, minus the sum of
(i) the principal portion of each Monthly Payment due on or before such Due Date
but subsequent to the Cut-off Date, whether or not received, (ii) all Principal
Prepayments received before such Due Date but after the Cut-off Date, (iii) the
principal portion of all Liquidation Proceeds and Insurance Proceeds received
before such Due Date but after the Cut-off Date, net of any portion thereof that
represents principal due (without regard to any acceleration of payments under
the related Mortgage and Mortgage Note) on a Due Date occurring on or before the
date on which such proceeds were received and (iv) any reduction in the
principal balance of such Mortgage Loan incurred with respect thereto as a
result of a Deficient Valuation occurring before such Due Date, but only to the
extent such reduction in principal balance represents a reduction in the portion
of principal of such Mortgage Loan not yet due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) as of the
date of such Deficient Valuation; and (c) as of any Due Date subsequent to the
occurrence of a Liquidation Event with respect to such Mortgage Loan, zero.

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

     Senior Enhancement Percentage: With respect to any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Class
Certificate Balance of the Subordinated Certificates and (ii) the Subordinated
Amount (in each case after taking into account the distributions of the
Principal Distribution Amount for such Distribution Date) by (y) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period.

     Senior Specified Enhancement Percentage: As of any date of determination,
36.00%.

                                      -25-
<PAGE>

     Servicer: The Provident Bank, an Ohio banking corporation, and its
successors and assigns, in its capacity as servicer hereunder.

     Servicer Investment Account: As defined in section 3.12(a).

     Servicer Termination Test: With respect to any Distribution Date, the
Servicer Termination Test will be failed with respect to the Servicer if the
Cumulative Loss Percentage exceeds 6.70%.

     Servicing Advances: The reasonable "out-of-pocket" costs and expenses
(including legal fees) incurred by the Servicer in the performance of its
servicing obligations in connection with a default, delinquency or other
unanticipated event, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures and litigation, in
respect of a particular Mortgage Loan, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property and
(iv) the performance of its obligations under Section 3.01, Section 3.09,
Section 3.13 and Section 3.15 hereof. The Servicer shall not be required to make
any Nonrecoverable Advances.

     Servicing Fee: With respect to each Mortgage Loan and for any calendar
month, an amount equal to one month's interest (or in the event of any payment
of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. Such
fee shall be payable monthly, and shall be pro rated for any portion of a month
during which the Mortgage Loan is serviced by the Servicer under this Agreement.
The Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds and proceeds
received with respect to REO Properties, to the extent permitted by Section
3.11) of such Monthly Payment collected by the Servicer, or as otherwise
provided under Section 3.11.

     Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per annum.

     Servicing File: With respect to each Mortgage Loan, the file retained by
the Servicer consisting of originals or copies of all documents in the Mortgage
File which are not delivered to the Trustee in the Custodial File and copies of
the Mortgage Loan Documents set forth in Exhibit K hereto.

     Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
facsimile signature appear on a list of servicing officers furnished to the
Trustee by the Servicer on the Closing Date pursuant to this Agreement, as such
list may from time to time be amended.

     Similar Law: As defined in Section 5.02(b).

     60 Day Delinquency Percentage: As to any Due Period (i) the aggregate
Principal Balance of the Mortgage Loans that are 60 or more days contractually
delinquent, in bankruptcy,

                                      -26-
<PAGE>

in foreclosure and REO Mortgage Loans over (ii) the aggregate Principal Balance
of the Mortgage Loans as of the last day of the related Due Period.

     60 Day+ Rolling Average: As to any Distribution Date, the average of the
applicable 60 Day Delinquency Percentage for each of the three (3) immediately
preceding Due Period.

     REO Mortgage Loan: A Mortgage Loan where title to the related Mortgaged
Property has been obtained by the Trustee or its nominee on behalf of the
Certificateholders.

     Specified Subordinated Amount: Prior to the Stepdown Date, an amount equal
to 1.75% of the Cut-off Date Pool Principal Balance, and on and after the
Stepdown Date, an amount equal to 3.50% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period,
subject to a minimum amount equal to 0.50% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date, provided, however, that
if, on any Distribution Date, a Trigger Event has occurred, the Specified
Subordinated Amount shall not be reduced to the applicable percentage of the
then current aggregate Stated Principal Balance of the Mortgage Loans until the
Distribution Date on which a Trigger Event is no longer occurring.

     Standard & Poor's: Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. If Standard & Poor's is designated as a Rating
Agency in the Preliminary Statement, for purposes of Section 10.05(b) the
address for notices to Standard & Poor's shall be Standard & Poor's, 55 Water,
New York, New York 10041, Attention: Residential Mortgage Surveillance Group -
Morgan Stanley Dean Witter Capital I Inc. 2002-NC1, or such other address as
Standard & Poor's may hereafter furnish to the Depositor and the Servicer.

     Startup Day: The Closing Date.

     Stated Principal Balance: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, to the extent actually received, minus
(ii) all amounts previously distributed to the Trustee with respect to the
related Mortgage Loan representing payments or recoveries of principal.

     Stepdown Date: The later to occur of (i) the earlier to occur of (a) the
Distribution Date in April 2005 and (b) the date on which the aggregate Class
Certificate Balances of the Class A Certificates have been reduced to zero and
(ii) the first Distribution Date on which the Senior Enhancement Percentage
(calculated for this purpose only after taking into account payments of
principal on the Mortgage Loans on the last day of the related Due Period but
prior to any applications of Principal Distribution Amount to the Certificates)
is greater than or equal to the Senior Specified Enhancement Percentage.

     Subordinated Amount: As of any Distribution Date, the excess, if any, of
(a) the aggregate Stated Principal Balance of the Mortgage Loans as of the end
of the related Due Period over (b) the aggregate of the Class Certificate
Balances of the Class A and Subordinated

                                      -27-
<PAGE>

Certificates as of such Distribution Date (after giving effect to the payment of
the Principal Remittance Amount on such Certificates on such Distribution Date).

     Subordinated Certificates: As specified in the Preliminary Statement.

     Subordination Deficiency: With respect to any Distribution Date, the
excess, if any, of (a) the Specified Subordinated Amount applicable to such
Distribution Date over (b) the Subordinated Amount applicable to such
Distribution Date.

     Subordination Reduction Amount: With respect to any Distribution Date, an
amount equal to the lesser of (a) the Excess Subordinated Amount and (b) the
Total Monthly Excess Spread.

     Subservicer: As defined in Section 3.02(a).

     Subservicing Account: As defined in Section 3.08.

     Substitute Mortgage Loan: A Mortgage Loan substituted by the Responsible
Party for a Deleted Mortgage Loan which must, on the date of such substitution,
as confirmed in a Request for Release, substantially in the form of Exhibit J,
(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 more than 10% less than, the Stated Principal Balance of the Deleted
Mortgage Loan; (ii) be accruing interest at a rate no lower than and not more
than 1% per annum higher than, that of the Deleted Mortgage Loan; (iii) have a
Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (iv) have
a remaining term to maturity no greater than (and not more than one year less
than that of) the Deleted Mortgage Loan; and (v) comply with each representation
and warranty set forth in Section 2.03.

     Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03.

     Tax Service Contract: As defined in Section 3.09(a).

     Telerate Page 3750: The display page currently so designated on the Bridge
Telerate Service (or such other page as may replace that page on that service
for displaying comparable rates or prices).

     Total Monthly Excess Spread: As to any Distribution Date, an amount equal
to the excess if any, of (i) the interest collected or advanced on the Mortgage
Loans for Due Dates during the related Remittance Period (net of Expense Fees)
over (ii) the sum of the interest payable to the Classes of Floating Rate
Certificates on such Distribution Date.

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

     Transfer Affidavit: As defined in section 5.02(b).

     Transferor Certificate: As defined in Section 5.02(b).

                                      -28-
<PAGE>

     Trigger Event: With respect to the Certificates and as of a Distribution
Date, exists if (i) after the Stepdown Date, the 60+ Day Rolling Average exceeds
the lesser of (x) before the date on which the aggregate Class Certificate
Balances of the Class A Certificates have been reduced to zero, 18% and (y) 40%
of the prior period's Senior Enhancement Percentage or (ii) the aggregate amount
of Realized Losses incurred since the Cut-off Date through the last day of the
related Due Period divided by the Cut-off Date Pool Principal Balance exceeds
the applicable percentages described below with respect to such Distribution
Date:

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

     DISTRIBUTION DATE OCCURRING IN       LOSS PERCENTAGE
     ------------------------------       ---------------
     -------------------------------------------------------------------------
     April 2005 through March 2006        4.00% for the first month, plus an
                                          additional 1/12th of 2.00% for each
                                          month thereafter (e.g. 5.00% in
                                          October 2005)

     -------------------------------------------------------------------------
     April 2006 through March 2007        6.00% for the first month, plus an
                                          additional 1/12th of 1.00% for each
                                          month thereafter (e.g. 6.50% in
                                          October 2006)

     -------------------------------------------------------------------------
     April 2007 through March 2008        7.00% for the first month, plus an
                                          additional 1/12th of 0.50% for each
                                          month thereafter (e.g. 7.25% in
                                          October 2007)

     -------------------------------------------------------------------------
     April 2008 and thereafter            7.50%
     -------------------------------------------------------------------------

         Trust Fund: The corpus of the trust created hereunder consisting of (i)
the Mortgage Loans and all interest and principal received on or with respect
thereto after the related Cut-off Date, other than such amounts which were due
on the Mortgage Loans on or before the related Cut-off Date; (ii) the Collection
Account, Excess Reserve Fund Account, the Distribution Account, and all amounts
deposited therein pursuant to the applicable provisions of this Agreement; (iii)
property that secured a Mortgage Loan and has been acquired by foreclosure,
deed-in-lieu of foreclosure or otherwise; and (iv) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing.

         Trustee: U.S. Bank National Association and its successors and, if a
successor trustee is appointed hereunder, such successor.

         Trustee Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the related Trustee Fee Rate on the
Stated Principal Balance of such Mortgage Loan or, in the event of any payment
of interest which accompanies a Principal Prepayment in Full made by the
Mortgagor, interest at the Trustee Fee Rate on the Stated Principal Balance of
such Mortgage Loan for the period covered by such payment of interest.

         Trustee Fee Rate: With respect to each Mortgage Loan, 0.005% per annum.

         Trustee Investment Account: As defined in section 3.07(e).

                                      -29-
<PAGE>

         Unpaid Interest Amounts: As of any Distribution Date and any Class of
Certificates, the sum of (a) the excess of (i) the sum of the Accrued
Certificate Interest Distribution Amount for such Distribution Date and any
portion of such Accrued Certificate Interest Distribution Amount from prior
Distribution Dates remaining unpaid over (ii) the amount in respect of interest
on such Class of Certificates actually distributed on the preceding Distribution
Date and (b) 30 days' interest on such excess at the applicable Pass-Through
Rate (to the extent permitted by applicable law).

         Unpaid Realized Loss Amount: With respect to any Class of Subordinated
Certificates and as to any Distribution Date, is the excess of (i) Applied
Realized Loss Amounts with respect to such Class over (ii) the sum of all
distributions in reduction of such Applied Realized Loss Amounts on all previous
Distribution Dates. Any amounts distributed to a Class of Subordinated
Certificates in respect of any Unpaid Realized Loss Amount will not be applied
to reduce the Class Certificate Balance of such Class.

         U.S. Person: Shall mean (i) a citizen or resident of the United States;
(ii) a corporation (or entity treated as a corporation for tax purposes) created
or organized in the United States or under the laws of the United States or of
any state thereof, including, for this purpose, the District of Columbia; (iii)
a partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any state
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations); (iv) an estate whose income is
includible in gross income for United States income tax purposes regardless of
its source; or (v) 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 U.S. Persons have authority to control all substantial decisions of the
trust. Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as U.S. Persons prior to such date, may elect to continue to
be U.S. Persons.

         Upper Tier Regular Interest: As described in the Preliminary Statement.

         Upper Tier REMIC: As described in the Preliminary Statement.

         Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X
Certificates, if any (such Voting Rights to be allocated among the holders of
Certificates of each such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class P
Certificates, if any, and (c) the remaining Voting Rights shall be allocated
among Holders of the remaining Classes of Certificates in proportion to the
Certificate Balances of their respective Certificates on such date.

         WAC Cap: With respect to the Mortgage Loans as of any Distribution
Date, the product of (i) the weighted average of the Adjusted Net Mortgage Rates
then in effect on the beginning of the related Due Period on the Mortgage Loans
and (ii) a fraction, the numerator of which is 30 and the denominator of which
is the actual number of days in the Interest Accrual Period related to such
Distribution Date.

                                      -30-
<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

         Section 2.01 Conveyance of Mortgage Loans.

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

         (b) In connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered or caused to be delivered to the Trustee for
the benefit of the Certificateholders the following documents or instruments
with respect to each Mortgage Loan so assigned:

         (i) the original Mortgage Note bearing all intervening endorsements
     showing a complete chain of endorsement from the originator to the last
     endorsee, endorsed "Pay to the order of _____________, without recourse"
     and signed (which may be by facsimile signature) in the name of the last
     endorsee by an authorized officer. To the extent that there is no room on
     the face of the Mortgage Notes for endorsements, the endorsement may be
     contained on an allonge, if state law so allows and the Trustee is so
     advised by the Responsible Party that state law so allows;

         (ii) the original of any guaranty executed in connection with the
     Mortgage Note;

         (iii) the original Mortgage with evidence of recording thereon or a
     certified true copy of such Mortgage submitted for recording. If in
     connection with any Mortgage Loan, the Responsible Party cannot deliver or
     cause to be delivered the original Mortgage with evidence of recording
     thereon on or prior to the Closing Date because of a delay caused by the
     public recording office where such Mortgage has been delivered for
     recordation or because such Mortgage has been lost or because such public
     recording office retains the original recorded Mortgage, the Responsible
     Party shall deliver or cause to be delivered to the Trustee, a photocopy of
     such Mortgage, together with (i) in the case of a delay caused by the
     public recording office, an Officer's Certificate of the Responsible Party
     or a certificate from an escrow company, a title company or closing
     attorney stating that such Mortgage has been dispatched to the appropriate
     public recording office for recordation and that the original recorded
     Mortgage or a copy of such Mortgage certified by such public recording
     office to be a true and complete copy of the original recorded Mortgage
     will be promptly delivered to the Trustee upon receipt thereof by the
     Responsible Party; or (ii) in the case of a Mortgage where a public
     recording office retains the original recorded Mortgage or in the case
     where a Mortgage is lost after recordation in a public recording office, a
     copy of such Mortgage certified by such public recording office to be a
     true and complete copy of the original recorded Mortgage;

                                      -31-
<PAGE>

         (iv) the originals of all assumption, modification, consolidation or
     extension agreements (if provided), with evidence of recording thereon or a
     certified true copy of such agreement submitted for recording;

         (v) the original Assignment of Mortgage for each Mortgage Loan endorsed
     in blank;

         (vi) the originals of all intervening assignments of mortgage (if any)
     evidencing a complete chain of assignment from the applicable originator to
     the last endorsee with evidence of recording thereon, or if any such
     intervening assignment has not been returned from the applicable recording
     office or has been lost or if such public recording office retains the
     original recorded assignments of mortgage, the Responsible Party shall
     deliver or cause to be delivered to the Trustee, a photocopy of such
     intervening assignment, together with (i) in the case of a delay caused by
     the public recording office, an Officer's Certificate of the Responsible
     Party or a certificate from an escrow company, a title company or a closing
     attorney stating that such intervening assignment of mortgage has been
     dispatched to the appropriate public recording office for recordation and
     that such original recorded intervening assignment of mortgage or a copy of
     such intervening assignment of mortgage certified by the appropriate public
     recording office to be a true and complete copy of the original recorded
     intervening assignment of mortgage will be promptly delivered to the
     Trustee upon receipt thereof by the Responsible Party; or (ii) in the case
     of an intervening assignment where a public recording office retains the
     original recorded intervening assignment or in the case where an
     intervening assignment is lost after recordation in a public recording
     office, a copy of such intervening assignment certified by such public
     recording office to be a true and complete copy of the original recorded
     intervening assignment;

         (vii) the original mortgagee title insurance policy or attorney's
     opinion of title and abstract of title; and (viii) the original of any
     security agreement, chattel mortgage or equivalent document executed in
     connection with the Mortgage (if provided).

         The Responsible Party shall deliver to the Trustee the applicable
recorded document promptly upon receipt from the respective recording office but
in no event later than 120 days from the Closing Date.

         From time to time, the Responsible Party shall forward to the Trustee
additional original documents, additional documents evidencing an assumption,
modification, consolidation or extension of a Mortgage Loan approved by the
Responsible Party, in accordance with the terms of this Agreement. All such
mortgage documents held by the Trustee as to each Mortgage Loan shall constitute
the "Custodial File".

         On or prior to the Closing Date, the Responsible Party shall deliver to
the Trustee Assignments of Mortgages, in blank, for each Mortgage Loan. No later
than thirty (30) Business Days following the later of the Closing Date and the
date of receipt by the Servicer of the recording information for a Mortgage, the
Servicer shall promptly submit or cause to be

                                      -32-
<PAGE>

submitted for recording, at no expense to the Trust Fund, the Trustee or the
Depositor, in the appropriate public office for real property records, each
Assignment referred to in Section 2.01(b)(v). Notwithstanding the foregoing,
however, for administrative convenience and facilitation of servicing and to
reduce closing costs, the Assignments shall not be required to be completed and
submitted for recording with respect to any Mortgage Loan if the Trustee and
each Rating Agency has received an opinion of counsel, satisfactory in form and
substance to the Trustee and each Rating Agency, to the effect that the
recordation of such Assignments in any specific jurisdiction is not necessary to
protect the Trustee's interest in the related Mortgage Note. If the Assignment
of Mortgage is to be recorded, the Mortgage shall be assigned by the Responsible
Party, at the expense of the Responsible Party, to "U.S. Bank National
Association, as trustee under the Pooling and Servicing Agreement dated as of
March 1, 2002, Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1." In the
event that any such assignment is lost or returned unrecorded because of a
defect therein, the Responsible Party shall promptly prepare a substitute
assignment to cure such defect and thereafter cause each such assignment to be
duly recorded.

         On or prior to the Closing Date, the Depositor shall deliver to the
Trustee a copy of the Data Tape Information in electronic, machine readable
medium in a form mutually acceptable to the Trustee.

         In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
the Trustee within 90 days following the Closing Date, and in the event that the
Responsible Party does not cure such failure within 30 days of discovery or
receipt of written notification of such failure from the Depositor, the related
Mortgage Loan shall, upon the request of the Depositor, be repurchased by the
Responsible Party at the price and in the manner specified in Section 2.03. The
foregoing repurchase obligation shall not apply in the event that the
Responsible Party cannot deliver such original or copy of any document submitted
for recordation to the appropriate public recording office within the specified
period due to a delay caused by the recording office in the applicable
jurisdiction; provided that the Responsible Party shall instead deliver a
recording receipt of such recording office or, if such recording receipt is not
available, an officer's certificate of a servicing officer of the Responsible
Party, confirming that such document has been accepted for recording.

         Notwithstanding anything to the contrary contained in this Section
2.01, in those instances where the public recording office retains or loses the
original Mortgage or assignment after it has been recorded, the obligations of
the Responsible Party shall be deemed to have been satisfied upon delivery by
the Responsible Party to the Trustee prior to the Closing Date of a copy of such
Mortgage or assignment, as the case may be, certified (such certification to be
an original thereof) by the public recording office to be a true and complete
copy of the recorded original thereof.

         Section 2.02 Acceptance by the Trustee of the Mortgage Loans.

         The Trustee acknowledges receipt of the documents identified in the
Initial Certification in the form annexed hereto as Exhibit E, and declares that
it holds and will hold such documents and the other documents delivered to it
pursuant to Section 2.01, and that it

                                      -33-
<PAGE>

holds or will hold such other assets as are included in the Trust Fund, in trust
for the exclusive use and benefit of all present and future Certificateholders.
The Trustee acknowledges that it will maintain possession of the related
Mortgage Notes in the State of Minnesota, unless otherwise permitted by the
Rating Agencies.

         Prior to and as a condition to the Closing, the Trustee shall deliver
via facsimile (with original to follow the next Business Day) to the Depositor
an Initial Certification prior to the Closing Date, or as the Depositor agrees
to, on the Closing Date, certifying receipt of a Mortgage Note and Assignment of
Mortgage for each Mortgage Loan. The Trustee shall not be responsible to verify
the validity, sufficiency or genuineness of any document in any Custodial File.

         Within 90 days after the Closing Date, the Trustee shall ascertain that
all documents required to be delivered to it are in its possession, and shall
deliver to the Depositor a Document Certification and Exception Report to the
effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as an exception and not covered by such
certification): (i) all documents required to be delivered to it are in its
possession; (ii) such documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan; (iii) based on its examination and
only as to the foregoing documents, the information set forth in items (1), (2),
(7), and (9) of the Mortgage Loan Schedule and items (1), (9) and (17) of the
Data Tape Information respecting such Mortgage Loan is correct; and (iv) each
Mortgage Note has been endorsed as provided in Section 2.01 of this Agreement.
The Trustee shall not be responsible to verify the validity, sufficiency or
genuineness of any document in any Custodial File.

         The Trustee shall retain possession and custody of each Custodial File
in accordance with and subject to the terms and conditions set forth herein. The
Servicer shall promptly deliver to the Trustee, upon the execution or receipt
thereof, the originals of such other documents or instruments constituting the
Custodial File as come into the possession of the Servicer from time to time.

Section 2.03 Representations, Warranties and Covenants of the Responsible Party
and the Servicer.

         (a) The Servicer hereby makes the representations and warranties set
forth in Schedule II hereto to the Depositor and the Trustee, as of the Closing
Date.

         (b) NC Capital Corporation, in its capacity as Responsible Party,
hereby makes the representations and warranties set forth in Schedule III and
Schedule IV hereto, to the Depositor and the Trustee, as of the Closing Date.

         (c) It is understood and agreed by the Servicer and the Responsible
Party that the representations and warranties set forth in Section 2.03 shall
survive the transfer of the Mortgage Loans by the Depositor to the Trustee, and
shall inure to the benefit of the Depositor and the Trustee notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment of
Mortgage or the examination or failure to examine any Mortgage File. Upon

                                      -34-
<PAGE>

discovery by any of the Responsible Party, the Depositor, the Trustee or the
Servicer of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the other.

         (d) Within 30 days of the earlier of either discovery by or notice to
the Responsible Party of that any Mortgage Loan does not conform to the
requirements as determined in the Trustee's review of the related Custodial File
or within 90 days of the earlier of either discovery by or notice to the
Responsible Party of any breach of a representation or warranty, set forth in
Section 2.03(b) that materially and adversely affects the value of the Mortgage
Loans or the interest of the Trustee or the Certificateholders therein, the
Responsible Party shall use its best efforts to cause to be remedied a material
defect in a document constituting part of a Mortgage File or promptly to cure
such breach in all material respects and, if such defect or breach cannot be
remedied, the Responsible Party shall, (i) if such 30 or 90 day period, as
applicable, expires 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 Substitute Mortgage Loan, in the manner and subject to
the conditions set forth in this Section 2.03; or (ii) at the Depositor's
option, repurchase such Mortgage Loan at the Repurchase Price; provided,
however, that any such substitution pursuant to (i) above shall not be effected
prior to the delivery to the Trustee of the Opinion of Counsel required by
Section 2.05, if any, and a Request for Release substantially in the form of
Exhibit K, and the Mortgage File for any such Substitute Mortgage Loan. In the
event that a breach shall involve any representation or warranty set forth in
Section 2.03(b) and Schedule IV, and such breach cannot be cured within 60 days
of the earlier of either discovery by or notice to the Responsible Party of such
breach, all of the Mortgage Loans shall, at the Depositor's option, be
repurchased by the Responsible Party at the Repurchase Price.

         With respect to any Substitute Mortgage Loan or Loans, the Responsible
Party shall deliver to the Trustee for the benefit of the Certificateholders the
Mortgage Note, the Mortgage, the related assignment of the Mortgage, and such
other documents and agreements as are required by Section 2.01, with the
Mortgage Note endorsed and the Mortgage assigned as required by Section 2.01. No
substitution is permitted to be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Substitute Mortgage Loans in the Due Period of substitution shall not be part of
the Trust Fund and will be retained by the Seller on the next succeeding
Distribution Date. For the Due Period of substitution, distributions to
Certificateholders will include the monthly payment due on any Deleted Mortgage
Loan for such 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 Substitute Mortgage Loan or Loans and the Servicer shall
deliver the amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, the Substitute Mortgage Loan or Loans shall be subject to the
terms of this Agreement in all respects, and the Responsible Party shall be
deemed to have made with respect to such Substitute Mortgage Loan or Loans, as
of the date of substitution, the representations and warranties made pursuant to
Section 2.03(b) with respect to such Mortgage Loan. Upon any such substitution
and the deposit to the Collection Account of

                                      -35-
<PAGE>

the amount required to be deposited therein in connection with such substitution
as described in the following paragraph, the Trustee shall release the Mortgage
File held for the benefit of the Certificateholders relating to such Deleted
Mortgage Loan to the Responsible Party and shall execute and deliver at the
Responsible Party's direction such instruments of transfer or assignment
prepared by the Responsible Party, in each case without recourse, as shall be
necessary to vest title in the Responsible Party, or its designee, the Trustee's
interest in any Deleted Mortgage Loan substituted for pursuant to this Section
2.03.

         For any month in which the Responsible Party substitutes one or more
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will determine the amount (if any) by which the aggregate principal balance of
all such Substitute Mortgage Loans as of the date of substitution is less than
the aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of the scheduled principal portion of the monthly payments due in
the Due Period of substitution). The amount of such shortage (the "Substitution
Adjustment Amount") plus, if the Responsible Party is not the Servicer, an
amount equal to the aggregate of any unreimbursed Advances and Servicing
Advances with respect to such Deleted Mortgage Loans shall be deposited into the
Collection Account by the Responsible Party on or before the Distribution
Account Deposit Date for the Distribution Date in the month succeeding the
calendar month during which the related Mortgage Loan became required to be
purchased or replaced hereunder.

         In addition to such repurchase obligation, the Responsible Party shall
indemnify the Depositor, any of its Affiliates, and the Trustee and hold such
parties harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and other
costs and expenses resulting from any claim, demand, defense or assertion based
on or grounded upon, or resulting from, a breach by the Responsible Party of any
of its representations and warranties contained in the Purchase Agreement or
this Agreement.

         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 Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee.

         In the event that the Responsible Party shall have repurchased a
Mortgage Loan, the Repurchase Price therefor shall be deposited in the
Collection Account pursuant to Section 3.10 on or before the Distribution
Account Deposit Date for the Distribution Date in the month following the month
during which the Responsible Party became obligated hereunder to repurchase or
replace such Mortgage Loan and upon such deposit of the Repurchase Price, the
delivery of the Opinion of Counsel required by Section 2.05 and receipt of a
Request for Release in the form of Exhibit J hereto, the Trustee shall release
the related Custodial File held for the benefit of the Certificateholders to
such Person as directed by the Servicer, and the Trustee shall execute and
deliver at such Person's direction such instruments of transfer or assignment
prepared by such Person, in each case without recourse, as shall be necessary to
transfer title from the Trustee. It is understood and agreed that the obligation
under this Agreement of any Person to cure, repurchase or replace any Mortgage
Loan as to which a breach has occurred and is continuing shall constitute the
sole remedy against such Persons respecting such breach available to
Certificateholders, the Depositor or the Trustee on their behalf.

                                      -36-
<PAGE>

         The representations and warranties made pursuant to this Section 2.03
shall survive delivery of the respective Custodial Files to the Trustee for the
benefit of the Certificateholders.

         Section 2.04 The Depositor and the Mortgage Loans.

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

         The Depositor hereby assigns, transfers and conveys to the Trustee all
of its rights with respect to the Mortgage Loans.

         Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitution and Repurchase, Non-Qualified Mortgages.

         (a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.03 shall be made more than 30 days after the
Closing Date unless the Responsible Party delivers to the Trustee an Opinion of
Counsel, which Opinion of Counsel shall not be at the expense of either the
Trustee or the Trust Fund, addressed to the Trustee, to the effect that such
substitution will not (i) result in the imposition of the tax on "prohibited
transactions" on the Trust Fund or contributions after the Startup Date, as
defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii)
cause the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding.

         (b) Upon discovery by the Depositor, the Responsible Party, the
Servicer or the Trustee 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 five (5) Business
Days of discovery) give written notice thereof to the other parties. In
connection therewith, the Trustee shall require the Responsible Party to
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 made pursuant to Section 2.03. The Trustee shall reconvey to the
Responsible Party 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 Execution and Delivery of Certificates.

         The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, has executed and
delivered to or upon the order of the Depositor, the Certificates in authorized
denominations evidencing directly or indirectly the entire ownership of the
Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights
referred to above for the benefit of all present and future Holders of the
Certificates.

                                      -37-
<PAGE>

         Section 2.07 REMIC Matters.

                  The Preliminary Statement sets forth the designations for
federal income tax purposes of all interests created hereby. The "Startup Day"
for purposes of the REMIC Provisions shall be the Closing Date. The "latest
possible maturity date" is February 25, 2032, which is the Distribution Date
following the latest Mortgage Loan maturity date.

         Section 2.08 Representations and Warranties of the Depositor.

                  The Depositor hereby represents, warrants and covenants to the
Trustee and the that as of the date of this Agreement or as of such date
specifically provided herein:

         (a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.

         (b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement;

         (c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Trustee, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);

         (d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except as have been made on or prior to the Closing Date;

         (e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;

                                      -38-
<PAGE>

         (f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement;

         (g) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency that may materially and adversely affect its performance
hereunder; and

         (h) Immediately prior to the transfer and assignment by the Depositor
to the Trustee, the Depositor had good title to, and was the sole owner of each
Mortgage Loan, free of any interest of any other Person, and the Depositor has
transferred all right, title and interest in each Mortgage Loan to the Trustee.
The transfer of the Mortgage Note and the Mortgage as and in the manner
contemplated by this Agreement is sufficient either (i) fully to transfer to the
Trustee, for the benefit of the Certificateholders, all right, title, and
interest of the Depositor thereto as note holder and mortgagee or (ii) to grant
to the Trustee, for the benefit of the Certificateholders, the security interest
referred to in Section 10.04 hereof.

         It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.08 shall survive delivery of the
respective Custodial Files to the Trustee or to a custodian, as the case may be,
and shall inure to the benefit of the Trustee.

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         Section 3.01 Servicer to Service Mortgage Loans.

         (a) For and on behalf of the Certificateholders, the Servicer shall
service and administer the Mortgage Loans in accordance with the terms of this
Agreement and the respective Mortgage Loans and, to the extent consistent with
such terms, in the same manner in which it services and administers similar
mortgage loans for its own portfolio, giving due consideration to customary and
usual standards of practice of mortgage lenders and loan servicers administering
similar mortgage loans but without regard to:

         (i) any relationship that the Servicer, any Subservicer or any
     Affiliate of the Servicer or any Subservicer may have with the related
     Mortgagor;

         (ii) the ownership or non-ownership of any Certificate by the Servicer
     or any Affiliate of the Servicer;

         (iii) the Servicer's obligation to make P&I Advances or Servicing
     Advances; or

                                      -39-
<PAGE>

         (iv) the Servicer's or any Subservicer's right to receive compensation
     for its services hereunder or with respect to any particular transaction.

         To the extent consistent with the foregoing, the Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone or through Subservicers as provided
in Section 3.02, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer in its own name
or in the name of a Subservicer is hereby authorized and empowered by the
Trustee when the Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver
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 the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee. The Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.15, the Trustee shall execute, at the
written request of the Servicer, and furnish to the Servicer and any Subservicer
such documents as are necessary or appropriate to enable the Servicer or any
Subservicer to carry out their servicing and administrative duties hereunder,
and the Trustee hereby grants to the Servicer, and this Agreement shall
constitute, a power of attorney to carry out such duties including a power of
attorney to take title to Mortgaged Properties after foreclosure on behalf of
the Trustee. The Trustee shall execute a separate power of attorney in favor of
the Servicer for the purposes described herein to the extent necessary or
desirable to enable the Servicer to perform its duties hereunder. The Trustee
shall not be liable for the actions of the Servicer or any Subservicers under
such powers of attorney.

         (b) Subject to Section 3.09(b) hereof, in accordance with the standards
of the preceding paragraph, the Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3.09(b), and further as provided in Section 3.11.
Any cost incurred by the Servicer or by Subservicers in effecting the timely
payment of taxes and assessments on a Mortgaged Property shall not be added to
the unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.

         (c) Notwithstanding anything in this Agreement to the contrary, the
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.01) and the Servicer shall not (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions resulting
from actual payments of principal) or change the final maturity date on such

                                      -40-
<PAGE>

Mortgage Loan or (ii) permit any modification, waiver or amendment of any term
of any Mortgage Loan that would both (A) effect an exchange or reissuance of
such Mortgage Loan under Section 1001 of the Code (or final, temporary or
proposed Treasury regulations promulgated thereunder) and (B) cause any REMIC to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions after the startup date" under the
REMIC Provisions, or (iii) except as provided in Section 3.07(a), waive any
Prepayment Charges.

         (d) The Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Servicer
from the responsibilities or liabilities arising under this Agreement.

         Section 3.02 Subservicing Agreements Between the Servicer and
Subservicers.

         (a) The Servicer may enter into Subservicing Agreements with
Subservicers, for the servicing and administration of the Mortgage Loans.

         Each Subservicer shall be (i) authorized to transact business in the
state or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution that has deposit accounts
insured by the FDIC and (iii) a Freddie Mac or Fannie Mae approved mortgage
servicer. Each Subservicing Agreement must impose on the Subservicer
requirements conforming to the provisions set forth in Section 3.08 and provide
for servicing of the Mortgage Loans consistent with the terms of this Agreement.
The Servicer will examine each Subservicing Agreement and will be familiar with
the terms thereof. The terms of any Subservicing Agreement will not be
inconsistent with any of the provisions of this Agreement. The Servicer and the
Subservicers may enter into and make amendments to the Subservicing Agreements
or enter into different forms of Subservicing Agreements, provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Trustee, without the consent of
the Trustee. Any variation without the consent of the Trustee from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Subservicing Accounts, or credits and charges to the
Subservicing Accounts or the timing and amount of remittances by the
Subservicers to the Servicer, are conclusively deemed to be inconsistent with
this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee and the Depositor copies of all Subservicing Agreements, and any
amendments or modifications thereof, promptly upon the Servicer's execution and
delivery of such instruments.

         (b) As part of its servicing activities hereunder, the Servicer (except
as otherwise provided in the last sentence of this paragraph), for the benefit
of the Trustee, shall enforce the obligations of each Subservicer under the
related Subservicing Agreement, including, without limitation, any obligation to
make advances in respect of delinquent payments as required by a Subservicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements, and the pursuit
of other appropriate

                                      -41-
<PAGE>

remedies, shall be in such form and carried out to such an extent and at such
time as the Servicer, in its good faith business judgment, would require were it
the owner of the related Mortgage Loans. The Servicer shall pay the costs of
such enforcement at its own expense, and shall be reimbursed therefor only (i)
from a general recovery resulting from such enforcement, to the extent, if any,
that such recovery exceeds all amounts due in respect of the related Mortgage
Loans or (ii) from a specific recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is directed.

         Section 3.03 Successor Subservicers.

         The Servicer shall be entitled to terminate any Subservicing Agreement
and the rights and obligations of any Subservicer pursuant to any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement. In the event of termination of any Subservicer, all servicing
obligations of such Subservicer shall be assumed simultaneously by the Servicer
without any act or deed on the part of such Subservicer or the Servicer, and the
Servicer either shall service directly the related Mortgage Loans or shall enter
into a Subservicing Agreement with a successor Subservicer which qualifies under
Section 3.02.

         Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Depositor or the Trustee without
fee, in accordance with the terms of this Agreement, in the event that the
Servicer shall, for any reason, no longer be the Servicer (including termination
due to an Event of Default).

         Section 3.04 Liability of the Servicer.

         Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. The Servicer shall be entitled to enter into any agreement
with a Subservicer for indemnification of the Servicer by such Subservicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.

         Section 3.05 No Contractual Relationship Between Subservicers and the
Trustee.

         Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
Servicer alone, and the Trustee (or any successor Servicer) shall not be deemed
a party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer except as set forth in Section 3.06.
The Servicer shall be solely liable for all fees owed by it to any Subservicer,
irrespective of whether the Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees.

                                      -42-
<PAGE>

         Section 3.06 Assumption or Termination of Subservicing Agreements by
Trustee.

         In the event the Servicer at any time shall for any reason no longer be
the Servicer (including by reason of the occurrence of a Event of Default), the
Trustee or its designee shall thereupon assume all of the rights and obligations
of the Servicer under each Subservicing Agreement that the Servicer may have
entered into, with copies thereof provided to the Trustee prior to the Trustee
assuming such rights and obligations, unless the Trustee elects to terminate any
Subservicing Agreement in accordance with its terms as provided in Section 3.03.

         Upon such assumption, the Trustee, its designee or the successor
servicer shall be deemed, subject to Section 3.03, to have assumed all of the
Servicer's interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if each Subservicing Agreement had
been assigned to the assuming party, except that (i) the Servicer shall not
thereby be relieved of any liability or obligations under any Subservicing
Agreement that arose before it ceased to be the Servicer and (ii) none of the
Depositor, the Trustee, their designees or any successor Servicer shall be
deemed to have assumed any liability or obligation of the Servicer that arose
before it ceased to be the Servicer.

         The Servicer at its expense shall, upon request of the Trustee, deliver
to the assuming party all documents and records relating to each Subservicing
Agreement and the Mortgage Loans then being serviced and an accounting of
amounts collected and held by or on behalf of it, and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.

         Section 3.07 Collection of Certain Mortgage Loan Payments.

         (a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any applicable insurance policies, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. Consistent with the foregoing, the
Servicer may (i) waive any late payment charge or, if applicable, any penalty
interest, or (ii) extend the due dates for the Scheduled Payments due on a
Mortgage Note for a period of not greater than 180 days; provided that any
extension pursuant to clause (ii) above shall not affect the amortization
schedule of any Mortgage Loan for purposes of any computation hereunder, except
as provided below. In the event of any such arrangement pursuant to clause (ii)
above, the Servicer shall make timely advances on such Mortgage Loan during such
extension pursuant to Section 4.01 and in accordance with the amortization
schedule of such Mortgage Loan without modification thereof by reason of such
arrangements, subject to Section 4.01(d) pursuant to which the Servicer shall
not be required to make any such advances that are Nonrecoverable P&I Advances.
Notwithstanding the foregoing, the Servicer may waive, in whole or in part, a
Prepayment Charge only under the following circumstances: (i) such waiver
relates to a default or a 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
or (ii) such Prepayment Charge is not permitted to be collected by applicable
law. If a Prepayment Charge is waived other than as permitted by the prior
sentence,

                                      -43-
<PAGE>

then the Servicer is required to 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 Collection Account together with and at the time
that the amount prepaid on the related Mortgage Loan is required to be deposited
into the Collection Account.

         (b) (i) The Trustee shall establish and maintain the Excess Reserve
Fund Account, on behalf of the Class X Certificateholders, to secure their
limited recourse obligation to pay to the Floating Rate Certificateholders Basis
Risk CarryForward Amounts.

         (ii) On each Distribution Date, the Trustee shall deposit the amount of
     any Basis Risk Payment for such date into the Excess Reserve Fund Account.

         (c) (i) On each Distribution Date on which there exists a Basis Risk
CarryForward Amount on any Class of Certificates, the Trustee shall (1) withdraw
from the Distribution Account and deposit in the Excess Reserve Fund Account, as
set forth in Section 4.02(a)(iii)(g), the lesser of the Class X Distributable
Amount (without regard to the reduction in the definition thereof with respect
to the Basis Risk CarryForward Amount) (to the extent remaining after the
distributions specified in Sections 4.02(a)(iii)(a)-(f)) and the Basis Risk
CarryForward Amount and (2) withdraw from the Excess Reserve Fund Account
amounts necessary to pay to such Class or Classes of Certificates the Basis Risk
CarryForward Amount. Such payments shall be allocated to those Classes on a pro
rata basis based upon the amount of Basis Risk CarryForward Amount owed to each
such Class and shall be paid in the priority set forth in Section
4.02(a)(iii)(h) hereof.

         (ii) The Trustee shall account for the Excess Reserve Fund Account as
     an outside reserve fund within the meaning of Treasury regulation
     1.860G-2(h) and not an asset of any REMIC created pursuant to this
     Agreement. The beneficial owner of the Excess Reserve Fund Account is the
     Class X Certificateholder. For all federal tax purposes, amounts
     transferred by the Upper Tier REMIC to the Excess Reserve Fund Account
     shall be treated as distributions by the Trustee to the Class X
     Certificateholder.

         (iii) Any Basis Risk CarryForward Amounts paid by the Trustee to the
     Floating Rate Certificateholders shall be accounted for by the Trustee as
     amounts paid first to the Holders of the Class X Certificate and then to
     the respective Class or Classes of Floating Rate Certificates. In addition,
     the Trustee shall account for the Floating Rate Certificateholders' rights
     to receive payments of Basis Risk CarryForward Amounts as rights in a
     limited recourse interest rate cap contract written by the Class X
     Certificateholders in favor of the Floating Rate Certificateholders.

         (iv) Notwithstanding any provision contained in this Agreement, the
     Trustee shall not be required to make any payments from the Excess Reserve
     Fund Account except as expressly set forth in this Section 3.07(c).

         (d) The Trustee shall establish and maintain the Distribution Account
on behalf of the Certificateholders. The Trustee shall, promptly upon receipt,
deposit in the Distribution Account and retain therein the following:

                                      -44-
<PAGE>

         (i) the aggregate amount remitted by the Servicer to the Trustee
     pursuant to Section 3.11;

         (ii) any amount deposited by the Servicer pursuant to Section 3.10 in
     connection with any losses on Permitted Investments; and

         (iii) any other amounts deposited hereunder which are required to be
     deposited in the Distribution Account.

         In the event that the Servicer shall remit any amount not required to
be remitted, it may at any time direct the Trustee in writing to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering notice to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds deposited in the Distribution Account shall be held by the
Trustee in trust for the Certificateholders until disbursed in accordance with
this Agreement or withdrawn in accordance with Section 4.02. In no event shall
the Trustee incur liability for withdrawals from the Distribution Account at the
direction of the Servicer.

         (e) The Trustee may invest the funds in the Distribution Account (for
purposes of this Section 3.07 a "Trustee Investment Account"), in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand no later than the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in a Trustee Investment Account shall be made in the name of the
Trustee. The Trustee shall be entitled to sole possession over each such
investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee. In the event amounts on deposit in a Trustee Investment Account are
at any time invested in a Permitted Investment payable on demand, the Trustee
may:

         (x)   consistent with any notice required to be given thereunder,
               demand that payment thereon be made on the last day such
               Permitted Investment may otherwise mature hereunder in an amount
               equal to the lesser of (1) all amounts then payable thereunder
               and (2) the amount required to be withdrawn on such date; and

         (y)   demand payment of all amounts due thereunder that such Permitted
               Investment would not constitute a Permitted Investment in respect
               of funds thereafter on deposit in the Trustee Investment Account.

         (i) All income and gain realized from the investment of funds deposited
     in the Distribution Account held by or on behalf of the Trustee, shall be
     for the benefit of the Trustee and shall be subject to its withdrawal. In
     regard to the Distribution Account, the Trustee shall deposit in the
     Distribution Account the amount of any loss of principal incurred in
     respect of any such Permitted Investment made with funds in such account
     immediately upon realization of such loss.

                                      -45-
<PAGE>

         (ii) Except as otherwise expressly provided in this Agreement, if any
     default occurs in the making of a payment due under any Permitted
     Investment, or if a default occurs in any other performance required under
     any Permitted Investment, the Trustee shall take such action as may be
     appropriate to enforce such payment or performance, including the
     institution and prosecution of appropriate proceedings. The Trustee shall
     not be liable for the amount of any loss incurred in respect of any
     investment or lack of investment of funds held in the Distribution Account
     if made in accordance with this Section 3.07.

         (f) The Servicer shall give notice to the Trustee, each Rating Agency
and the Depositor of any proposed change of the location of the Collection
Account not later than 30 days and not more than 45 days prior to any change
thereof.

         Section 3.08 Subservicing Accounts.

         In those cases where a Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement, the Subservicer will be required to
establish and maintain one or more accounts (collectively, the "Subservicing
Account"). The Subservicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Servicer. The Subservicer shall deposit in the
clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections 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 Subservicer's receipt thereof, all proceeds
of Mortgage Loans received by the Subservicer less its servicing compensation to
the extent permitted by the Subservicing Agreement, and shall thereafter deposit
such amounts in the Subservicing Account, in no event more than two Business
Days after the deposit of such funds into the clearing account. The Subservicer
shall thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Servicer for deposit in the Collection Account not later than
two Business Days after the deposit of such amounts in the Subservicing Account.
For purposes of this Agreement, the Servicer shall be deemed to have received
payments on the Mortgage Loans when the Subservicer receives such payments.

         Section 3.09 Collection of Taxes, Assessments and Similar Items; Escrow
Accounts.

         (a) The Servicer shall ensure that each of the Mortgage Loans shall be
covered by a paid-in-full, life-of-the-loan tax service contract with a provider
mutually acceptable to the Depositor and Servicer (each, a "Tax Service
Contract"). Each Tax Service Contract shall be assigned to the Trustee, or its
designee, at the Servicer's expense in the event that the Servicer is terminated
as Servicer of the related Mortgage Loan.

         (b) To the extent that the services described in this paragraph (b) are
not otherwise provided pursuant to the Tax Service Contracts described in
paragraph (a) hereof, the Servicer undertakes to perform such functions. The
Servicer shall establish and maintain, or cause to be established and
maintained, one or more accounts (the "Escrow Accounts"), which shall be
Eligible Accounts. The Servicer shall deposit in the clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on

                                      -46-
<PAGE>

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, all collections from the Mortgagors (or related advances from
Subservicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments")
collected on account of the Mortgage Loans and shall thereafter deposit such
Escrow Payments in the Escrow Accounts, in no event more than two Business Days
after the deposit of such funds in the clearing account, for the purpose of
effecting the payment of any such items as required under the terms of this
Agreement. Withdrawals of amounts from an Escrow Account may be made only to (i)
effect payment of taxes, assessments, hazard insurance premiums, and comparable
items; (ii) reimburse the Servicer (or a Subservicer to the extent provided in
the related Subservicing Agreement) out of related collections for any advances
made pursuant to Section 3.01 (with respect to taxes and assessments) and
Section 3.13 (with respect to hazard insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages; (iv) pay interest, if required and as
described below, to Mortgagors on balances in the Escrow Account; (v) clear and
terminate the Escrow Account at the termination of the Servicer's obligations
and responsibilities in respect of the Mortgage Loans under this Agreement or
(vi) recover amounts deposited in error. As part of its servicing duties, the
Servicer or Subservicers shall pay to the Mortgagors interest on funds in Escrow
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Escrow Accounts is insufficient, to pay such interest from its
or their own funds, without any reimbursement therefor. To the extent that a
Mortgage does not provide for Escrow Payments, the Servicer shall determine
whether any such payments are made by the Mortgagor in a manner and at a time
that avoids the loss of the Mortgaged Property due to a tax sale or the
foreclosure of a tax lien. The Servicer assumes full responsibility for the
payment of all such bills within such time and shall effect payments of all such
bills irrespective of the Mortgagor's faithful performance in the payment of
same or the making of the Escrow Payments and shall make advances from its own
funds to effect such payments; provided, however, that such advances are deemed
to be Servicing Advances.

         Section 3.10 Collection Account.

         (a) On behalf of the Trustee, the Servicer shall establish and
maintain, or cause to be established and maintained, one or more Eligible
Accounts (such account or accounts, the "Collection Account"), held in trust for
the benefit of the Trustee. On behalf of the Trustee, the Servicer shall deposit
or cause to be deposited in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections 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 Collection Account, in no
event more than two Business Days after the deposit of such funds into the
clearing account, as and when received or as otherwise required hereunder, the
following payments and collections received or made by it subsequent to the
Cut-off Date (other than in respect of principal or interest on the related
Mortgage Loans due on or before the Cut-off Date), or payments (other than
Principal Prepayments) received by it on or prior to the Cut-off Date but
allocable to a Due Period subsequent thereto:

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

                                      -47-
<PAGE>

         (ii) all payments on account of interest (net of the related Servicing
     Fee) on each Mortgage Loan;

         (iii) all Insurance Proceeds to the extent such Insurance Proceeds are
     not to be applied to the restoration of the related Mortgaged Property or
     released to the related Mortgagor in accordance with the express
     requirements of law or in accordance with prudent and customary servicing
     practices and Liquidation Proceeds;

         (iv) any amounts required to be deposited pursuant to Section 3.12 in
     connection with any losses realized on Permitted Investments with respect
     to funds held in the Collection Account;

         (v) any amounts required to be deposited by the Servicer pursuant to
     the second paragraph of Section 3.13(a) in respect of any blanket policy
     deductibles;

         (vi) all proceeds of any Mortgage Loan repurchased or purchased in
     accordance with this Agreement; and

         (vii) all Prepayment Charges collected by the Servicer.

         The foregoing requirements for deposit in the Collection Accounts shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees and other similar fees and charges need
not be deposited by the Servicer in the Collection Account and shall, upon
collection, belong to the Servicer as additional compensation for its servicing
activities. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.

         (b) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. The
Servicer shall give notice to the Trustee and the Depositor of the location of
the Collection Account maintained by it when established and prior to any change
thereof.

         Section 3.11 Withdrawals from the Collection Account.

         (a) The Servicer shall, from time to time, make withdrawals from the
Collection Account for any of the following purposes or as described in Section
4.01:

         (i) On or prior to the Remittance Date, to remit to the Trustee (i) the
     Trustee Fee with respect to such Distribution Date and (ii) all Available
     Funds in respect of the related Distribution Date together with all amounts
     representing Prepayment Charges from the Mortgage Loans received during the
     related Prepayment Period;

         (ii) to reimburse the Servicer for P&I Advances, but only to the extent
     of amounts received which represent Late Collections (net of the related
     Servicing Fees) of Monthly Payments on Mortgage Loans with respect to which
     such P&I Advances were made in accordance with the provisions of Section
     4.01;

                                      -48-
<PAGE>

         (iii) to pay the Servicer or any Subservicer (a) any unpaid Servicing
     Fees or (b) any unreimbursed Servicing Advances with respect to each
     Mortgage Loan, but only to the extent of any Late Collections, Liquidation
     Proceeds, Insurance Proceeds or other amounts as may be collected by the
     Servicer from a Mortgagor, or otherwise received with respect to such
     Mortgage Loan (or the related REO Property);

         (iv) to pay to the Servicer as servicing compensation (in addition to
     the Servicing Fee) on the Remittance Date any interest or investment income
     earned on funds deposited in the Collection Account;

         (v) to pay to the Responsible Party, with respect to each Mortgage Loan
     that has previously been purchased or replaced pursuant to this Agreement
     all amounts received thereon subsequent to the date of purchase or
     substitution, as the case may be;

         (vi) to reimburse the Servicer for any P&I Advance or Servicing Advance
     previously made which the Servicer has determined to be a Nonrecoverable
     P&I Advance or Nonrecoverable Servicing Advance in accordance with the
     provisions of Section 4.01;

         (vii) to pay, or to reimburse the Servicer for advances in respect of,
     expenses incurred in connection with any Mortgage Loan pursuant to Section
     3.15;

         (viii) to reimburse the Servicer or the Depositor for expenses incurred
     by or reimbursable to the Servicer or the Depositor, as the case may be,
     pursuant to Section 6.03;

         (ix) to reimburse the Servicer or the Trustee, as the case may be, for
     expenses reasonably incurred in respect of the breach or defect giving rise
     to the purchase obligation under Section 2.03 of this Agreement that were
     included in the Repurchase Price of the Mortgage Loan, including any
     expenses arising out of the enforcement of the purchase obligation;

         (x) to withdraw any amounts deposited in the Collection Account in
     error; and

         (xi) to clear and terminate the Collection Account upon termination of
     this Agreement.

         (b) 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 Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (a)(ii), (iii), (v), (vi), (vii), (viii) and (ix)
above. The Servicer shall provide written notification to the Depositor, on or
prior to the next succeeding Remittance Date, upon making any withdrawals from
the Collection Account pursuant to subclause (a)(vii) above.

         Section 3.12 Investment of Funds in the Collection Account.

         (a) The Servicer may invest the funds in the Collection Account (for
purposes of this Section 3.12, a "Servicer Investment Account"), in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand no later than the

                                      -49-
<PAGE>

Business Day immediately preceding the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any investment
of funds in a Servicer Investment Account shall be made in the name of the
Servicer. The Servicer shall be entitled to sole possession (except with respect
to investment direction of funds held in the Collection Account and any income
and gain realized thereon) over each such investment, and any certificate or
other instrument evidencing any such investment shall be delivered directly to
the Servicer or its agent, together with any document of transfer necessary to
transfer title to such investment to the Servicer. In the event amounts on
deposit in a Servicer Investment Account are at any time invested in a Permitted
Investment payable on demand, the Servicer may:

         (x)   consistent with any notice required to be given thereunder,
               demand that payment thereon be made on the last day such
               Permitted Investment may otherwise mature hereunder in an amount
               equal to the lesser of (1) all amounts then payable thereunder
               and (2) the amount required to be withdrawn on such date; and

         (y)   demand payment of all amounts due thereunder that such Permitted
               Investment would not constitute a Permitted Investment in respect
               of funds thereafter on deposit in the Servicer Investment
               Account.

         (b) All income and gain realized from the investment of funds deposited
in the Collection Account held by or on behalf of the Servicer, shall be for the
benefit of the Servicer and shall be subject to its withdrawal in the manner set
forth in Section 3.11. In regard to the Collection Account, the Servicer shall
deposit in the Collection Account the amount of any loss of principal incurred
in respect of any such Permitted Investment made with funds in such accounts
immediately upon realization of such loss.

         (c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Servicer shall take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings. The Servicer shall not be liable for the amount of any
loss incurred in respect of any investment or lack of investment of funds held
in the Collection Account if made in accordance with this Section 3.12.

         Section 3.13 Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage.

         (a) The Servicer shall cause to be maintained for each Mortgage Loan
fire insurance with extended coverage on the related Mortgaged Property in an
amount which is at least equal to the least of (i) the current principal balance
of such Mortgage Loan, (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 and (iii) the maximum insurable value of the improvements
which are a part of such Mortgaged Property, 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 fire insurance with

                                      -50-
<PAGE>

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 property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property, plus accrued interest at
the Mortgage Rate and related Servicing Advances. 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 to be 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) shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.11. Any cost incurred by the Servicer in maintaining any such insurance shall
not, for the purpose of calculating distributions to the Trustee, be added to
the unpaid 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 will 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 unpaid 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).

         In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of A:X or better in Best's
(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 3.13, 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 3.13, and there
shall have been one or more losses which would have been covered by such policy,
deposit to the Collection 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 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 Mortgage Loans, unless
the Servicer has

                                      -51-
<PAGE>

obtained a waiver of such requirements from Fannie Mae or Freddie Mac. 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 provide the Trustee with copies of any such insurance policies
and fidelity bond. 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 each Subservicer to maintain a policy of insurance covering errors
and omissions and a fidelity bond which would meet such requirements.

         Section 3.14 Enforcement of Due-On-Sale Clauses; Assumption Agreements.

         The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Servicer shall not be required to take such action if, in its sole business
judgment, the Servicer believes it is not in the best interests of the Trust
Fund and shall not exercise any such rights if prohibited by law from doing so.
If the Servicer reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized 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 the Mortgagor and becomes liable under the Mortgage
Note, provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer, has a credit risk rating at
least equal to that of the original Mortgagor. In connection with any
assumption, modification or substitution, the Servicer shall apply such
underwriting standards and follow such practices and procedures as shall be
normal and usual in its general mortgage servicing activities and as it applies
to other mortgage loans owned solely by it. The Servicer shall not take or enter
into any assumption and modification agreement, however, unless (to the extent
practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy, or a new policy meeting the requirements of this Section is obtained.
Any fee collected by the Servicer in respect of an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Rate and the
amount of the Scheduled Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Servicer shall notify the Trustee
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee the executed original of such
substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of

                                      -52-
<PAGE>

such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.

         Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.14, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.

         Section 3.15 Realization Upon Defaulted Mortgage Loans.

         The Servicer shall use its best efforts, consistent with customary
servicing practices as described in Section 3.01, to foreclose upon or otherwise
comparably convert (which may include an acquisition of REO Property) 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 pursuant to Section 3.07, and which are not
released from this Agreement pursuant to any other provision hereof. The
Servicer shall use reasonable efforts to realize upon such defaulted Mortgage
Loans in such manner as will maximize the receipt of principal and interest by
the Trustee, taking into account, among other things, the timing of foreclosure
proceedings. The foregoing is subject to the provisions that, in any case in
which Mortgaged Property shall have suffered damage from an uninsured cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such property unless it shall determine in its sole discretion (i) that such
restoration will increase the net proceeds of liquidation of the related
Mortgage Loan to the Trustee, after reimbursement to itself for such expenses,
and (ii) that such expenses will be recoverable by the Servicer through
Insurance Proceeds or Liquidation Proceeds from the related Mortgaged Property,
as contemplated in Section 3.11. The Servicer shall be responsible for all other
costs and expenses incurred by it in any such proceedings; provided, however,
that it shall be entitled to reimbursement thereof from the related property, as
contemplated in Section 3.11.

         The proceeds of any liquidation or REO Disposition, as well as any
recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds or any income from an REO Property, will be applied in the
following order of priority: first, to reimburse the Servicer or any Subservicer
for any related unreimbursed Servicing Advances, pursuant to Section 3.11 or
3.17; second, to accrued and unpaid interest on the Mortgage Loan or REO Imputed
Interest, at the Mortgage Rate, to the date of the liquidation or REO
Disposition, or to the Due Date prior to the Remittance Date on which such
amounts are to be distributed if not in connection with a liquidation or REO
Disposition; third, to reimburse the Servicer for any related unreimbursed P&I
Advances, pursuant to Section 3.11; and fourth, as a recovery of principal of
the Mortgage Loan. If the amount of the recovery so allocated to interest is
less than a full recovery thereof, that amount will be allocated as follows:
first, to unpaid Servicing Fees; and second, as interest at the Mortgage Rate
(net of the Servicing Fee Rate). The portion of the recovery so allocated to
unpaid Servicing Fees shall be reimbursed to the Servicer or any Subservicer
pursuant to Section 3.11 or 3.17. The portions of the recovery so allocated to
interest at the Mortgage Rate (net of the Servicing Fee Rate) and to principal
of the Mortgage

                                      -53-
<PAGE>

Loan shall be applied as follows: first, to reimburse the Servicer or any
Subservicer for any related unreimbursed Servicing Advances in accordance with
Section 3.11 or 3.17, and second, to the Trustee in accordance with the
provisions of Section 4.02, subject to the last paragraph of Section 3.17 with
respect to certain excess recoveries from an REO Disposition.

         Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Servicer has received actual notice of, or has actual knowledge of
the presence of, hazardous or toxic substances or wastes on the related
Mortgaged Property, or if the Trustee otherwise requests, the Servicer shall
cause an environmental inspection or review of such Mortgaged Property to be
conducted by a qualified inspector. Upon completion of the inspection, the
Servicer shall promptly provide the Trustee with a written report of the
environmental inspection.

         After reviewing the environmental inspection report, the Depositor
shall determine how the Servicer shall proceed with respect to the Mortgaged
Property. In the event (a) the environmental inspection report indicates that
the Mortgaged Property is contaminated by hazardous or toxic substances or
wastes and (b) the Depositor directs the Servicer to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Servicer shall be reimbursed
for all reasonable costs associated with such foreclosure or acceptance of a
deed in lieu of foreclosure and any related environmental clean-up costs, as
applicable, from the related Liquidation Proceeds, or if the Liquidation
Proceeds are insufficient to fully reimburse the Servicer, the Servicer shall be
entitled to be reimbursed from amounts in the Collection Account pursuant to
Section 3.11 hereof. In the event the Depositor directs the Servicer not to
proceed with foreclosure or acceptance of a deed in lieu of foreclosure, the
Servicer shall be reimbursed from general collections for all Servicing Advances
made with respect to the related Mortgaged Property from the Collection Account
pursuant to Section 3.11 hereof.

         Section 3.16 Release of Mortgage Files.

         (a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Servicer will, within five (5) Business
Days of the payment in full, notify the Trustee by a certification (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Collection Account pursuant to Section 3.10 have been or will
be so deposited) of a Servicing Officer and shall request delivery to it of the
Custodial File. Upon receipt of such certification and request, the Trustee
shall promptly release the related Custodial File to the Servicer within two (2)
Business Days. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Collection
Account.

         (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall, upon
request of the Servicer and delivery to the Trustee, of a Request for Release,
release the related Custodial File to the Servicer, and the Trustee shall, at
the direction of the Servicer, execute such documents as shall be necessary to
the prosecution of any such proceedings and the Servicer shall retain the
Mortgage File in trust for the benefit of the Trustee. Such Request for Release
shall obligate the Servicer to return each and every document

                                      -54-
<PAGE>

previously requested from the Custodial File to the Trustee when the need
therefor by the Servicer no longer exists, unless the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Collection Account or the Mortgage File or such document has
been delivered to an attorney, or to a public trustee or other public official
as required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered to the Trustee a certificate of a
Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation that are required to be deposited
into the Collection Account have been so deposited, or that such Mortgage Loan
has become an REO Property, a copy of the Request for Release of Documents shall
be released by the Trustee to the Servicer or its designee.

         Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer any court pleadings, requests for trustee's
sale or other documents reasonably necessary to the foreclosure or trustee's
sale in respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity, or shall
exercise and deliver to the Servicer a power of attorney sufficient to authorize
the Servicer to execute such documents on its behalf. Each such certification
shall include a request that such pleadings or documents be executed by the
Trustee and a statement as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.

         Section 3.17 Title, Conservation and Disposition of REO Property.

         (a) This Section shall apply only to REO Properties acquired for the
account of the Trustee and shall not apply to any REO Property relating to a
Mortgage Loan which was purchased or repurchased from the Trustee pursuant to
any provision hereof. In the event that title to any such REO Property is
acquired, the deed or certificate of sale shall be issued to the Servicer, or to
its nominee, on behalf of the Trustee.

         (b) The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Trustee. The Servicer shall notify the
Trustee from time to time as to the status of each REO Property.

                                      -55-
<PAGE>

         (c) The Servicer shall use its best efforts to dispose of the REO
Property as soon as possible (subject to the Trustee's right to veto any
proposed sale of REO Property) and shall sell such REO Property in any event
within one year after title has been taken to such REO Property, unless the
Servicer determines, and gives an appropriate notice to the Trustee to such
effect, that a longer period is necessary for the orderly liquidation of such
REO Property. If a period longer than one year is permitted under the foregoing
sentence and is necessary to sell any REO Property, the Servicer shall report
monthly to the Trustee as to the progress being made in selling such REO
Property. Notwithstanding its veto rights, the Trustee has no obligation with
respect to REO dispositions.

         (d) [Reserved].

         (e) The Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets and shall deposit such funds in the
Collection Account.

         (f) The Servicer shall deposit net of reimbursement to the Servicer for
any related outstanding Servicing Advances and unpaid Servicing Fees provided in
Section 3.11 hereof, or cause to be deposited, on a daily basis in the
Collection Account all revenues received with respect to the related REO
Property and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of the REO Property.

         (g) The Servicer, upon an REO Disposition, shall be entitled to
reimbursement for any related unreimbursed Servicing Advances as well as any
unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.11.

         (h) Any net proceeds which are in excess of the applicable Stated
Principal Balance plus all unpaid REO Imputed Interest thereon through the date
of the REO Disposition shall be retained by the Servicer as additional servicing
compensation.

         (i) The Servicer shall use its reasonable best efforts to sell, or
cause the Subservicer to sell, any REO Property as soon as possible, but in no
event later than the conclusion of the third calendar year beginning after the
year of its acquisition by the REMIC unless (i) the Servicer applies for an
extension of such period from the Internal Revenue Service pursuant to the REMIC
Provisions and Code Section 856(e)(3), in which event such REO Property shall be
sold within the applicable extension period, or (ii) the Servicer obtains for
the Trustee an Opinion of Counsel, addressed to the Depositor, the Trustee and
the Servicer, to the effect that the holding by the REMIC of such REO Property
subsequent to such period will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code or cause the
REMIC to fail to qualify as a REMIC under the REMIC Provisions or comparable
provisions of relevant state laws at any time. The Servicer shall manage,
conserve, protect and operate each REO Property for the Trustee solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) or result in the receipt by the REMIC of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or
any "net income from foreclosure property" which is subject to taxation under
Section 860G(a)(1) of the Code. Pursuant to its efforts to sell such REO
Property, the Servicer

                                      -56-
<PAGE>

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 Trustee on behalf of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Trustee on behalf of the Certificateholders for
the period prior to the sale of such REO Property; provided, however, that any
rent received or accrued with respect to such REO Property qualifies as "rents
from real property" as defined in Section 856(d) of the Code.

         Section 3.18 Notification of Adjustments.

         With respect to each Adjustable Rate Mortgage Loan, the Servicer shall
adjust the Mortgage Rate on the related interest rate adjustment date and shall
adjust the Scheduled Payment on the related mortgage payment adjustment date, if
applicable, in compliance with the requirements of applicable law and the
related Mortgage and Mortgage Note. The Servicer shall execute and deliver any
and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Rate and Scheduled
Payment adjustments. The Servicer shall promptly, upon written request therefor,
deliver to the Trustee such notifications and any additional applicable data
regarding such adjustments and the methods used to calculate and implement such
adjustments. Upon the discovery by the Servicer that the Servicer has failed to
adjust a Mortgage Rate or Scheduled Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall deposit in the Collection Account from
its own funds the amount of any interest loss caused as such interest loss
occurs.

         Section 3.19 Access to Certain Documentation and Information Regarding
the Mortgage Loans.

         In the event the Servicer reasonably believes that compliance with this
Section will make the Mortgage Loans legal for investment by federally insured
savings and loan associations, the Servicer shall provide, or cause the
Subservicer to provide, to the Depositor, the Trustee, the OTS or the FDIC and
the examiners and supervisory agents thereof access to the documentation
regarding the Mortgage Loans in its possession required by applicable
regulations of the OTS. Such access shall be afforded without charge, but only
upon reasonable and prior written request and during normal business hours at
the offices of the Servicer, the Depositor, the Trustee or any Subservicer.
Nothing in this Section shall derogate from the obligation of the Servicer, the
Depositor, the Trustee or any Subservicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Servicer, the Depositor, the Trustee or any Subservicer to provide access
as provided in this Section as a result of such obligation shall not constitute
a breach of this Section.

         Section 3.20 Documents, Records and Funds in Possession of the Servicer
to be Held for the Trustee.

         Not later than fifteen days after each Distribution Date, the Servicer
shall forward to the Trustee a statement prepared by the Servicer setting forth
the status of the Collection Account as of the close of business on the last day
of the calendar month relating to such Distribution Date and showing, for the
period covered by such statement, the aggregate amount

                                      -57-
<PAGE>

of deposits into and withdrawals from the Collection Account of each category of
deposit specified in Section 3.10(a) and each category of withdrawal specified
in Section 3.11. Such statement may be in the form of the then current Fannie
Mae Monthly Accounting Report for its Guaranteed Mortgage Pass-Through Program
with appropriate additions and changes, and shall also include information as to
the aggregate of the outstanding principal balances of all of the Mortgage Loans
as of the last day of the calendar month immediately preceding such Distribution
Date. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon the request and at the expense of the
requesting party, provided such statement is delivered by the Servicer to the
Trustee.

         Section 3.21 Servicing Compensation.

         (a) As compensation for its activities hereunder, the Servicer shall,
with respect to each Mortgage Loan, be entitled to retain from deposits to the
Collection Account and from Liquidation Proceeds, Insurance Proceeds and REO
Proceeds related to such Mortgage Loan, the Servicing Fee with respect to each
Mortgage Loan (less any portion of such amounts retained by any Subservicer). In
addition, the Servicer shall be entitled to recover unpaid Servicing Fees out of
related late collections to the extent permitted in Section 3.11. The right to
receive the Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all of the Servicer's responsibilities and
obligations under this Agreement; provided, however, that the Servicer may pay
from the Servicing Fee any amounts due to a Subservicer pursuant to a
Subservicing Agreement entered into under Section 3.02.

         (b) Additional servicing compensation in the form of assumption or
modification fees, late payment charges, NSF fees, reconveyance fees and other
similar fees and charges (other than Prepayment Charges) shall be retained by
the Servicer only to the extent such fees or charges are received by the
Servicer. The Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to
withdraw from the Collection Account, as additional servicing compensation,
interest or other income earned on deposits therein.

         (c) The Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder (including payment of
premiums for any blanket policy insuring against hazard losses pursuant to
Section 3.13, servicing compensation of the Subservicer to the extent not
retained by it and the fees and expenses of independent accountants and any
agents appointed by the Servicer), and shall not be entitled to reimbursement
therefor except as specifically provided in Section 3.11.

         Section 3.22 Annual Statement as to Compliance.

         The Servicer will deliver or cause to be delivered to the Depositor,
the Rating Agencies and the Trustee on or before August 15th of each calendar
year, commencing in 2002, an Officers' Certificate 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 or a similar
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

                                      -58-
<PAGE>

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.

         Section 3.23 Annual Independent Public Accountants' Servicing
Statement; Financial Statements.

         Not later than August 15th of each calendar year commencing in 2002,
the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Depositor, the
Servicer, the Rating Agencies and the Trustee 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 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.

         Section 3.24 Trustee to Act as Servicer.

         In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its successor shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (i)
liable for losses of the Servicer pursuant to Section 3.10 or any acts or
omissions of the predecessor Servicer hereunder), (ii) obligated to make
Advances if it is prohibited from doing so by applicable law, (iii) obligated to
effectuate repurchases or substitutions of Mortgage Loans hereunder, including
but not limited to repurchases or substitutions pursuant to Section 2.03, (iv)
responsible for expenses of the Servicer pursuant to Section 2.03 or (v) deemed
to have made any representations and warranties of the Servicer hereunder. Any
such assumption shall be subject to Section 7.02.

         Every subservicing agreement entered into by the Servicer shall contain
a provision giving the successor Servicer the option to terminate such agreement
in the event a successor Servicer is appointed.

         If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee (or any other
successor Servicer) may, at its option, succeed to any rights and obligations of
the Servicer under any subservicing agreement in accordance with the terms
thereof; provided that the Trustee (or any other successor Servicer) shall not
incur any liability or have any obligations in its capacity as successor
Servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Servicer thereunder; and the Servicer shall not

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thereby be relieved of any liability or obligations under the subservicing
agreement arising prior to the date of such succession.

         The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement (if any) and the Mortgage Loans then being
serviced thereunder and an accounting of amounts collected held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.

         Section 3.25 Compensating Interest.

         The Servicer shall remit to the Trustee on each Remittance Date an
amount from its own funds equal to the lesser of (a) the Prepayment Interest
Shortfall, if any, for such Remittance Date, and (b) the amount of the Servicing
Fee payable to the Servicer for such Remittance Date.

         Section 3.26 Credit Reporting; Gramm-Leach-Bliley Act.

         (a) With respect to each Group I Mortgage Loan, the Servicer agrees to
accurately and fully report its borrower credit files to all three credit
repositories in a timely manner.

         (b) The Servicer shall comply with Title V of the Gramm-Leach-Bliley
Act of 1999 and all applicable regulations promulgated thereunder, relating to
the Mortgage Loans and the related borrowers and shall provide all required
notices thereunder prior to the July 1, 2001 effective date and annually
thereafter.

                                   ARTICLE IV

                                DISTRIBUTIONS AND
                            ADVANCES BY THE SERVICER

         Section 4.01 Advances.

         (a) The amount of P&I Advances to be made by the Servicer for any
Remittance Date shall equal, subject to Section 4.01(c), the sum of (i) the
aggregate amount of Scheduled Payments (with each interest portion thereof net
of the related Servicing Fee), due on the Due Date immediately preceding such
Remittance Date in respect of the Mortgage Loans, which Scheduled Payments were
not received as of the close of business on the last Business Day of the
immediately preceding calendar month, plus (ii) with respect to each REO
Property, which REO Property was acquired during or prior to the related
Prepayment Period and as to which such REO Property an REO Disposition did not
occur during the related Prepayment Period, an amount equal to the excess, if
any, of the Scheduled Payments (with each interest portion thereof net of the
related Servicing Fee) that would have been due on the related Due Date in
respect of the related Mortgage Loans, over the net income from such REO
Property transferred to the Collection Account for distribution on such
Remittance Date.

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<PAGE>

         (b) On the Remittance Date, the Servicer shall remit in immediately
available funds to the Trustee an amount equal to the aggregate amount of P&I
Advances, if any, to be made in respect of the Mortgage Loans and REO Properties
for the related Remittance Date either (i) from its own funds or (ii) from the
Collection Account, to the extent of funds held therein for future distribution
(in which case, it will cause to be made an appropriate entry in the records of
Collection Account that Amounts Held For Future Distribution have been, as
permitted by this Section 4.01, used by the Servicer in discharge of any such
P&I Advance) or (iii) in the form of any combination of (i) and (ii) aggregating
the total amount of P&I Advances to be made by the Servicer with respect to the
Mortgage Loans and REO Properties. Any Amounts Held For Future Distribution and
so used shall be appropriately reflected in the Servicer's records and replaced
by the Servicer by deposit in the Collection Account on or before any future
Remittance Date to the extent required.

         (c) The obligation of the Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from coverage under this Agreement, except as otherwise provided
in this Section.

         (d) Notwithstanding anything herein to the contrary, no P&I Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
P&I Advance or Servicing Advance would, if made, constitute a Nonrecoverable P&I
Advance or Nonrecoverable Advance. The determination by the Servicer that it has
made a Nonrecoverable P&I Advance or a Nonrecoverable Advance or that any
proposed P&I Advance or Servicing Advance, if made, would constitute a
Nonrecoverable P&I Advance or a Nonrecoverable Advance, respectively, shall be
evidenced by an Officers' Certificate of the Servicer delivered to the Trustee.

         (e) Except as otherwise provided herein, the Servicer shall be entitled
to reimbursement pursuant to Section 3.11 hereof for Servicing Advances from
recoveries from the related Mortgagor or from all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds and Condemnation Proceeds)
with respect to the related Mortgage Loan.

         Section 4.02 Priorities of Distribution.

     (a) On each Distribution Date, the Trustee will make the disbursements and
transfers from amounts then on deposit in the Distribution Account in the
following order of priority and to the extent of the Available Funds remaining:

         (i) to the holders of each Class of Certificates in the following order
of priority:

         (a) to the Class A Certificates, the related Accrued Certificate
     Interest Distribution Amount and any Unpaid Interest Amounts for such
     Distribution Date, as described in Section 4.02(a), pro rata (based on the
     accrued and unpaid interest distributable under this clause 4.02(a)(i)(a)
     to such Classes of Certificates);

                                      -61-
<PAGE>

         (b) to the Class M-1 Certificates, the Accrued Certificate Interest
     Distribution Amount for such Class on such Distribution Date;

         (c) to the Class M-2 Certificates, the Accrued Certificate Interest
     Distribution Amount for such Class on such Distribution Date;

         (d) to the Class B-1 Certificates, the Accrued Certificate Interest
     Distribution Amount for such Class on such Distribution Date;

         (ii) (A) on each Distribution Date (a) before the related Stepdown Date
or (b) with respect to which a Trigger Event is in effect, to the holders of the
related Class or Classes of LIBOR Certificates then entitled to distributions of
principal as set forth below, an amount equal to the Principal Distribution
Amount in the following order of priority:

         (a) to the Class A-1 and Class A-2 Certificates, allocated as described
         in Section 4.02(c), until the respective Class Certificate Balances
         thereof are reduced to zero;

         (b) sequentially to the Class M-1, Class M-2 and Class B-1
         Certificates, in that order, until the respective Class Certificate
         Balances are reduced to zero;

              (B) on each Distribution Date (a) on and after the related
Stepdown Date and (b) as long as a Trigger Event is not in effect, to the
holders of the related Class or Classes of LIBOR Certificates then entitled to
distribution of principal an amount equal to, in the aggregate, the Principal
Distribution Amount in the following amounts and order of priority:

         (a) the lesser of (x) the Principal Distribution Amount and (y) the
     Class A Principal Distribution Amount to the Class A Certificates,
     allocated as described in Section 4.02(c), until the respective Class
     Certificate Balances thereof are reduced to zero;

         (b) the lesser of (x) the excess of (i) the Principal Distribution
     Amount over (ii) the amount distributed to the Class A Certificateholders
     in clause (ii)(B)(a) above and (y) the Class M-1 Principal Distribution
     Amount to the Class M-1 Certificateholders, until the Class Certificate
     Balance thereof has been reduced to zero;

         (c) the lesser of (x) the excess of (i) the Principal Distribution
     Amount over (ii) the amount distributed to the Class A Certificateholders
     in clause (ii)(B)(a) above and to the Class M-1 Certificates in clause
     (ii)(B). (b) above and (y) the Class M-2 Principal Distribution Amount to
     the Class M-2 Certificateholders, until the Class Certificate Balance
     thereof has been reduced to zero;

         (d) the lesser of (x) the excess of (i) the Principal Distribution
     Amount over (ii) the amount distributed to the Class A Certificateholders
     in clause (ii)(B)(a) above, to the Class M-1 Certificates in clause
     (ii)(B)(b) above and to the Class M-2 Certificates in clause (ii)(B)(c)
     above and (y) the Class B-1 Principal Distribution Amount to the

                                      -62-
<PAGE>

     Class B-1 Certificateholders, until the Class Certificate Balance thereof
     has been reduced to zero;

         (iii) any amount remaining after the distributions in clauses (i) and
(ii) above shall be distributed in the following order of priority:

         (a) to the holders of the Class M-1 Certificates, any Unpaid Interest
     Amounts for such Class;

         (b) to the holders of the Class M-1 Certificates, any Unpaid Realized
     Loss Amount for such Class;

         (c) to the holders of the Class M-2 Certificates, any Unpaid Interest
     Amounts for such Class;

         (d) to the holders of the Class M-2 Certificates, any Unpaid Realized
     Loss Amount for such Class;

         (e) to the holders of the Class B-1 Certificates, any Unpaid Interest
     Amounts for such Class;

         (f) to the holders of the Class B-1 Certificates, any Unpaid Realized
     Loss Amount for such Class;

         (g) to the Excess Reserve Fund Account, the amount of any Basis Risk
     Payment for such Distribution Date;

         (h) from funds on deposit in the Excess Reserve Fund Account, an amount
     equal to any Basis Risk CarryForward Amount with respect to any Floating
     Rate Certificate for such Distribution Date to the Floating Rate
     Certificates in the same order and priority in which Accrued Certificate
     Interest is allocated among those Classes of Certificates;

         (i) to the holders of the Class X Certificates, the remainder of the
     Class X Distributable Amount not distributed pursuant to Sections
     4.02(a)(iii)(a)-(h); and

         (iv) to the holders of the Class R Certificates, any remaining amount.

     (b) On each Distribution Date, all amounts representing Prepayment Charges
from the Mortgage Loans received during the related Prepayment Period will be
distributed to the holders of the Class P Certificates.

         Solely for purposes of this interest allocation calculation, the
portion of the interest component of Available Funds attributable to Group I
Mortgage Loans will be allocated:

         1. first, to the Class A-1 Certificates, the Accrued Certificate
Interest Distribution Amount and any Unpaid Interest Amounts for the Class A-1
Certificates;

                                      -63-
<PAGE>

         2. second, to the Class A-2 Certificates, the Accrued Certificate
Interest Distribution Amount and any Unpaid Interest Amounts for the Class A-2,
to the extent not otherwise previously paid from the interest component of
Available Funds attributable to Group II Mortgage Loans.

         Solely for purposes of this interest allocation calculation, the
portion of the interest component of Available Funds attributable to Group II
Mortgage Loans will be allocated:

         1. first, to the Class A-2 Certificates, the Accrued Certificate
Interest Distribution Amount and any Unpaid Interest Amounts for the Class A-2
Certificates;

         2. second, to the Class A-1 Certificates, the Accrued Certificate
Interest Distribution Amount and any Unpaid Interest Amounts for the Class A-1
Certificates to the extent not otherwise previously paid from the interest
component of Available Funds attributable to Group I Mortgage Loans.

         If on any Distribution Date, as a result of the foregoing allocation
rules, either class of Class A Certificates does not receive the related Accrued
Certificate Interest Distribution Amount or the related Unpaid Interest Amounts,
if any, then that unpaid amount will be recoverable by the holders of that
class, with interest thereon, on future distribution dates, as Unpaid Interest
Amounts, subject to the priorities described above.

     (c) All principal distributions to the holders of the Class A Certificates
on any distribution date will be allocated between the Class A-1 Certificates
and the Class A-2 Certificates on a pro rata basis based on the Class A
Principal Allocation Percentage for each of those Classes for that Distribution
Date; provided, however, that if the Class Certificate Balance of either of
Class A Certificates is reduced to zero, then the remaining amount of principal
distributions distributable to the Class A Certificates on that Distribution
Date, and the amount of principal distributions distributable on all subsequent
Distribution Dates will be distributed to the holders of the Classes of Class A
Certificates remaining outstanding on a pro rata basis on the Class Certificate
Balance for each of those Classes for that Distribution Date until their Class
Certificate Balances have been reduced to zero and if the Class Certificate
Balance of the Class A-2 Certificates are reduced to zero, then the remaining
amount of principal distributions distributable to the Class A Certificates on
that Distribution Date, and the amount of principal distributions distributable
on all subsequent Distribution Dates will be distributed to the holders of the
Classes of Class A Certificates remaining outstanding until its Class
Certificate Balance has been reduced to zero. Any payments of principal to the
Class A-1 Certificates shall be made first from Available Funds relating to the
Group I Mortgage Loans. Any payments of principal to the Class A-2 Certificates
shall be made first from Available Funds relating to the Group II Mortgage
Loans.

     (d) On any Distribution Date, any Relief Act Shortfalls and Net Prepayment
Interest Shortfalls for such Distribution Date will be allocated as a reduction
in the following order:

         (1)   First, to the amount of interest payable to the Class X
               Certificates; and

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<PAGE>

         (2)   Second, pro rata, as a reduction of the Accrued Certificate
               Interest for the Class A, Class M and Class B-1 Certificates,
               based on the amount of interest to which such classes would
               otherwise be entitled.

         Section 4.03 Monthly Statements to Certificateholders.

         (a) Not later than each Distribution Date, the Trustee shall make
available to each Certificateholder, the Servicer, the Depositor and each Rating
Agency a statement setting forth with respect to the related distribution:

         (i) the amount thereof allocable to principal, separately identifying
     the aggregate amount of any Principal Prepayments and Liquidation Proceeds
     included therein;

         (ii) the amount thereof allocable to interest, any Unpaid Interest
     Amounts included in such distribution and any remaining Unpaid Interest
     Amounts after giving effect to such distribution, any Basis Risk
     CarryForward Amount for such Distribution Date and the amount of all Basis
     Risk CarryForward Amount covered by withdrawals from the Excess Reserve
     Fund Account on such Distribution Date;

         (iii) if the distribution to the Holders of such Class of Certificates
     is less than the full amount that would be distributable to such Holders if
     there were sufficient funds available therefor, the amount of the shortfall
     and the allocation thereof as between principal and interest, including any
     Basis Risk CarryForward Amount not covered by amounts in the Excess Reserve
     Fund Account;

         (iv) the Class Certificate Balance of each Class of Certificates after
     giving effect to the distribution of principal on such Distribution Date;

         (v) the Pool Stated Principal Balance for the following Distribution
     Date;

         (vi) the amount of the Servicing Fees paid to or retained by the
     Servicer or Subservicer (with respect to the Subservicers, in the
     aggregate) with respect to such Distribution Date;

         (vii) the Pass-Through Rate for each such Class of Certificates with
     respect to such Distribution Date;

         (viii) the amount of Advances included in the distribution on such
     Distribution Date and the aggregate amount of Advances reported by the
     servicer as outstanding as of the close of business on such Distribution
     Date;

         (ix) the number and aggregate Scheduled Principal Balances of Mortgage
     Loans (1) as to which the Scheduled Payment is delinquent 1 to 30 days, 31
     to 59 days, 60 to 89 days and 90 or more days, (2) as to which the
     Scheduled Payment is delinquent 31 to 60 days, 61 to 90 days and 91 or more
     days, (3) that have become REO Property, (4) that are in foreclosure and
     (5) that are in bankruptcy, in each case as of the close of business on the
     last Business Day of the immediately preceding month;

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<PAGE>

         (x) For each of the preceding 12 calendar months, or all calendar
     months since the related Cut-off Date, whichever is less, the aggregate
     dollar amount of the Scheduled Payments (A) due on all Outstanding Mortgage
     Loans on each of the Due Dates in each such month and (B) delinquent 60
     days or more on each of the Due Dates in each such month;

         (xi) with respect to any Mortgage Loan that became an REO Property
     during the preceding calendar month, the loan number and Stated Principal
     Balance of such Mortgage Loan as of the close of business on the
     Determination Date preceding such Distribution Date and the date of
     acquisition thereof;

         (xii) the total number and principal balance of any REO Properties (and
     market value, if available) as of the close of business on the
     Determination Date preceding such Distribution Date;

         (xiii) whether a Trigger Event has occurred and is continuing
     (including the calculation of thereof and the aggregate outstanding balance
     of all 60+ Delinquent Loans)

         (xiv) the amount on deposit in the Excess Reserve Fund Account (after
     giving effect to distributions on such Distribution Date); (xv) the
     aggregate amount of Applied Realized Loss Amounts incurred during the
     preceding calendar month and aggregate Applied Realized Loss Amounts
     through such Distribution Date;

         (xvi) the amount of any Net Monthly Excess Cash Flow on such
     Distribution Date and the allocation thereof to the Certificateholders with
     respect to Applied Realized Losses and Unpaid Interest Amounts; and

         (xvii) the Subordinated Amount and Required Subordinated Amount.

         (xviii) Prepayment Charges collected and paid by Servicer.

         (b) The Trustee's responsibility for providing the above statement to
the Certificateholders, each Rating Agency, the Servicer and the Depositor is
limited to the availability, timeliness and accuracy of the information derived
from the Servicer. The Trustee will provide the above statement via the
Trustee's internet website. The Trustee's website will initially be located at
http:\\www.usbank.com/abs and assistance in using the website can be obtained by
calling the Trustee's Bondholder Communications desk at 1-800-934-6802. A paper
copy of the statement will also be made available upon request.

         (c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished 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), (a)(ii) and (a)(vii) of this Section
4.03 aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Trustee shall
be deemed

                                      -66-
<PAGE>

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) Not later than the fifth Business Day following the end of each
month, the Servicer shall furnish to the Trustee a monthly remittance advice
statement containing such information as shall be reasonably requested by the
Trustee to provide the reports required by Section 4.03(a) as to the
accompanying remittance and the period ending on the close of business on the
last Business Day of the immediately preceding month.

         The Servicer shall furnish to the Trustee an individual loan accounting
report, as of the last Business Day of each month, to document Mortgage Loan
payment activity on an individual Mortgage Loan basis. With respect to each
month, the corresponding individual loan accounting report (in electronic
format) shall be received by the Trustee no later than the related Determination
Date, which report shall contain the following:

         (i) with respect to each Scheduled Payment, the amount of such
     remittance allocable to principal (including a separate breakdown of any
     Principal Prepayment, including the date of such prepayment, and any
     prepayment penalties or premiums, along with a detailed report of interest
     on principal prepayment amounts remitted in accordance with Section 3.25);

         (ii) with respect to each Scheduled Payment, the amount of such
     remittance allocable to interest and assumption fees;

         (iii) the amount of servicing compensation received by the Servicer
     during the prior distribution period;

         (iv) the individual and aggregate Stated Principal Balance of the
     Mortgage Loans;

         (v) the individual and aggregate Scheduled Principal Balances of the
     Mortgage Loans;

         (vi) the aggregate of any expenses reimbursed to the Servicer during
     the prior distribution period pursuant to Section 3.05; and

         (vii) 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 Certain Matters Relating to the Determination of LIBOR.

         Until all of the LIBOR Certificates are paid in full, the Trustee will
at all times retain at least four Reference Banks for the purpose of determining
LIBOR with respect to each Interest Determination Date. The Servicer initially
shall designate the Reference Banks. Each "Reference Bank" shall be a leading
bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency market, shall not control, be controlled by, or be under common
control with, the Trustee and shall have an established place of business in
London. If any such

                                      -67-
<PAGE>

Reference Bank should be unwilling or unable to act as such or if the Servicer
should terminate its appointment as Reference Bank, the Servicer shall promptly
appoint or cause to be appointed another Reference Bank. The Trustee shall have
no liability or responsibility to any Person for (i) the selection of any
Reference Bank for purposes of determining LIBOR or (ii) any inability to retain
at least four Reference Banks which is caused by circumstances beyond its
reasonable control.

         (i) The Pass-Through Rate for each Class of LIBOR Certificates for each
     Interest Accrual Period shall be determined by the Trustee on each LIBOR
     Determination Date so long as the LIBOR Certificates are outstanding on the
     basis of LIBOR and the respective formulae appearing in footnotes
     corresponding to the LIBOR Certificates in the table relating to the
     Certificates in the Preliminary Statement. The Trustee shall not have any
     liability or responsibility to any Person for its inability, following a
     good-faith reasonable effort, to obtain quotations from the Reference Banks
     or to determine the arithmetic mean referred to in the definition of LIBOR,
     all as provided for in this Section 4.04 and the definition of LIBOR. The
     establishment of LIBOR and each Pass-Through Rate for the LIBOR
     Certificates by the Trustee shall (in the absence of manifest error) be
     final, conclusive and binding upon each Holder of a Certificate and the
     Trustee.

         Section 4.05 Allocation of Applied Realized Loss Amounts. Any Applied
Realized Loss Amounts will be allocated to the most junior Class of Subordinate
Certificates then outstanding in reduction of the Class Certificate Balance
thereof.

                                   ARTICLE V

                                THE CERTIFICATES

         Section 5.01 The Certificates.

         The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
denominations, integral multiples in excess thereof (except that one Certificate
in each Class may be issued in a different amount which must be in excess of the
applicable minimum denomination) and aggregate denominations per Class set forth
in the Preliminary Statement.

         The Depositor hereby directs the Trustee to register the Class X and
the Class P Certificates as follows: "U.S. Bank National Association, as
Indenture Trustee on behalf of the Noteholders of the Morgan Stanley Dean Witter
Capital I Inc. NIM Trust 2002-NC1N, and to deliver such Class X and Class P
Certificates to U.S. Bank National Association, as trustee of the NIMs Trust.

         Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (x) 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

                                      -68-
<PAGE>

Holder has so notified the Trustee at least five Business Days prior to the
related Record Date and (ii) such Holder shall hold (A) 100% of the Class
Certificate Balance of any Class of Certificates or (B) Certificates of any
Class with aggregate principal Denominations of not less than $1,000,000 or (y)
by check mailed by first class mail to such Certificateholder at the address of
such holder appearing in the Certificate Register.

         The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time 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 countersignature and delivery of any such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless countersigned by 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 executed and delivered
hereunder. All Certificates shall be dated the date of their countersignature.
On the Closing Date, the Trustee shall countersign the Certificates to be issued
at the 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.

         Section 5.02 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 5.06, 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 execute and deliver, in the name of the designated transferee
or transferees, one or more new Certificates of the same Class and 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 which 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.

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<PAGE>

         All Certificates surrendered for registration of transfer or exchange
shall be cancelled 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 said Act and such state securities laws. Except
with respect to the transfer of the Class X and Class P Certificates to the NIMs
Trust on the Closing Date, in the event that a transfer of a Private Certificate
which is a Physical Certificate 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 shall certify to the Trustee in writing the facts surrounding the
transfer in substantially the form set forth in Exhibit H (the "Transferor
Certificate") and either (i) there shall be delivered to the Trustee a letter in
substantially the form of Exhibit I (the "Rule 144A Letter") or (ii) there shall
be delivered to the Trustee at the expense of the transferor an Opinion of
Counsel that such transfer may be made without registration under the Securities
Act. In the event that a transfer of a Private Certificate which is a Book-Entry
Certificate 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 will be deemed to
have made as of the transfer date each of the certifications set forth in the
Transferor Certificate in respect of such Certificate and the transferee will be
deemed to have made as of the transfer date each of the certifications set forth
in the Rule 144A Letter in respect of such Certificate, in each case as if such
Certificate were evidenced by a Physical Certificate. 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 exemption provided by Rule 144A. The Trustee and
the Servicer 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 and the Depositor and the Servicer against any liability
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws.

         Except with respect to the transfer of the Class X and Class P
Certificates to the NIMs Trust on the Closing Date, 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 (in the
event such Certificate is a Private Certificate, such requirement is satisfied
only by the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit I), to the effect that such transferee is
not an employee benefit plan or arrangement subject to Section 406 of ERISA, a
plan subject to Section 4975 of the Code or a plan subject to any Federal, state
or local law materially similar to the foregoing provisions of ERISA or the Code
("Similar Law"), nor a

                                      -70-
<PAGE>

person acting on behalf of any such plan or arrangement nor using the assets of
any such plan or arrangement to effect such transfer, or (ii) if the
ERISA-Restricted Certificate is a Private Certificate or a Class P Certificate
that has been the subject of an ERISA-Qualifying Underwriting, a representation
that the purchaser is an insurance company that is purchasing such Certificates
with funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60") and that the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60 or (iii) in the case of any such
ERISA-Restricted Certificate or Class P Certificate presented for registration
in the name of an employee benefit plan subject to Title I of ERISA, a plan or
arrangement subject to Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a plan subject to Similar Law, or a trustee of any
such plan or any other person acting on behalf of any such plan or arrangement
or using such plan's or arrangement's assets, an Opinion of Counsel satisfactory
to the Trustee and the Servicer, which Opinion of Counsel shall not be an
expense of the Trustee, the Servicer or the Trust Fund, addressed to the
Trustee, to the effect that the purchase or holding of such ERISA-Restricted
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code or similar violation of Similar Law and will not subject the Trustee or
the Servicer to any obligation in addition to those expressly undertaken in this
Agreement or to any liability. For purposes of the preceding sentence, with
respect to an ERISA-Restricted Certificate that is not a Private Certificate, in
the event the representation letter referred to in the preceding sentence is not
furnished, such representation shall be deemed to have been made to the Trustee
by the transferee's (including an initial acquiror's) acceptance of the
ERISA-Restricted Certificates. In the event that such representation is
violated, or any attempt to transfer to a plan or arrangement subject to Section
406 of ERISA, a plan subject to Section 4975 of the Code or a plan subject to
Similar Law, or a person acting on behalf of any such plan or arrangement or
using the assets of any such plan or arrangement, without such Opinion of
Counsel, such attempted transfer or acquisition shall be void and of no effect.

         The Class R Certificate may not be sold to any employee benefit plan
subject to Title I of ERISA, any plan subject to Section 4975 of the Code, or
any plan subject to any Similar Law or any person investing on behalf of or with
plan assets of such plan.

         To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 5.02(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 so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.

         (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:

                                      -71-
<PAGE>

         (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 G.

         (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 5.02(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 5.02(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 5.02(b) and this Section 5.02(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, Transferor Certificate and the Rule 144A Letter. 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. 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.

         (v) The Depositor shall use its best efforts to make available, upon
     receipt of written request from the Trustee, all information necessary to
     compute any tax imposed under Section 860E(e) of the Code as a result of a
     Transfer of an Ownership Interest in a Residual Certificate to any Holder
     who is not a Permitted Transferee.

         The restrictions on Transfers of a Residual Certificate set forth in
this Section 5.02(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

                                      -72-
<PAGE>

Opinion of Counsel, which Opinion of Counsel shall not be an expense of the
Trust Fund, the Trustee, the Responsible Party or the Servicer, to the effect
that the elimination of such restrictions will not cause the Trust Fund
hereunder 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 which, 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 which 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 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.

         (e) Except as provided below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.

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

         If (x) (i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Trustee or the Depositor is
unable to locate a qualified successor, (y) the Depositor at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository or (z) after the occurrence of an Event of Default, Certificate
Owners representing at least 51% of the Certificate Balance of the Book-Entry
Certificates together advise the Trustee and the Depository through the
Depository Participants in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of

                                      -73-
<PAGE>

the Certificate Owners, the Trustee shall notify all Certificate Owners, through
the Depository, of the occurrence of any such event and of the availability of
definitive, fully-registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
related Class of Certificates by the Depository, accompanied by the instructions
from the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Servicer, the Depositor nor the Trustee shall be
liable for any delay in delivery of such instruction and each may conclusively
rely on, and shall be protected in relying on, such instructions. The Depositor
shall provide the Trustee with an adequate inventory of certificates to
facilitate the issuance and transfer of Definitive Certificates. Upon the
issuance of 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 the
Definitive Certificates as Certificateholders hereunder; provided, that the
Trustee shall not by virtue of its assumption of such obligations become liable
to any party for any act or failure to act of the Depository.

         Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.

         If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (b) there is delivered to the Depositor, the Servicer and
the Trustee such security or indemnity as may be required by them to hold 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, countersign 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 5.03, 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 5.03 shall constitute complete and indefeasible evidence of
ownership, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.

         Section 5.04 Persons Deemed Owners.

         The Servicer, the Trustee, the Depositor and any agent of the Servicer,
the Depositor or 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 Servicer, the Trustee, the Depositor nor any agent
of the Servicer, the Depositor or the Trustee shall be affected by any notice to
the contrary.

         Section 5.05 Access to List of Certificateholders' Names and Addresses.

         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 which such Certificateholders propose to transmit, or if

                                      -74-
<PAGE>

the Depositor or Servicer 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, the Servicer or such Certificateholders at
such recipients' expense the most recent list of the Certificateholders of such
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 5.06 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 in New York City where Certificates may
be surrendered for registration of transfer or exchange. The Trustee initially
designates its offices for such purposes located at 100 Wall Street, Suite 2000,
New York, New York 10005. The Trustee will give prompt written notice to the
Certificateholders of any change in such location of any such office or agency.

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

         Section 6.01 Respective Liabilities of the Depositor and the Servicer.

         The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.

         Section 6.02 Merger or Consolidation of the Depositor or the Servicer.

         The Depositor and the Servicer will each keep in full effect its
existence, rights and franchises as a corporation or federal savings bank, as
the case may be, under the laws of the United States or under the laws of one of
the states thereof and will each 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, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

         Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person 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, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or surviving Person to the Servicer shall be qualified to sell
mortgage loans to, and to service mortgage loans on behalf of, Fannie Mae or
FHLMC.

                                      -75-
<PAGE>

         Section 6.03 Limitation on Liability of the Depositor, the Servicer and
Others.

         Neither the Depositor, the Servicer nor any of their directors,
officers, employees or agents of the Depositor shall be under any liability to
the Certificateholders for any action taken or for refraining from the taking of
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 representations or warranties
made by it herein or protect the Depositor or any such Person from any liability
which would otherwise be imposed by reasons of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. The Depositor and any director, officer,
employee or agent of the Depositor may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor and any director, officer, employee or
agent of the Depositor shall be indemnified by the Trust Fund and held harmless
against any loss, liability or expense incurred in connection with any audit,
controversy or judicial proceeding relating to a governmental taxing authority
or any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. The Depositor shall not be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and which in its opinion may
involve it in any expense or liability; provided, however, that the Depositor
may in its discretion undertake any such action that it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto and interests of the Trustee and 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 Depositor shall be entitled to be reimbursed therefor out of the
Collection Account.

         Neither the Servicer nor any of the officers, employees or agents of
the Servicer shall be under any liability to the Trustee or the Depositor for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement; provided, however, that this provision shall not
protect the Servicer or any such person against any breach of warranties or
representations made herein, or failure to perform its obligations in strict
compliance with the terms of this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement. The Servicer and any officer, employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expenses or liability; provided, however, that the Servicer may undertake any
such action which it may deem necessary or desirable in respect to this
Agreement and the rights and duties of the parties hereto. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities for which the Depositor or the Trustee
will be liable as set forth in this Agreement, and

                                      -76-
<PAGE>

the Servicer shall be entitled to be reimbursed therefor from the Depositor or
the Trustee, as applicable, upon written demand.

         Section 6.04 Limitation on Resignation of the Servicer.

         The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Depositor and the Trustee or upon the determination that its
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Servicer. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Depositor and the Trustee which Opinion of Counsel
shall be in form and substance acceptable to the Depositor and the Trustee. No
such resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder.

         Section 6.05 Additional Indemnification by the Servicer; Third Party
Claims.

         The Servicer shall indemnify the Responsible Party, the Depositor and
the Trustee and hold them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that any of them may
sustain in any way related to any breach by the Servicer, of any of its
representations and warranties referred to in Section 2.03(a) or the failure of
the Servicer to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement. The Servicer immediately shall
notify the Depositor and the Trustee if a claim is made by a third party with
respect to this Agreement or the Mortgage Loans, assume (with the prior written
consent of the Depositor and the Trustee) the defense of any such claim and pay
all expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
the Responsible Party, the Depositor or the Trustee in respect of such claim.

                                  ARTICLE VII

                                     DEFAULT

         Section 7.01 Events of Default.

         "Event of Default," wherever used herein, means any one of the
following events:

         (a) any failure by the Servicer to remit to the Trustee any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of one Business Day after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Depositor or the Trustee or to the Servicer, the Depositor and
the Trustee by Certificateholders evidencing percentage interests of at least
25% in the Certificates; or

         (b) failure on the part of the Servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Servicer set forth in this

                                      -77-
<PAGE>

Agreement which continues unremedied for a period of forty-five days (except
that such number of days shall be fifteen in the case of a failure to pay any
premium for any insurance policy required to be maintained under this Agreement)
after the earlier of (i) the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Depositor or the Trustee, or to the Servicer, the Depositor and the Trustee by
Certificateholders of Certificates evidencing percentage interests of at least
25% in the Certificates and (ii) actual knowledge of such failure by a Servicing
Officer of the Servicer; or

         (c) 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, marshalling 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

         (d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling 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

         (e) 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;

         (f) any failure by the Servicer of the Servicer Termination Test; or

         (g) any failure of the Servicer to make any P&I Advance on any
Remittance Date required to be made from its own funds pursuant to Section 4.01
which continues unremedied for one Business Day immediately following the
Remittance Date; or

         (h) A breach of any representation and warranty of the Servicer
referred to in Section 2.03(a), which materially and adversely affects the
interests of the Certificateholders and which continues unremedied for a period
of thirty days after the date upon which written notice of such breach is given
to the Servicer by the Trustee or the Depositor, or to the Servicer, the Trustee
and the Depositor by Certificateholders entitled to at least 25% of the Voting
Rights in the Certificates.

         If an Event of Default described in clauses (a) through (h) of this
Section 7.01 shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, the Trustee may, or at the
direction of 51% of the Voting Rights, the Trustee shall, by notice in writing
to the Servicer (with a copy to each Rating Agency), terminate all of the rights
and obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder; provided however, that the Trustee shall not be required to give
written notice to the Servicer of the occurrence of an Event of Default
described in clauses (b) through (h) of this Section 7.01 unless and until a
Responsible Officer of the Trustee has actual knowledge of the occurrence of
such an

                                      -78-
<PAGE>

Event of Default. On and after the receipt by the Servicer of such written
notice, all authority and power of the Servicer hereunder, whether with respect
to the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee.
The Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Servicer to pay
amounts owed pursuant to Article VIII. The Servicer agrees to cooperate with the
Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the Trustee of
all cash amounts which shall at the time be credited to the Collection Account,
or thereafter be received with respect to the Mortgage Loans.

         Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of Late Collections,
Liquidation Proceeds, Insurance Proceeds or out of any late collection of a
Scheduled Payment on a Mortgage Loan which was due prior to the notice
terminating such Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which such Servicer would
have been entitled pursuant to Sections 3.11, and any other amounts payable to
such Servicer hereunder the entitlement to which arose prior to the termination
of its activities hereunder. Notwithstanding anything herein to the contrary,
the Servicer's right to recover any unreimbursed Servicing Advance or P&I
Advance shall be prior to any recovery of Servicing Advances or P&I Advances by
any successor servicer.

         Section 7.02 Trustee to Act; Appointment of Successor.

         On and after the time the Servicer receives a notice of termination
pursuant to Section 3.24 or Section 7.01, the Trustee shall, subject to and to
the extent provided in Section 3.05, be the successor to the Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and 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 P&I Advances or
Servicing Advances pursuant to Section 4.01. As compensation therefor, the
Trustee shall be entitled to all funds relating to the Mortgage Loans that the
Servicer would have been entitled to charge to the Collection Account if the
Servicer had continued to act hereunder including, if the Servicer was receiving
the Servicing Fee, the Servicing Fee and the income on investments or gain
related to the Collection Account. Notwithstanding the foregoing, if the Trustee
has become the successor to the Servicer in accordance with Section 7.01, the
Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
by applicable law from making P&I Advances and Servicing Advances pursuant to
Section 4.01 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
to the Servicer shall be an institution which is a Fannie Mae and FHLMC approved
seller/servicer in good

                                      -79-
<PAGE>

standing, which has a net worth of at least $30,000,000, which is willing to
service the Mortgage Loans and which executes and delivers to the Depositor and
the Trustee an agreement accepting such delegation and assignment, containing an
assumption by such Person of the rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer (other than liabilities of the
Servicer under Section 6.03 incurred prior to termination of the Servicer under
Section 7.01), with like effect as if originally named as a party to this
Agreement; provided that each Rating Agency acknowledges 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.
Pending appointment of a successor to the Servicer hereunder, the Trustee,
unless the Trustee is prohibited by law from so acting, shall, subject to
Section 3.05, act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of the Servicing Fee Rate and amounts paid to the Servicer from
investments. 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.

         Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer, maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.

         Section 7.03 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 Event of Default, the
Trustee shall transmit by mail to all Certificateholders and each Rating Agency
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

         Section 8.01 Duties of the Trustee.

         The Trustee, before the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent

                                      -80-
<PAGE>

person would exercise or use under the circumstances in the conduct of such
person's own affairs.

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

         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.

         Unless an Event of Default known to the Trustee has occurred and is
continuing,

         (a) 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 the duties and obligations specifically set
forth in this Agreement, no implied covenants or obligations shall be read into
this Agreement against the Trustee, and the Trustee may conclusively rely, 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 which it believed in good faith
to be genuine and to have been duly executed by the proper authorities
respecting any matters arising hereunder;

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

         (c) the Trustee shall not be liable with respect to any action taken,
suffered, or omitted to be taken by it in good faith in accordance with the
direction of Holders of Certificates evidencing not less than 25% of the Voting
Rights of Certificates relating to the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee under this Agreement.

         Section 8.02 Certain Matters Affecting the Trustee.

         Except as otherwise provided in Section 8.01:

         (a) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties and the Trustee shall have no responsibility to
ascertain or confirm the genuineness of any signature of any such party or
parties;

                                      -81-
<PAGE>

         (b) the Trustee may consult with counsel, financial advisers or
accountants and the advice of any such counsel, financial advisers or
accountants and any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel;

         (c) the Trustee shall not be liable 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;

         (d) 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 so to do by Holders of Certificates
evidencing not less than 25% of the Voting Rights allocated to each Class of
Certificates;

         (e) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agents, accountants or attorneys
appointed with due care by it hereunder;

         (f) the Trustee shall not be required to risk or expend its own funds
or otherwise incur any financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers hereunder if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not assured to it;

         (g) the Trustee shall not be liable for any loss on any investment of
funds pursuant to this Agreement (other than as issuer of the investment
security);

         (h) the Trustee shall not be deemed to have knowledge of an Event of
Default until a Responsible Officer of the Trustee shall have received written
notice thereof; and

         (i) the Trustee shall be under no obligation to exercise any of the
trusts, rights or powers vested in it by this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs, expenses
and liabilities which may be incurred therein or thereby.

         Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.

         The recitals contained herein and in the Certificates shall be taken as
the statements of the Depositor and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document other than with respect to the Trustee's execution and
countersignature of the Certificates. The Trustee shall not be accountable for
the use or application by the Depositor or the Servicer of any funds paid to the

                                      -82-
<PAGE>

Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Depositor or the Servicer.

         The Trustee shall have no responsibility for filing or recording 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 (unless the Trustee shall have become the successor
Servicer).

         The Trustee executes the Certificates not in its individual capacity
but solely as Trustee of the Trust Fund created by this Agreement, in the
exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee on behalf of the Trust Fund in the Certificates is made and intended not
as a personal undertaking or agreement by the Trustee but is made and intended
for the purpose of binding only the Trust Fund.

         Section 8.04 Trustee May Own Certificates.

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

         Section 8.05 Trustee's Fees and Expenses.

         As compensation for its activities under this Agreement, the Trustee
may withdraw from the Distribution Account on each Distribution Date the Trustee
Fee for the Distribution Date and any interest or investment income earned on
funds deposited in the Distribution Account. The Trustee and any director,
officer, employee, or agent of the Trustee shall be indemnified by the Servicer
against any loss, liability, or expense (including reasonable attorney's fees)
resulting from any error in any tax or information return prepared by the
Servicer or incurred in connection with any claim or legal action relating to

         (a) this Agreement,

         (b) the Certificates, or

         (c) the performance of any of the Trustee's duties under this
Agreement,

         other than any loss, liability, or expense incurred because of willful
misfeasance, bad faith, or negligence in the performance of any of the Trustee's
duties under this Agreement. This indemnity shall survive the termination of
this Agreement or the resignation or removal of the Trustee under this
Agreement. Without limiting the foregoing, except as otherwise agreed upon in
writing by the Depositor and the Trustee, and except for any expense,
disbursement, or advance arising from the Trustee's negligence, bad faith, or
willful misconduct, the Servicer shall pay or reimburse the Trustee, for all
reasonable expenses, disbursements, and advances incurred or made by the Trustee
in accordance with this Agreement with respect to

         (A) the reasonable compensation, expenses, and disbursements of its
counsel not associated with the closing of the issuance of the Certificates,

                                      -83-
<PAGE>

         (B) the reasonable compensation, expenses, and disbursements of any
accountant, engineer, or appraiser that is not regularly employed by the
Trustee, to the extent that the Trustee must engage them to perform services
under this Agreement, and

         (C) printing and engraving expenses in connection with preparing any
Definitive Certificates.

         Except as otherwise provided in this Agreement or a separate letter
agreement between the Trustee and the Depositor, the Trustee shall not be
entitled to payment or reimbursement for any routine ongoing expenses incurred
by the Trustee in the ordinary course of its duties as Trustee, Registrar, or
Paying Agent under this Agreement or for any other expenses.

         Section 8.06 Eligibility Requirements for the Trustee.

         The Trustee hereunder shall at all times be a corporation or
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 of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit
rating which would not cause either of the Rating Agencies to reduce their
respective then current ratings of the Certificates (or having provided such
security from time to time as is sufficient to avoid such reduction) as
evidenced in writing by each Rating Agency. If such corporation or association
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 8.06 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with this
Section 8.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07. The entity serving as Trustee may have normal
banking and trust relationships with the Depositor and its affiliates or the
Servicer and its affiliates; provided, however, that such entity cannot be an
affiliate of the Depositor or the Servicer other than the Trustee in its role as
successor to the Servicer.

         Section 8.07 Resignation and Removal of the Trustee.

         The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice of resignation to the Depositor, the
Servicer, each Rating Agency not less than 60 days before the date specified in
such notice, when, subject to Section 8.08, such resignation is to take effect,
and acceptance by a successor trustee in accordance with Section 8.08 meeting
the qualifications set forth in Section 8.06. If no successor trustee meeting
such qualifications shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice or resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.

         If at any time the Trustee shall cease to be eligible in accordance
with Section 8.06 and shall fail to resign after written request thereto by the
Depositor, or if at any time the Trustee shall become incapable of acting, or
shall be adjudged as bankrupt or insolvent,

                                      -84-
<PAGE>

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 a tax
is imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located and the imposition of such tax would be avoided by the
appointment of a different trustee, then the Depositor or the Servicer may
remove the Trustee and appoint a successor trustee by written instrument, in
triplicate, one copy of which shall be delivered to the Trustee, one copy to the
Servicer and one copy to the successor trustee.

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

         Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to this Section 8.07 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 8.08.

         Section 8.08 Successor Trustee.

         Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
and the Servicer 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. The Depositor, the Servicer and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties, and obligations.

         No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of its acceptance, the successor trustee is
eligible under Section 8.06 and its appointment does not adversely affect the
then current rating of the Certificates.

         Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.

         Section 8.09 Merger or Consolidation of the Trustee.

         Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided that such corporation

                                      -85-
<PAGE>

shall be eligible under Section 8.06 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 8.10 Appointment of Co-Trustee or Separate Trustee.

         Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing any Mortgage Note may at the
time be located, the Servicer and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust 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 8.10, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider appropriate. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08.

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

         (a) To the extent necessary to effectuate the purposes of this Section
8.10, all rights, powers, duties and obligations conferred or imposed upon the
Trustee, except for the obligation of the Trustee under this Agreement to
advance funds on behalf of the 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 as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the applicable 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;

         (b) No trustee hereunder shall be held personally liable because of any
act or omission of any other trustee hereunder and such appointment shall not,
and shall not be deemed to, constitute any such separate trustee or co-trustee
as agent of the Trustee;

         (c) The Trustee may at any time accept the resignation of or remove any
separate trustee or co-trustee; and

         (d) The Servicer, and not the Trustee, shall be liable for the payment
of reasonable compensation, reimbursement and indemnification to any such
separate trustee or co-trustee.

                                      -86-
<PAGE>

         Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the separate trustees and co-trustees, when
and as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. 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
Servicer and the Depositor.

         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 8.11 Tax Matters.

         It is intended that the assets with respect to which any REMIC election
pertaining to the Trust Fund is to be made, as set forth in the Preliminary
Statement, shall constitute, and that the conduct of matters relating to such
assets shall be such as to qualify such assets 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
any the REMIC and that in such capacity it shall:

         (a) prepare and file in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066 or any successor form adopted by
the Internal Revenue Service) and prepare and file with the Internal Revenue
Service and applicable state or local tax authorities income tax or information
returns for each taxable year with respect to any REMIC, described in the
Preliminary Statement 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 to Certificateholders the schedules, statements or
information at such times and in such manner as may be required thereby;

         (b) within thirty days of the Closing Date, furnish 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;

         (c) make an election that each of the Lower Tier REMIC and the Upper
Tier REMIC be treated as a REMIC on the federal tax return for its first taxable
year (and, if necessary, under applicable state law);

                                      -87-
<PAGE>

         (d) prepare and forward 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 the calculation of any original issue
discount using the Prepayment Assumption (as defined in the Prospectus
Supplement);

         (e) provide information necessary 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
Non-Permitted Transferee, or a pass-through entity in which a Non-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) to the extent that they are under its control, conduct matters
relating to such assets at all times that any Certificates are outstanding so as
to maintain the status as a REMIC under the REMIC Provisions;

         (g) 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 created
hereunder;

         (h) pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal or state tax, including prohibited
transaction taxes as described below, imposed on any REMIC created hereunder
before its termination 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) cause federal, state or local income tax or information returns to
be signed by the Trustee or such other person as may be required to sign such
returns by the Code or state or local laws, regulations or rules;

         (j) maintain records relating to each REMIC created hereunder,
including the income, expenses, assets, and liabilities thereof on a calendar
year basis and on the accrual method of accounting and the fair market value and
adjusted basis of the assets determined at such intervals as may be required by
the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information; and

         (k) as and when necessary and appropriate, represent each REMIC created
hereunder 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 each REMIC created
hereunder, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of any REMIC created
hereunder, and otherwise act on behalf of the REMIC in relation to any tax
matter or controversy involving it.

                                      -88-
<PAGE>

         The Trustee shall treat the rights of the Class P Certificateholders to
Prepayment Charges as the beneficial ownership of interests in a grantor trust,
and not as an obligation of any REMIC created hereunder, for federal income tax
purposes.

         To enable the Trustee to perform its duties under this Agreement, the
Depositor shall provide to the Trustee within ten 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 the price, yield, prepayment assumption, and projected
cash flows of the Certificates and the Mortgage Loans. Moreover, the Depositor
shall provide information to the Trustee concerning the value to each Class of
Certificates of the right to receive Basis Risk CarryForward Amounts from the
Excess Reserve Fund. Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor any additional information or data that
the Trustee may, from time to time, reasonably request to enable the Trustee to
perform its duties under this Agreement. 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.

         If any tax is imposed on "prohibited transactions" of any REMIC created
hereunder as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of such REMIC as defined in Section 860G(c) of the Code,
on any contribution to the REMIC after the Startup Day pursuant to Section
860G(d) of the Code, or any other tax is imposed, including any minimum tax
imposed on the REMIC pursuant to Sections 23153 and 24874 of the California
Revenue and Taxation Code, if not paid as otherwise provided for herein, the tax
shall be paid by (i) the Trustee if such tax arises out of or results from
negligence of the Trustee in the performance of any of its obligations under
this Agreement, (ii) the Servicer, in the case of any such minimum tax, and
otherwise if such tax arises out of or results from a breach by the Servicer of
any of its obligations under this Agreement, (iii) a Responsible Party if such
tax arises out of or results from that Responsible Party's obligation to
repurchase a Mortgage Loan pursuant to Section 2.03, or (iv) in all other cases,
or if the Trustee, the Servicer, or the Responsible Party fails to honor its
obligations under the preceding clauses (i), (ii), or (iii), any such tax will
be paid with amounts otherwise to be distributed to the Certificateholders, as
provided in Section 4.02(a).

         Section 8.12 Periodic Filings.

         Pursuant to written instructions from the Depositor, the Trustee shall
prepare, execute and file all periodic reports required under the Securities
Exchange Act of 1934 in conformity with the terms of the relief granted to
issuers similar to the Trust Fund. In connection with the preparation and filing
of such periodic reports, the Depositor and the Servicer shall timely provide to
the Trustee all material information available to them which is required to be
included in such reports and not known to them to be in the possession of the
Trustee and such other information as the Trustee reasonably may request from
either of them and otherwise reasonably shall cooperate with the Trustee. The
Trustee shall have no liability with respect to any failure to properly prepare
or file such periodic reports resulting from or relating to the Trustee's
inability or failure to obtain any information not resulting from its own
negligence or willful misconduct.

                                      -89-
<PAGE>

         Section 8.13 Tax Classification of the Excess Reserve Fund Account

         For federal income tax purposes, the Trustee shall treat the Excess
Reserve Fund Account as an outside reserve fund, within the meaning of Treasury
Regulation (Section) 1.860-2(h), that is beneficially owned by the holder of the
Class X Certificate. The Trustee shall treat the rights that each Class of
Certificates has to receive payments of Basis Risk CarryForward Amounts from the
Excess Reserve Fund Account as rights to receive payments under an interest rate
cap contract written by the Class X Certificateholder in favor of each Class.
Accordingly, each Class of Certificates (excluding the Class X, Class P and
Class R Certificates) will comprise two components - an Upper Tier Regular
Interest and an interest in a cap contract. The Trustee shall allocate the issue
price for a Class of Certificates between two components for purposes of
determining the issue price of the Upper Tier Regular Interest component based
on information received from the Depositor.

                                    ARTICLE IX

                                   TERMINATION

         Section 9.01 Termination upon Liquidation or Purchase of the Mortgage
Loans.

         Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the purchase by the Servicer of all
Mortgage Loans (and REO Properties) at the price equal to the sum of (i) 100% of
the Stated Principal Balance of each Mortgage Loan (other than in respect of REO
Property) plus one month's accrued interest thereon at the applicable Adjusted
Mortgage Rate and (ii) the lesser of (x) the appraised value of any REO Property
as determined by the higher of two appraisals completed by two independent
appraisers selected by the Servicer at the expense of the Servicer and (y) the
Stated Principal Balance of each Mortgage Loan related to any REO Property, in
each case plus accrued and unpaid interest thereon at the applicable Adjusted
Net Mortgage Rate 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. In no event shall the trusts created hereby continue beyond the
expiration of 21 years from the death of the survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of St.
James's, living on the date hereof.

         The right to repurchase all Mortgage Loans and REO Properties pursuant
to clause (a) above shall be conditioned upon the aggregate Stated Principal
Balance of the Mortgage Loans, at the time of any such repurchase, aggregating
ten percent or less of the Cut-off Date Pool Principal Balance.

         Section 9.02 Final Distribution on the Certificates.

         If on any Determination Date, the Servicer determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Servicer shall direct the Trustee
promptly to send a Notice of

                                      -90-
<PAGE>

Final Distribution to each Certificateholder. If the Servicer elects to
terminate the Trust Fund pursuant to clause (a) of Section 9.01, at least 20
days prior to the date the Notice of Final Distribution is to be mailed to the
affected Certificateholders the Servicer shall notify the Depositor and the
Trustee of the date the Servicer intends to terminate the Trust Fund and of the
applicable repurchase price of the Mortgage Loans and REO Properties.

         A Notice of Final Distribution, specifying the Distribution Date on
which Certificateholders may surrender their Certificates for payment of the
final distribution and cancellation, shall be given promptly by the Trustee by
letter to Certificateholders mailed not earlier than the 15th day and not later
than the 10th day of the month next preceding the month of such final
distribution. Any such Notice of Final Distribution shall specify (a) the
Distribution Date upon which final distribution on the Certificates will be made
upon presentation and surrender of 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 Servicer will give such Notice
of Final Distribution to each Rating Agency at the time such Notice of Final
Distribution is given to Certificateholders.

         In the event such Notice of Final Distribution is given, the Servicer
shall cause all funds in the Collection Account to be remitted to the Trustee
for 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 with respect to the Trust
Fund and the receipt by the Trustee of a Request for Release therefor, the
Trustee shall promptly release to the Servicer the Custodial Files for the
Mortgage Loans.

         Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Certificateholders of each Class, in each case on
the final Distribution Date and in the order set forth in Section 4.02, in
proportion to their respective Percentage Interests, with respect to
Certificateholders of the same Class, an amount equal to (i) as to each Class of
Regular Certificates (except the Class X Certificate), the Certificate Balance
thereof plus for each such Class and the Class X Certificate accrued interest
thereon in the case of an interest-bearing Certificate and (ii) as to the
Residual Certificates, the amount, if any, which remains on deposit in the
Distribution Account (other than the amounts retained to meet claims) after
application pursuant to clause (i) above.

         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 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
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund
which remain subject hereto.

                                      -91-
<PAGE>

         Section 9.03 Additional Termination Requirements.

         In the event the Servicer exercises its purchase option with respect to
the Mortgage Loans as provided in Section 9.01, the Trust Fund shall be
terminated in accordance with the following additional requirements, unless the
Trustee has been supplied with an Opinion of Counsel, at the expense of the
Servicer, to the effect that the failure to comply with the requirements of this
Section 9.03 will not (i) result in the imposition of taxes on "prohibited
transactions" on either REMIC as defined in Section 860F of the Code, or (ii)
cause either the Lower Tier REMIC or the Upper Tier REMIC to fail to qualify as
a REMIC at any time that any Certificates are outstanding:

         (a) The Trustee shall sell all of the assets of the Trust Fund to the
Servicer, and, within 90 days of such sale, shall distribute to the
Certificateholders the proceeds of such sale in complete liquidation of each of
the Lower Tier REMIC and the Upper Tier REMIC.

         (b) The Trustee shall attach a statement to the final federal income
tax return for each of the Lower Tier REMIC and the Upper Tier REMIC stating
that pursuant to Treasury Regulation (Section) 1.860F-1, the first day of the
90-day liquidation period for each such REMIC was the date on which the Trustee
sold the assets of the Trust Fund to the Servicer.

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

         Section 10.01 Amendment.

         This Agreement may be amended from time to time by the Depositor, the
Responsible Party, the Servicer and the Trustee without the consent of any of
the Certificateholders (i) to cure any ambiguity or mistake, (ii) to correct any
defective provision herein or to supplement any provision herein which may be
inconsistent with any other provision herein, (iii) to add to the duties of the
Depositor or the Servicer, (iv) to add any other provisions with respect to
matters or questions arising hereunder or (v) to modify, alter, amend, add to or
rescind any of the terms or provisions contained in this Agreement; provided,
that any action pursuant to clauses (iv) or (v) above shall not, as evidenced by
an Opinion of Counsel (which Opinion of Counsel shall not be an expense of the
Trustee or the Trust Fund), adversely affect in any material respect the
interests of any Certificateholder; and provided further that the amendment
shall not be deemed to adversely affect in any material respect the interests of
the Certificateholders if the Person requesting the amendment obtains a letter
from each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the
Certificates; it being understood and agreed that any such letter in and of
itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating. The Trustee, the Depositor, the Responsible Party and
the Servicer also may at any time and from time to time amend this Agreement
without the consent of the Certificateholders to modify, eliminate or add to any
of its provisions to such extent as shall be necessary or helpful to (i)
maintain the qualification of the Lower Tier REMIC and the Upper Tier REMIC
under the

                                      -92-
<PAGE>

Code, (ii) avoid or minimize the risk of the imposition of any tax on the Lower
Tier REMIC or the Upper Tier REMIC pursuant to the Code that would be a claim at
any time prior to the final redemption of the Certificates or (iii) comply with
any other requirements of the Code, 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 helpful to, as applicable,
(i) maintain such qualification, (ii) avoid or minimize the risk of the
imposition of such a tax or (iii) comply with any such requirements of the Code.

         This Agreement may also be amended from time to time by the Depositor,
the Servicer, the Responsible Party and the Trustee with the consent of the
Holders of Certificates evidencing Percentage Interests aggregating not less
than 662/3% of each Class of Certificates affected thereby 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, however, 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) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class or (iii) reduce
the aforesaid percentages of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all such
Certificates then outstanding.

         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 not be an expense of the
Trustee or the Trust Fund, to the effect that such amendment will not cause the
imposition of any tax on any REMIC or the Certificateholders or cause any REMIC
to fail to qualify as a REMIC at any time that any Certificates are outstanding.

         Notwithstanding the foregoing provisions of this Section 10.01, with
respect to any amendment that significantly modifies the permitted activities of
the Trustee or the Servicer, any Certificate beneficially owned by the Depositor
or any of its Affiliates or by the Responsible Party or any of its Affiliates
shall be deemed not to be outstanding (and shall not be considered when
determining the percentage of Certificateholders consenting or when calculating
the total number of Certificates entitled to consent) for purposes of
determining if the requisite consents of Certificateholders under this Section
10.01 have been obtained.

         Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency.

         It shall not be necessary for the consent of Certificateholders under
this Section 10.01 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.

                                      -93-
<PAGE>

         Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund), satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.

         Section 10.02 Recordation of Agreement; Counterparts.

         This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Servicer at its expense, but only upon
receipt of an Opinion of Counsel to the effect that such recordation materially
and beneficially affects the interests of the Certificateholders.

         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 10.03 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.

         Section 10.04 Intention of Parties.

         It is the express intent of the parties hereto that the conveyance (i)
of the Mortgage Loans by the Depositor and (ii) of the Trust Fund by the
Depositor to the Trustee each be, and be construed as, an absolute sale thereof.
It is, further, not the intention of the parties that such conveyances be deemed
a pledge thereof. However, in the event that, notwithstanding the intent of the
parties, such assets are held to be the property of the Depositor, as the case
may be, or if for any other reason this Agreement is held or deemed to create a
security interest in either 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) the conveyances provided for in this Agreement
shall be deemed to be an assignment and a grant by the Depositor to the Trustee,
for the benefit of the Certificateholders, of a security interest in all of the
assets transferred, 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

                                      -94-
<PAGE>

Agreement were deemed to create a security interest in 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. The Depositor shall arrange for filing any Uniform Commercial
Code continuation statements in connection with any security interest granted or
assigned to the Trustee for the benefit of the Certificateholders.

         Section 10.05 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:

         1. Any material change or amendment to this Agreement;

         2. The occurrence of any Event of Default that has not been cured;

         3. The resignation or termination of the Servicer or the Trustee and
the appointment of any successor;

         4. The repurchase or substitution of Mortgage Loans pursuant to Section
2.03; and

         5. The final payment to Certificateholders.

         (b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:

         1. Each report to Certificateholders described in Section 4.03; and

         2. Any notice of a purchase of a Mortgage Loan pursuant to Section
2.02, 2.03 or 3.11.

         All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor or the Underwriter, Morgan Stanley Dean Witter Capital I Inc. or
Morgan Stanley & Co. Incorporated. 1585 Broadway, New York, New York 10036,
Attention: Cecilia Tarrant, Esq., (b) in the case of the Servicer, The Provident
Bank, 4221 International Parkway Atlanta, Georgia 30354, Attention: Randy
Decker, or such other address as may be hereafter furnished to the Depositor,
the Responsible Party and the Trustee by the Servicer in writing, (c) in the
case of the Trustee to the Corporate Trust Office, U.S. Bank National
Association, 180 East Fifth Street, St. Paul, Minnesota 55101, Attention:
Structured Finance/MSDW 2002-NC1, or such other address as the Trustee may
hereafter furnish to the Depositor, the Responsible Party or Servicer; (d) in
the case of the Responsible Party, NC Capital Corporation, 18400 Van Karman,
Suite 1000, Irvine, California 92612, Attention: Patrick Flanagan, President, or
such other address as the Responsible Party may hereafter furnish to the
Depositor, the Trustee or the Servicer and (e) in the case of each of the Rating
Agencies, the address specified therefor in the definition corresponding to the
name of such Rating Agency. Notices to Certificateholders shall be deemed given
when mailed, first class postage prepaid, to their respective addresses
appearing in the Certificate Register.

                                      -95-
<PAGE>

         Section 10.06 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 10.07 Assignment.

         Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may not be assigned by the Servicer
without the prior written consent of the Trustee and Depositor; provided,
however, that the Servicer may pledge its interest in any reimbursements for P&I
Advances or Servicing Advances hereunder.

         Section 10.08 Limitation on Rights of Certificateholders.

         The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the trust created hereby, 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 created hereby, 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 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 an Event of Default and of the continuance thereof, as herein provided, and
unless 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 reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any 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

                                      -96-
<PAGE>

herein provided and for the common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section 10.08, each and
every Certificateholder and the Trustee shall be entitled to such relief as can
be given either at law or in equity.

         Section 10.09 Inspection and Audit Rights.

         The Servicer agrees that, on reasonable prior notice, it will permit
any representative of the Depositor or the Trustee during such Person's normal
business hours, to examine all the books of account, records, reports and other
papers of such Person relating to the Mortgage Loans, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants selected by the Depositor or the Trustee and to discuss its
affairs, finances and accounts relating to the Mortgage Loans with its officers,
employees and independent public accountants (and by this provision the Servicer
hereby authorizes said accountants to discuss with such representative such
affairs, finances and accounts), all at such reasonable times and as often as
may be reasonably requested. Any out-of-pocket expense of the Servicer incident
to the exercise by the Depositor or the Trustee of any right under this Section
10.09 shall be borne by the Servicer.

         Section 10.10 Certificates Nonassessable and Fully Paid.

         It is the intention of the Depositor that Certificate holders 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.

                                  * * * * * * *

                                      -97-
<PAGE>

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

                                        MORGAN STANLEY DEAN WITTER
                                          CAPITAL I INC.
                                          as Depositor

                                        By: /s/ Cecilia Tarrant
                                           -----------------------------------
                                           Name:  Cecilia Tarrant
                                           Title: Vice President

                                        U.S. BANK NATIONAL ASSOCIATION,
                                          solely as Trustee and not in its
                                          individual capacity

                                        By: /s/ Shannon Rantz
                                           -----------------------------------
                                           Name:  Shannon Rantz
                                           Title: Assistant Vice President

                                        THE PROVIDENT BANK
                                          as Servicer

                                        By: /s/ Michael W. Maloney
                                           -----------------------------------
                                           Name:  Michael W. Maloney
                                           Title: Senior Vice President

                                        NC CAPITAL CORPORATION
                                          as Responsible Party

                                        By: /s/ Pat Flanagan
                                           -----------------------------------
                                           Name:  Pat Flanagan
                                           Title: CEO

<PAGE>

                                   SCHEDULE I

                             Mortgage Loan Schedule
                        [Delivered at Closing to Trustee]

                                     S-I-1

<PAGE>

                                   SCHEDULE II

                       Mortgage Pass-Through Certificates,
                                 Series 2002-NC1

                 Representations and Warranties of the Servicer
                 ----------------------------------------------

         THE PROVIDENT BANK (the "Servicer"") hereby makes the representations
and warranties set forth in this Schedule II to the Depositor and the Trustee,
as of the Closing Date, or if so specified herein, as of the Cut-off Date.
Capitalized terms used but not otherwise defined in this Schedule II shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") relating to the above-referenced Series.

         (1)   The Servicer is an Ohio banking corporation duly organized,
     validly existing and in good standing under the laws of the state of Ohio
     and is duly authorized and qualified to transact any and all business
     contemplated by this Pooling and Servicing Agreement to be conducted by the
     Servicer 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 and to service the Mortgage Loans in accordance with the
     terms of this Pooling and Servicing Agreement;

         (2) The Servicer has the full 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 Pooling and Servicing
     Agreement and has duly authorized by all necessary action on the part of
     the Servicer the execution, delivery and performance of this Pooling and
     Servicing Agreement; and this Pooling and Servicing Agreement, assuming the
     due authorization, execution and delivery thereof by the Depositor, the
     Responsible Party and the Trustee, constitutes a legal, valid and binding
     obligation of the Servicer, enforceable against the Servicer in accordance
     with its terms, except to the extent that (a) the enforceability thereof
     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 the equitable defenses and to the discretion of
     the court before which any proceeding therefor may be brought;

         (3) The execution and delivery of this Pooling and Servicing Agreement
     by the Servicer, the servicing of the Mortgage Loans by the Servicer
     hereunder, the consummation by the Servicer of any other of the
     transactions herein contemplated, and the fulfillment of or compliance with
     the terms hereof are in the ordinary course of business of the Servicer and
     will not (A) result in a breach of any term or provision of the
     organizational documents of the Servicer or (B) conflict with, result in a
     breach, violation or acceleration of, or result in a default under, the
     terms of any other material agreement or instrument to which the Servicer
     is a party or by which it may be bound, or any statute, order or regulation
     applicable to the Servicer of any court, regulatory body, administrative
     agency or governmental body having jurisdiction over the Servicer; and the
     Servicer is not a party to, bound by, or in breach or violation of any
     indenture or other

                                     S-II-1
<PAGE>

     agreement or instrument, or subject to or in violation of any statute,
     order or regulation of any court, regulatory body, administrative agency or
     governmental body having jurisdiction over it, which materially and
     adversely affects or, to the Servicer's knowledge, would in the future
     materially and adversely affect, (x) the ability of the Servicer to perform
     its obligations under this Pooling and Servicing Agreement or (y) the
     business, operations, financial condition, properties or assets of the
     Servicer taken as a whole;

         (4) the Servicer is an approved seller/servicer for Fannie Mae or
     Freddie Mac in good standing and is a HUD approved mortgagee pursuant to
     Section 203 and Section 211 of the National Housing Act;

         (5) No litigation is pending against the Servicer that would materially
     and adversely affect the execution, delivery or enforceability of this
     Pooling and Servicing Agreement or the ability of the Servicer to service
     the Mortgage Loans or to perform any of its other obligations hereunder in
     accordance with the terms hereof;

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

         (7) The Servicer covenants that its computer and other systems used in
     servicing the Mortgage Loans operate in a manner such that the Servicer can
     service the Mortgage Loans in accordance with the terms of this Pooling and
     Servicing Agreement.

                                     S-II-2
<PAGE>
                                  SCHEDULE III

                       Mortgage Pass-Through Certificates,
                                 Series 2002-NC1

             Representations and Warranties as to the Mortgage Loans
             -------------------------------------------------------

         NC Capital Corporation hereby makes the representations and warranties
set forth in this Schedule III as to the Mortgage Loans only to the Depositor
and the Trustee, as of March 27, 2002 or date of origination of the Mortgage
Loan (as applicable). Capitalized terms used but not otherwise defined in this
Schedule III shall have the meanings ascribed thereto in the Pooling and
Servicing Agreement.

         (1) Mortgage Loans as Described. NC Capital Corporation has delivered
     to the Purchaser, as of March 1, 2002, the Data Tape Information and that
     Data Tape Information is true and correct, including, without limitation,
     the terms of the prepayment charges, if any, as of March 27, 2002;

         (2) Payments Current. All payments required to be made up to March 1,
     2002 for the Mortgage Loan under the terms of the Mortgage Note have been
     made and credited. No payment required under the Mortgage Loan is 30 days
     or more delinquent nor has any payment under the Mortgage Loan been 30 days
     or more delinquent at any time since the origination of the Mortgage Loan.
     The first Monthly Payment was or shall be made with respect to the Mortgage
     Loan on its Due Date or within the grace period, all in accordance with the
     terms of the related Mortgage Note;

         (3) No Outstanding Charges. There are no defaults in complying with the
     terms of the Mortgage, and all taxes, governmental assessments, insurance
     premiums, water, sewer and municipal charges, leasehold payments or ground
     rents which previously became due and owing have been paid, or an escrow of
     funds has been established in an amount sufficient to pay for every such
     item which remains unpaid and which has been assessed but is not yet due
     and payable. Neither NC Capital Corporation nor any Affiliate has advanced
     funds, or induced, solicited or knowingly received any advance of funds by
     a party other than the Mortgagor, directly or indirectly, for the payment
     of any amount required under the Mortgage Loan, except for interest
     accruing from the date of the Mortgage Note or date of disbursement of the
     Mortgage Loan proceeds, whichever is earlier, to the day which precedes by
     one month the Due Date of the first installment of principal and interest;

         (4) Original Terms Unmodified. The terms of the Mortgage Note and
     Mortgage have not been impaired, waived, altered or modified in any respect
     from the date of origination, except by a written instrument which has been
     recorded, if necessary to protect the interests of the Purchaser, and which
     has been delivered to the Trustee and the terms of which are reflected in
     the Mortgage Loan Schedule, the Data Tape Information or included in the
     Mortgage File. The substance of any such waiver, alteration or modification
     has been approved by the title insurer, if any, to the extent required by
     the policy, and its terms are reflected on the Mortgage Loan Schedule. No

                                     S-III-1
<PAGE>

     Mortgagor has been released, in whole or in part, except in connection with
     an assumption agreement approved by the title insurer, to the extent
     required by the policy, and which assumption agreement is part of the
     Mortgage Loan File delivered to the Trustee and the terms of which are
     reflected in the Mortgage Loan Schedule and the Data Tape Information;

         (5) No Defenses. The Mortgage Loan is not subject to any right of
     rescission, set-off, counterclaim or defense, including, without
     limitation, the defense of usury, nor will the operation of any of the
     terms of the Mortgage Note or the Mortgage, or the exercise of any right
     thereunder, render either the Mortgage Note or the Mortgage unenforceable,
     in whole or in part, and no such right of rescission, set-off, counterclaim
     or defense has been asserted with respect thereto, and no Mortgagor was a
     debtor in any state or Federal bankruptcy or insolvency proceeding at the
     time the Mortgage Loan was originated;

         (6) Hazard Insurance. Pursuant to the terms of the Mortgage, all
     buildings or other improvements upon the Mortgaged Property are insured by
     a generally acceptable insurer against loss by fire, hazards of extended
     coverage and such other hazards as are provided for in the Fannie Mae
     Guides or by Freddie Mac, as well as all additional requirements set forth
     in Section 3.13 of the Pooling and Servicing Agreement. If required by the
     Flood Disaster Protection Act of 1973, as amended, the Mortgage Loan is
     covered by a flood insurance policy meeting the requirements of the current
     guidelines of the Federal Insurance Administration is in effect which
     policy conforms to Fannie Mae and Freddie Mac, as well as all additional
     requirements set forth in Section 3.13 of the Pooling and Servicing
     Agreement. All individual insurance policies contain a standard mortgagee
     clause naming NC Capital Corporation and its successors and assigns as
     mortgagee, and all premiums thereon have been paid. The Mortgage obligates
     the Mortgagor thereunder to maintain the hazard insurance policy at the
     Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
     authorizes the holder of the Mortgage to obtain and maintain such insurance
     at such Mortgagor's cost and expense, and to seek reimbursement therefor
     from the Mortgagor. Where required by state law or regulation, the
     Mortgagor has been given an opportunity to choose the carrier of the
     required hazard insurance, provided the policy is not a "master" or
     "blanket" hazard insurance policy covering a condominium, or any hazard
     insurance policy covering the common facilities of a planned unit
     development. The hazard insurance policy is the valid and binding
     obligation of the insurer, is in full force and effect, and will be in full
     force and effect and inure to the benefit of the Trustee upon the
     consummation of the transactions contemplated by this Agreement. NC Capital
     Corporation has not engaged in, and has no knowledge of the Mortgagor's
     having engaged in, any act or omission which would impair the coverage of
     any such policy, the benefits of the endorsement provided for herein, or
     the validity and binding effect of either, including, without limitation,
     no unlawful fee, commission, kickback or other unlawful compensation or
     value of any kind has been or will be received, retained or realized by any
     attorney, firm or other person or entity, and no such unlawful items have
     been received, retained or realized by NC Capital Corporation;

                                     S-III-2
<PAGE>

         (7) Compliance with Applicable Laws. 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 and disclosure laws applicable to the
     Mortgage Loan have been complied with, the consummation of the transactions
     contemplated hereby will not involve the violation of any such laws or
     regulations, and NC Capital Corporation shall maintain in its possession,
     available for the Purchaser's or the Trustee's inspection, and shall
     deliver to the Purchaser upon demand, evidence of compliance with all such
     requirements;

         (8) No Satisfaction of Mortgage. The Mortgage has not been satisfied,
     cancelled, subordinated or rescinded, in whole or in part, and the
     Mortgaged Property has not been released from the lien of the Mortgage, in
     whole or in part, nor has any instrument been executed that would effect
     any such release, cancellation, subordination or rescission. NC Capital
     Corporation has not waived the performance by the Mortgagor of any action,
     if the Mortgagor's failure to perform such action would cause the Mortgage
     Loan to be in default, nor has NC Capital Corporation waived any default
     resulting from any action or inaction by the Mortgagor;

         (9) Location and Type of Mortgaged Property. The Mortgaged Property is
     located in the state identified in the Mortgage Loan Schedule and consists
     of a single parcel of real property with a detached single family residence
     erected thereon, or a two- to four-family dwelling, or an individual
     condominium unit in a low rise condominium project, or an individual unit
     in a planned unit development or a de minimis planned unit development
     which is in each case four stories or less; provided, however, that any
     condominium unit, planned unit development, mobile home (double wide only)
     or manufactured dwelling shall conform with the applicable Fannie Mae and
     Freddie Mac requirements regarding such dwellings and that no Mortgage Loan
     is secured by a single parcel of real property with a cooperative housing
     corporation , a log home or, except as described in Exhibit I hereto, a
     mobile home erected thereon or by a mixed use property, a property in
     excess of 10 acres or other unique property types. As of the date of
     origination, no portion of the Mortgaged Property has been used for
     commercial purposes, and since the date of origination, no portion of the
     Mortgaged Property was used for commercial purposes; provided, that
     Mortgaged Properties which contain a home office shall not be considered as
     being used for commercial purposes as long as the Mortgaged Property has
     not been altered for commercial purposes and is not storing any chemicals
     or raw materials other than those commonly used for homeowner repair,
     maintenance and/or household purposes. With respect to any Mortgage Loan
     secured by a Mortgaged Property improved by manufactured housing, (i) the
     related manufactured housing unit is permanently affixed to the land, and
     (ii) the related manufactured housing unit and the related land are subject
     to a Mortgage properly filed in the appropriate public recording office and
     naming NC Capital Corporation as mortgagee;

         (10) Valid First Lien. The Mortgage is a valid, subsisting, enforceable
     and perfected first lien on the Mortgaged Property, including all buildings
     and improvements on the Mortgaged Property and all installations and
     mechanical, electrical, plumbing, heating and air conditioning systems
     located in or annexed to such buildings, and all

                                     S-III-3
<PAGE>

     additions, alterations and replacements made at any time with respect to
     the foregoing. The lien of the Mortgage is subject only to:

               (i) the lien of current real property taxes and assessments not
         yet due and payable;

               (ii) covenants, conditions and restrictions, rights of way,
         easements and other matters of the public record as of the date of
         recording acceptable to prudent mortgage lending institutions generally
         and specifically referred to in the lender's title insurance policy
         delivered to the originator of the Mortgage Loan and (a) specifically
         referred to or otherwise considered in the appraisal made for the
         originator of the Mortgage Loan or (b) which do not adversely affect
         the Appraised Value of the Mortgaged Property set forth in such
         appraisal; and

               (iii) other matters to which like properties are commonly subject
         which do not materially interfere with the benefits of the security
         intended to be provided by the Mortgage or the use, enjoyment, value or
         marketability of the related Mortgaged Property.

         (11) Validity of Mortgage Documents. The Mortgage Note and the Mortgage
     and any other agreement executed and delivered by a Mortgagor in connection
     with a Mortgage Loan are genuine, and each is the legal, valid and binding
     obligation of the maker thereof enforceable in accordance with its terms.
     All parties to the Mortgage Note, the Mortgage and any other such related
     agreement had legal capacity to enter into the Mortgage Loan and to execute
     and deliver the Mortgage Note, the Mortgage and any such agreement, and the
     Mortgage Note, the Mortgage and any other such related agreement have been
     duly and properly executed by other such related parties. No fraud, error,
     omission, misrepresentation, negligence or similar occurrence with respect
     to a Mortgage Loan has taken place on the part of any Person, including
     without limitation, the Mortgagor, any appraiser, any builder or developer,
     or any other party involved in the origination of the Mortgage Loan. NC
     Capital Corporation has reviewed all of the documents constituting the
     Servicing File and has made such inquiries as it deems necessary to make
     and confirm the accuracy of the representations set forth herein;

         (12) Full Disbursement of Proceeds. The Mortgage Loan has been closed
     and the proceeds of the Mortgage Loan have been fully disbursed and there
     is no requirement for future advances thereunder, and any and all
     requirements as to completion of any on-site or off-site improvement and as
     to disbursements of any escrow funds therefor have been complied with. All
     costs, fees and expenses incurred in making or closing the Mortgage Loan
     and the recording of the Mortgage were paid, and the Mortgagor is not
     entitled to any refund of any amounts paid or due under the Mortgage Note
     or Mortgage;

         (13) Ownership. Immediately prior to the transfer contemplated by the
     NCCC Purchase Agreements, NC Capital Corporation was the sole owner of
     record and holder of the Mortgage Loan and the indebtedness evidenced by
     each Mortgage Note and upon the sale of the Mortgage Loans to the
     Purchaser, NC Capital Corporation retained the Mortgage Files or any part
     thereof with respect thereto not delivered to the Purchaser or

                                     S-III-4
<PAGE>

     the Purchaser's designee, in trust only for the purpose of servicing and
     supervising the servicing of each Mortgage Loan. The Mortgage Loan was not
     assigned or pledged, and NC Capital Corporation had good, indefeasible and
     marketable title thereto, and has full right to transfer and sell the
     Mortgage Loan to the Purchaser free and clear of any encumbrance, equity,
     participation interest, lien, pledge, charge, claim or security interest,
     and has full right and authority subject to no interest or participation
     of, or agreement with, any other party, to sell and assign each Mortgage
     Loan pursuant to the NCCC Purchase Agreements and following the sale of
     each Mortgage Loan, the Purchaser will own such Mortgage Loan free and
     clear of any encumbrance, equity, participation interest, lien, pledge,
     charge, claim or security interest;

         (14) Doing Business. All parties which have had any interest in the
     Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are
     (or, during the period in which they held and disposed of such interest,
     were) (1) in compliance with any and all applicable licensing requirements
     of the laws of the state wherein the Mortgaged Property is located, and (2)
     either (i) organized under the laws of such state, or (ii) qualified to do
     business in such state, or (iii) a federal savings and loan association, a
     savings bank or a national bank having a principal office in such state, or
     (3) not doing business in such state;

         (15) LTV. No Mortgage Loan has an LTV greater than 100%;

         (16) Title Insurance. The Mortgage Loan is covered by an ALTA lender's
     title insurance policy, or with respect to any Mortgage Loan for which the
     related Mortgaged Property is located in California a CLTA lender's title
     insurance policy, or other generally acceptable form of policy or insurance
     acceptable to Fannie Mae or Freddie Mac with respect to Mortgage Loans and
     each such title insurance policy is issued by a title insurer acceptable to
     Fannie Mae or Freddie Mac and qualified to do business in the jurisdiction
     where the Mortgaged Property is located, insuring NC Capital Corporation,
     its successors and assigns, as to the first priority lien of the Mortgage
     in the original principal amount of the Mortgage Loan, subject only to the
     exceptions contained in clauses (i), (ii) and (iii) of representation 10 of
     this Schedule III, and in the case of Adjustable Rate Mortgage Loans,
     against any loss by reason of the invalidity or unenforceability of the
     lien resulting from the provisions of the Mortgage providing for adjustment
     to the Mortgage Rate and Scheduled Payment. Where required by state law or
     regulation, the Mortgagor has been given the opportunity to choose the
     carrier of the required mortgage title insurance. Additionally, such
     lender's title insurance policy affirmatively insures ingress and egress,
     and against encroachments by or upon the Mortgaged Property or any interest
     therein. NC Capital Corporation, its successor and assigns, are the sole
     insureds of such lender's title insurance policy, and such lender's title
     insurance policy is valid and remains in full force and effect and will be
     in force and effect upon the consummation of the transactions contemplated
     by this Agreement. No claims have been made under such lender's title
     insurance policy, and no prior holder of the related Mortgage, including NC
     Capital Corporation, has done, by act or omission, anything which would
     impair the coverage of such lender's title insurance policy, including,
     without limitation, no unlawful fee, commission, kickback or other unlawful

                                     S-III-5
<PAGE>

     compensation or value of any kind has been or will be received, retained or
     realized by any attorney, firm or other person or entity, and no such
     unlawful items have been received, retained or realized by NC Capital
     Corporation;

         (17) No Defaults. Other than payments due but not yet 30 days
     delinquent, there is no default, breach, violation or event which would
     permit acceleration existing under the Mortgage or the Mortgage Note and no
     event which, with the passage of time or with notice and the expiration of
     any grace or cure period, would constitute a default, breach, violation or
     event which would permit acceleration, and neither NC Capital Corporation
     nor its affiliates or any of their respective predecessors have waived any
     default, breach, violation or event which would permit acceleration;

         (18) No Mechanics' Liens. As of the date of origination, there are no
     mechanics' or similar liens or claims which have been filed for work, labor
     or material (and no rights are outstanding that under law could give rise
     to such liens) affecting the related Mortgaged Property which are or may be
     liens prior to, or equal or coordinate with, the lien of the related
     Mortgage;

         (19) Location of Improvements; No Encroachments. All improvements which
     were considered in determining the Appraised Value of the Mortgaged
     Property lay wholly within the boundaries and building restriction lines of
     the Mortgaged Property, and no improvements on adjoining properties
     encroach upon the Mortgaged Property. As of the date of origination, there
     are no improvements located on or being part of the Mortgaged Property in
     violation of any applicable zoning law or regulation;

         (20) Origination; Payment Terms. Either (a) the Mortgage Loan was
     originated by a Mortgagee approved by the Secretary of Housing and Urban
     Development pursuant to Sections 203 and 211 of the National Housing Act, a
     savings and loan association, a savings bank, a commercial bank, credit
     union, insurance company or other similar institution which is supervised
     and examined by a federal or state authority, or (b) the following
     requirements have been met with respect to the Mortgage Loan: NC Capital
     Corporation meets the requirements set forth in clause (a), and (i) such
     Mortgage Loan was underwritten in accordance with standards established by
     NC Capital Corporation, using application forms and related credit
     documents approved by NC Capital Corporation, (ii) NC Capital Corporation
     approved each application and the related credit documents before a
     commitment by the correspondent was issued, and no such commitment was
     issued until NC Capital Corporation agreed to fund such Mortgage Loan,
     (iii) the closing documents for such Mortgage Loan were prepared on forms
     approved by NC Capital Corporation, and (iv) such Mortgage Loan was
     actually funded by NC Capital Corporation and was purchased by NC Capital
     Corporation at closing or soon thereafter. The documents, instruments and
     agreements submitted for loan underwriting were not falsified and contain
     no untrue statement of material fact or omit to state a material fact
     required to be stated therein or necessary to make the information and
     statements therein not misleading. Principal payments on the Mortgage Loan
     commenced no more than sixty days after funds were disbursed in connection
     with the Mortgage Loan. The Mortgage Rate is as set forth on Mortgage Loan
     Schedule hereto (including in the case of Adjustable Rate Mortgage Loans,
     the

                                     S-III-6
<PAGE>

     interest rate and payment limitations set forth on Mortgage Loan Schedule
     hereto). All Mortgage Loans have Due Dates on the first day of each month
     except as specified on the Mortgage Loan Schedule. Each Mortgage Note is
     payable in equal monthly installments of principal and interest, which
     installments of interest, with respect to Adjustable Rate Mortgage Loans,
     are subject to change due to the adjustments to the Mortgage Rate on each
     Interest Rate Adjustment Date, with interest calculated and payable in
     arrears and is not calculated on a simple interest basis. The monthly
     principal payments on each Mortgage Loan is sufficient to amortize the
     Mortgage Loan fully by the stated maturity date, over an original term of
     not more than thirty years from commencement of amortization. There is no
     negative amortization allowed in the terms of any Mortgage Note. None of
     the Mortgage Loans allows for negative amortization or the conversion of
     the interest rate thereon from an adjustable rate to a fixed rate or from a
     fixed rate to an adjustable rate. No Mortgage Loan is a Balloon Loan;

         (21) Customary Provisions. The Mortgage contains customary and
     enforceable provisions such as to render the rights and remedies of the
     holder thereof adequate for the realization against the Mortgaged Property
     of the benefits of the security provided thereby, including, (i) in the
     case of a Mortgage designated as a deed of trust, by trustee's sale, and
     (ii) otherwise by judicial foreclosure. Upon default by a Mortgagor on a
     Mortgage Loan and foreclosure on, or trustee's sale of, the Mortgaged
     Property pursuant to the proper procedures, the holder of the Mortgage Loan
     will be able to deliver good and merchantable title to the Mortgaged
     Property. There is no homestead or other exemption available to a Mortgagor
     which would interfere with the right to sell the Mortgaged Property at a
     trustee's sale or the right to foreclose the Mortgage, subject to
     applicable federal and state laws and judicial precedent with respect to
     bankruptcy and right of redemption or similar law;

         (22) Index. With respect to Adjustable Rate Mortgage Loans, the Index
     set forth in the Mortgage Note is LIBOR;

         (23) Occupancy of the Mortgaged Property. As of the Closing Date the
     Mortgaged Property is lawfully occupied under applicable law. All
     inspections, licenses and certificates required to be made or issued with
     respect to all occupied portions of the Mortgaged Property and, with
     respect to the use and occupancy of the same, including, but not limited
     to, certificates of occupancy and fire underwriting certificates, have been
     made or obtained from the appropriate authorities;

         (24) No Additional Collateral. The Mortgage Note is not and has not
     been secured by any collateral except the lien of the corresponding
     Mortgage and the security interest of any applicable security agreement or
     chattel mortgage;

         (25) Deeds of Trust. In the event the Mortgage constitutes a deed of
     trust, a trustee, authorized and duly qualified under applicable law to
     serve as such, has been properly designated and currently so serves and is
     named in the Mortgage, and no fees or expenses are or will become payable
     by the Purchaser to the trustee under the deed of trust, except in
     connection with a trustee's sale after default by the Mortgagor;

                                     S-III-7
<PAGE>

         (26) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage,
     the Assignment of Mortgage and any other documents required to be delivered
     under this Agreement for each Mortgage Loan have been delivered to the
     Purchaser;

         (27) Transfer of Mortgage Loans. The Assignment of Mortgage is in
     recordable form, other than the assignee's name and recording information
     not yet returned from the recording office, and is acceptable for recording
     under the laws of the jurisdiction in which the Mortgaged Property is
     located. The transfer, assignment and conveyance of the Mortgage Notes and
     the Mortgages by NC Capital Corporation are not subject to the bulk
     transfer or similar statutory provisions in effect in any applicable
     jurisdiction;

         (28) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, the
     Mortgage contains an enforceable provision for the acceleration of the
     payment of the unpaid principal balance of the Mortgage Loan in the event
     that the Mortgaged Property is sold or transferred without the prior
     written consent of the mortgagee thereunder, and to the best of NC Capital
     Corporation's knowledge, such provision is enforceable;

         (29) No Buydown Provisions No Graduated Payments or Contingent
     Interests. The Mortgage Loan does not contain provisions pursuant to which
     Monthly Payments are paid or partially paid with funds deposited in any
     separate account established by NC Capital Corporation, the Mortgagor, or
     anyone on behalf of the Mortgagor, or paid by any source other than the
     Mortgagor nor does it contain any other similar provisions which may
     constitute a "buydown" provision. The Mortgage Loan is not a graduated
     payment mortgage loan and the Mortgage Loan does not have a shared
     appreciation or other contingent interest feature;

         (30) Assumability. With respect to each Adjustable Rate Mortgage Loan,
     the Mortgage Loan Documents provide that after the related first Interest
     Rate Adjustment Date, a related Mortgage Loan may only be assumed if the
     party assuming such Mortgage Loan meets certain credit requirements stated
     in the Mortgage Loan Documents;

         (31) Consolidation of Future Advances. Any future advances made to the
     Mortgagor prior to the Cut-off Date have been consolidated with the
     outstanding principal amount secured by the Mortgage, and the secured
     principal amount, as consolidated, bears a single interest rate and single
     repayment term. The lien of the Mortgage securing the consolidated
     principal amount is expressly insured as having first lien priority by a
     title insurance policy, an endorsement to the policy insuring the
     mortgagee's consolidated interest or by other title evidence acceptable to
     Fannie Mae and Freddie Mac. The consolidated principal amount does not
     exceed the original principal amount of the Mortgage Loan;

         (32) Mortgaged Property Undamaged; No Condemnation Proceedings. There
     is no proceeding pending or threatened for the total or partial
     condemnation of the Mortgaged Property. The Mortgaged Property is undamaged
     by waste, fire, earthquake or earth movement, windstorm, flood, tornado or
     other casualty so as to affect adversely

                                     S-III-8
<PAGE>

     the value of the Mortgaged Property as security for the Mortgage Loan or
     the use for which the premises were intended and each Mortgaged Property is
     in good repair. There have not been any condemnation proceedings with
     respect to the Mortgaged Property and NC Capital Corporation has no
     knowledge of any such proceedings in the future;

         (33) Collection Practices; Escrow Payments; Interest Rate Adjustments.
     The origination, servicing and collection practices used by NC Capital
     Corporation and its Affiliates with respect to the Mortgage Loan have been
     in all respects in compliance with Accepted Servicing Practices, applicable
     laws and regulations, and have been in all respects legal and proper. With
     respect to escrow deposits and Escrow Payments, if any, all such payments
     are in the possession of, or under the control of, NC Capital Corporation
     and there exist no deficiencies in connection therewith for which customary
     arrangements for repayment thereof have not been made. All Escrow Payments
     have been collected in full compliance with state and federal law and the
     provisions of the related Mortgage Note and Mortgage. An escrow of funds is
     not prohibited by applicable law and has been established in an amount
     sufficient to pay for every item that remains unpaid and has been assessed
     but is not yet due and payable. No escrow deposits or Escrow Payments or
     other charges or payments due NC Capital Corporation have been capitalized
     under the Mortgage or the Mortgage Note. All Mortgage Rate adjustments have
     been made in strict compliance with state and federal law and the terms of
     the related Mortgage Note. Any interest required to be paid pursuant to
     state, federal and local law has been properly paid and credited;

         (34) Other Insurance Policies. No action, inaction or event has
     occurred and no state of facts exists or has existed that has resulted or
     will result in the exclusion from, denial of, or defense to coverage under
     any insurance policy related to the Mortgage Loans, irrespective of the
     cause of such failure of coverage. In connection with the placement of any
     such insurance, no commission, fee, or other compensation has been or will
     be received by NC Capital Corporation or by any officer, director, or
     employee of NC Capital Corporation or any designee of NC Capital
     Corporation or any corporation in which NC Capital Corporation or any
     officer, director, or employee had a financial interest at the time of
     placement of such insurance;

         (35) No Violation of Environmental Laws. There is no pending action or
     proceeding directly involving the Mortgaged Property in which compliance
     with any environmental law, rule or regulation is an issue; there is no
     violation of any environmental law, rule or regulation with respect to the
     Mortgaged Property; and nothing further remains to be done to satisfy in
     full all requirements of each such law, rule or regulation constituting a
     prerequisite to use and enjoyment of said property;

         (36) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not
     notified NC Capital Corporation, and NC Capital Corporation has no
     knowledge of any relief requested or allowed to the Mortgagor under the
     Soldiers' and Sailors' Civil Relief Act of 1940;

         (37) Appraisal. The Mortgage File contains an appraisal of the related
     Mortgaged Property signed by a qualified appraiser, acceptable to NC
     Capital

                                     S-III-9
<PAGE>

     Corporation, who had no interest, direct or indirect in the Mortgaged
     Property or in any loan made on the security thereof, and whose
     compensation is not affected by the approval or disapproval of the Mortgage
     Loan, and the appraisal and appraiser both satisfy the requirements of
     Fannie Mae or Freddie Mac and Title XI of the Financial Institutions
     Reform, Recovery, and Enforcement Act of 1989 and the regulations
     promulgated thereunder, all as in effect on the date the Mortgage Loan was
     originated;

         (38) Disclosure Materials. The Mortgagor has executed a statement to
     the effect that the Mortgagor has received all disclosure materials
     required by, and the originator has complied with all applicable law with
     respect to the making of the Mortgage Loans;

         (39) Construction or Rehabilitation of Mortgaged Property. No Mortgage
     Loan was made in connection with the construction or rehabilitation of a
     Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
     Property;

         (40) Value of Mortgaged Property. NC Capital Corporation has no
     knowledge of any circumstances existing that could reasonably be expected
     to adversely affect the value or the marketability of any Mortgaged
     Property or Mortgage Loan or to cause the Mortgage Loans to prepay during
     any period materially faster or slower than similar mortgage loans held by
     NC Capital Corporation generally secured by properties in the same
     geographic area as the related Mortgaged Property;

         (41) No Defense to Insurance Coverage. No action has been taken or
     failed to be taken, no event has occurred and no state of facts exists or
     has existed on or prior to the Closing Date (whether or not known to NC
     Capital Corporation on or prior to such date) which has resulted or will
     result in an exclusion from, denial of, or defense to coverage under any
     primary mortgage insurance (including, without limitation, any exclusions,
     denials or defenses which would limit or reduce the availability of the
     timely payment of the full amount of the loss otherwise due thereunder to
     the insured) whether arising out of actions, representations, errors,
     omissions, negligence, or fraud of NC Capital Corporation, the related
     Mortgagor or any party involved in the application for such coverage,
     including the appraisal, plans and specifications and other exhibits or
     documents submitted therewith to the insurer under such insurance policy,
     or for any other reason under such coverage, but not including the failure
     of such insurer to pay by reason of such insurer's breach of such insurance
     policy or such insurer's financial inability to pay;

         (42) Escrow Analysis. With respect to each Mortgage, NC Capital
     Corporation or its Affiliate has within the last twelve months (unless such
     Mortgage was originated within such twelve month period) analyzed the
     required Escrow Payments for each Mortgage and adjusted the amount of such
     payments so that, assuming all required payments are timely made, any
     deficiency will be eliminated on or before the first anniversary of such
     analysis, or any overage will be refunded to the Mortgagor, in accordance
     with RESPA and any other applicable law;

                                    S-III-10
<PAGE>

         (43) Prior Servicing. Each Mortgage Loan has been serviced in all
     material respects in strict compliance with Accepted Servicing Practices;

         (44) Credit Information. As to each consumer report (as defined in the
     Fair Credit Reporting Act, Public Law 91-508) or other credit information
     furnished by NC Capital Corporation to the Purchaser, that Seller has full
     right and authority and is not precluded by law or contract from furnishing
     such information to the Purchaser;

         (45) Leaseholds. If the Mortgage Loan is secured by a long-term
     residential lease, (1) the lessor under the lease holds a fee simple
     interest in the land; (2) the terms of such lease expressly permit the
     mortgaging of the leasehold estate, the assignment of the lease without the
     lessor's consent and the acquisition by the holder of the Mortgage of the
     rights of the lessee upon foreclosure or assignment in lieu of foreclosure
     or provide the holder of the Mortgage with substantially similar
     protections; (3) the terms of such lease do not (a) allow the termination
     thereof upon the lessee's default without the holder of the Mortgage being
     entitled to receive written notice of, and opportunity to cure, such
     default, (b) allow the termination of the lease in the event of damage or
     destruction as long as the Mortgage is in existence, (c) prohibit the
     holder of the Mortgage from being insured (or receiving proceeds of
     insurance) under the hazard insurance policy or policies relating to the
     Mortgaged Property or (d) permit any increase in rent other than
     pre-established increases set forth in the lease; (4) the original term of
     such lease is not less than 15 years; (5) the term of such lease does not
     terminate earlier than five years after the maturity date of the Mortgage
     Note; and (6) the Mortgaged Property is located in a jurisdiction in which
     the use of leasehold estates in transferring ownership in residential
     properties is a generally accepted practice;

         (46) Predatory Lending Regulations; High Cost Loans. None of the
     Mortgage Loans are classified as (a) "high cost" loans under the Home
     Ownership and Equity Protection Act of 1994 or (b) "high cost,"
     "threshold," or "predatory" loans under any other applicable state, federal
     or local law;

         (47) [Reserved]

         (48) [Reserved]

         (49) Conformance with Agency and Underwriting Standards. The Mortgage
     Loan was underwritten in accordance with the Underwriting Standards (as
     defined in the NCCC Purchase Agreements). The Mortgage Note and Mortgage
     are on forms acceptable to Freddie Mac or Fannie Mae and neither the NC
     Capital Corporation nor any Affiliate has made any representations to a
     Mortgagor that are inconsistent with the mortgage instruments used;

         (50) No Credit Insurance: No proceeds from any Mortgage Loan were used
     to acquire a single premium credit life insurance policy;

         (51) Acceptable Investment. There are no circumstances or conditions
     with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
     Mortgage File or the

                                    S-III-11
<PAGE>

     Mortgagor's credit standing that can reasonably be expected to cause
     private institutional investors who invest in mortgage loans similar to the
     Mortgage Loan to regard the Mortgage Loan as an unacceptable investment,
     cause the Mortgage Loan to become delinquent, or adversely affect the value
     or marketability of the Mortgage Loan, or cause the Mortgage Loans to
     prepay during any period materially faster or slower than the mortgage
     loans originated by the Seller generally;

         (52) Condominiums/Planned Unit Developments. If the Mortgaged Property
     is a condominium unit or a planned unit development (other than a de
     minimis planned unit development) such condominium or planned unit
     development project such Mortgage Loan was originated in accordance with,
     and the Mortgaged Property meets the guidelines set forth in the
     Originator's Underwriting Guidelines.

                                    S-III-12
<PAGE>

                                   SCHEDULE IV

         NC Capital Corporation hereby makes the representations and warranties
set forth in this Schedule IV to the Depositor and the Trustee, as of the
Closing Date.

(a)  Due Organization and Authority. The Responsible Party is a corporation duly
     organized, validly existing and in good standing under the laws of the
     state of California and has all licenses necessary to carry on its business
     as now being conducted and is licensed, qualified and in good standing in
     each state wherein it owns or leases any material properties or where a
     Mortgaged Property is located, if the laws of such state require licensing
     or qualification in order to conduct business of the type conducted by the
     Responsible Party, and in any event the Responsible Party is in compliance
     with the laws of any such state to the extent necessary; the Responsible
     Party has the full corporate power, authority and legal right to execute
     and deliver this Agreement and to perform its obligations hereunder; the
     execution, delivery and performance of this Agreement by the Responsible
     Party and the consummation of the transactions contemplated hereby have
     been duly and validly authorized; this Agreement and all agreements
     contemplated hereby have been duly executed and delivered and constitute
     the valid, legal, binding and enforceable obligations of the Responsible
     Party, regardless of whether such enforcement is sought in a proceeding in
     equity or at law; and all requisite corporate action has been taken by the
     Responsible Party to make this Agreement and all agreements contemplated
     hereby valid and binding upon the Responsible Party in accordance with
     their terms;

(b)  No Conflicts. Neither the execution and delivery of this Agreement, the
     consummation of the transactions contemplated hereby, nor the fulfillment
     of or compliance with the terms and conditions of this Agreement, will
     conflict with or result in a breach of any of the terms, conditions or
     provisions of the Responsible Party's charter or by-laws or any legal
     restriction or any agreement or instrument to which the Responsible Party
     is now a party or by which it is bound, or constitute a default or result
     in an acceleration under any of the foregoing, or result in the violation
     of any law, rule, regulation, order, judgment or decree to which the
     Responsible Party or its property is subject, or result in the creation or
     imposition of any lien, charge or encumbrance that would have an adverse
     effect upon any of its properties pursuant to the terms of any mortgage,
     contract, deed of trust or other instrument;

(c)  No Litigation Pending. There is no action, suit, proceeding or
     investigation pending or threatened against the Responsible Party, before
     any court, administrative agency or other tribunal asserting the invalidity
     of this Agreement, seeking to prevent the consummation of any of the
     transactions contemplated by this Agreement or which, either in any one
     instance or in the aggregate, may result in any material adverse change in
     the business, operations, financial condition, properties or assets of the
     Responsible Party, or in any material impairment of the right or ability of
     the Responsible Party to carry on its business substantially as now
     conducted, or in any material liability on the part of the Responsible
     Party, or which would draw into question the validity of this Agreement or
     of any action taken or to be taken in connection with the obligations of
     the Responsible Party contemplated herein, or which would be likely to
     impair materially the ability of the Responsible Party to perform under the
     terms of this Agreement;

                                     S-IV-1
<PAGE>

(d)  No Consent Required. No consent, approval, authorization or order of, or
     registration or filing with, or notice to any court or governmental agency
     or body including HUD, the FHA or the VA is required for the execution,
     delivery and performance by the Responsible Party of or compliance by the
     Responsible Party with this Agreement or the consummation of the
     transactions contemplated by this Agreement, or if required, such approval
     has been obtained prior to the Closing Date;

                                     S-IV-2
<PAGE>

                                    EXHIBIT A

To be added to the Class A-1, Class M-1 and Class M-2 Certificates while they
remain Private Certificates. IF THIS CERTIFICATE IS A PHYSICAL CERTIFICATE,
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER (THE "TRANSFEROR
LETTER") IN THE FORM OF EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER
(I) THE TRUSTEE RECEIVES A RULE 144A LETTER (THE "144A LETTER") IN THE FORM OF
EXHIBIT I TO THE AGREEMENT REFERRED TO HEREIN OR (II) THE TRUSTEE RECEIVES AN
OPINION OF COUNSEL, DELIVERED AT THE EXPENSE OF THE TRANSFEROR, THAT SUCH
TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.

IF THIS CERTIFICATE IS A BOOK-ENTRY CERTIFICATE, THE PROPOSED TRANSFEROR WILL BE
DEEMED TO HAVE MADE EACH OF THE CERTIFICATIONS SET FORTH IN THE TRANSFEROR
LETTER AND THE PROPOSED TRANSFEREE WILL BE DEEMED TO HAVE MADE EACH OF THE
CERTIFICATIONS SET FORTH IN THE RULE 144A LETTER, IN EACH CASE AS IF SUCH
CERTIFICATE WERE EVIDENCED BY A PHYSICAL CERTIFICATE.]

In the event that a transfer of a Private Certificate which is a Book-Entry
Certificate 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 will be deemed to
have made as of the transfer date each of the certifications set forth in the
Transferor Certificate in respect of such Certificate and the transferee will be
deemed to have made as of the transfer date each of the certifications set forth
in the Rule 144A Letter in respect of such Certificate, in each case as if such
Certificate were evidenced by a Physical Certificate.

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

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN 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, AS AMENDED (THE "CODE") AND CERTAIN OTHER ASSETS.

Certificate No.                            :

                                      A-1
<PAGE>

Cut-off Date                               :                  March 1, 2002

First Distribution Date                    :                 April 25, 2002

Initial Certificate Balance of this
Certificate ("Denomination")               :                 $

Initial Certificate Balances of all
Certificates of this Class                 :                 $

CUSIP                                      :

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.

            Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1
               Mortgage Pass-Through Certificates, Series 2002-NC1
                         [Class A-][Class M-][Class B-1]

         evidencing a percentage interest in the distributions allocable
         to the Certificates of the above-referenced Class.

         Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Responsible Party, the Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.

         This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among Morgan Stanley Dean Witter
Capital I Inc., as depositor (the "Depositor"), The Provident Bank as servicer
(the " Servicer"), NC Capital Corporation, as responsible party (the
"Responsible Party") and U.S. Bank National Association, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

         Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      A-2
<PAGE>

                                      * * *

                                      A-3
<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:

                                      U.S. BANK NATIONAL ASSOCIATION,
                                        not in its individual capacity,
                                        but solely as Trustee

                                      By
                                        --------------------------------

Countersigned:

By
  -------------------------------
  Authorized Signatory of
  U.S. BANK NATIONAL ASSOCIATION,
  not in its individual capacity,
  but solely as Trustee

                                      A-4
<PAGE>

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.
            Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1
                       Mortgage Pass-Through Certificates

         This Certificate is one of a duly authorized issue of Certificates
designated as Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account 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 thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the Business Date immediately preceding such Distribution Date, provided,
however, that for any Definitive Certificates, the Record Date shall be the last
Business Day of the month next preceding the month of such Distribution Date.

         Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes, or such other location specified in the notice to Certificateholders
of such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Responsible Party the Servicer and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any

                                      A-5
<PAGE>

such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor 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 in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the offices designated by the Trustee for such purposes, accompanied
by a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust Fund will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Responsible Party and the Trustee and
any agent of the Depositor or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor, the Trustee, nor any such agent shall be affected by any notice
to the contrary.

         On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Servicer will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.

         Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

                                      A-6
<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

         I (We) further direct the Trustee 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

                                      A-7
<PAGE>

                           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.

                                      A-8
<PAGE>

                                    EXHIBIT B

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA") OF
A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO APPLICABLE
FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") MATERIALLY SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE, OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN
ASSETS OF SUCH A PLAN, OR (ii) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY, A
REPRESENTATION LETTER THAT IT IS USING THE ASSETS OF ITS GENERAL ACCOUNT, AND
THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE ARE COVERED UNDER SECTIONS I
AND III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 OR (iii) AN OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AND THE SERVICER, TO THE EFFECT THAT THE
PURCHASE OR HOLDING OF THIS CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE
TRUST FUND BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF ERISA AND THE CODE OR SIMILAR VIOLATION OF SIMILAR LAW
AND WILL NOT SUBJECT THE TRUSTEE OR THE SERVICER TO ANY OBLIGATION IN ADDITION
TO THOSE EXPRESSLY UNDERTAKEN IN THIS AGREEMENT OR TO ANY LIABILITY.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I
OF ERISA, SECTION 4975 OF THE CODE OR SIMILAR LAW WITHOUT THE REPRESENTATION
LETTER OR THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE
SHALL BE VOID AND OF NO EFFECT.

Certificate No.                       :                1

Cut-off Date                          :                 March 1, 2002

First Distribution Date               :                April 25, 2002

Percentage Interest of this
Certificate ("Denomination")          :                100%

                                      B-1
<PAGE>

CUSIP                                 :

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.

            Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1
               Mortgage Pass-Through Certificates, Series 2002-NC1

                                     Class P

         evidencing a percentage interest in the distributions allocable
         to the Certificates of the above-referenced Class.

         Distributions in respect of this Certificate are distributable monthly
as set forth herein. This Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Responsible Party, the
Servicer or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.

         This certifies that U.S. Bank National Association, as Indenture
Trustee, is the registered owner of the Percentage Interest evidenced by this
Certificate (obtained by dividing the denomination of this Certificate by the
aggregate of the denominations of all Certificates of the Class to which this
Certificate belongs) in certain monthly distributions pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among Morgan Stanley Dean Witter Capital I Inc., as depositor (the
"Depositor"), The Provident Bank , as servicer (the "Servicer"), NC Capital
Corporation, as responsible Party (the "Responsible Party"), and U.S. Bank
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

         This Certificate does not have a Pass-Through Rate and will be entitled
to distributions only to the extent set forth in the Agreement. In addition, any
distribution of the proceeds of any remaining assets of the Trust will be made
only upon presentment and surrender of this Certificate at the offices
designated by the Trustee for such purpose, or the office or agency maintained
by the Trustee.

         No transfer of a Certificate of this Class shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with the 1933 Act and such laws. In the event of any
such transfer, the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached to the Pooling and Servicing
Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis

                                      B-2
<PAGE>

therefor, from the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall be an expense of the transferor.

         No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter 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, Section 4975 of the Code
or Similar Law, or a person acting on behalf of or investing plan assets of any
such plan, which representation letter shall not be an expense of the Trustee
or, (ii) if the transferee is an insurance company, a representation letter that
it is purchasing this Certificate with the assets of its general account and
that the purchase and holding of the certificate are covered under Sections I
and III of Prohibited Transaction Class Exemption 95-60 or (iii) in the case of
a Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or a plan or arrangement subject to Section 4975 of the Code
(or comparable provisions of any subsequent enactments) or any materially
similar provisions of applicable Federal, state or local law ("Similar Law"), or
a trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, an Opinion of
Counsel satisfactory to the Trustee and the Servicer, which Opinion of Counsel
shall not be an expense of the Trustee, the Servicer, or the Trust Fund,
addressed to the Trustee, to the effect that the purchase or holding of this
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code or similar violation of Similar Law and will not subject the Trustee or
the Servicer to any obligation in addition to those expressly undertaken in this
Agreement or to any liability.

         Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      * * *

                                      B-3
<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:

                                      U.S. BANK NATIONAL ASSOCIATION,
                                        not in its individual capacity,
                                        but solely as Trustee

                                      By
                                        -------------------------------

Countersigned:

By
  --------------------------------
  Authorized Signatory of
  U.S. BANK NATIONAL ASSOCIATION,
  not in its individual capacity,
  but solely as Trustee

                                      B-4
<PAGE>

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.
            Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1
                       Mortgage Pass-Through Certificates

         This Certificate is one of a duly authorized issue of Certificates
designated as Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account 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 thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

         Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. 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

                                      B-5
<PAGE>

transfer hereof or in exchange therefor 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 in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the offices designated by the Trustee for such purposes or the
office or agency maintained by the Trustee in New York, New York, accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust Fund will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Responsible Party and the Trustee and
any agent of the Depositor or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor, the Trustee, nor any such agent shall be affected by any notice
to the contrary.

         On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Servicer will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.

         Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

                                      B-6
<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

         I (We) further direct the Trustee 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

                                      B-7
<PAGE>

                            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.

                                      B-8
<PAGE>

                                    EXHIBIT C

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, AS AMENDED (THE "CODE").

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE A REPRESENTATION LETTER TO THE EFFECT THAT
SUCH TRANSFEREE IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE OR A PLAN SUBJECT TO MATERIALLY SIMILAR PROVISIONS OF
APPLICABLE FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") OR A PERSON INVESTING ON
BEHALF OF OR WITH PLAN ASSETS OF SUCH A PLAN. IN THE EVENT THAT SUCH
REPRESENTATION IS VIOLATED, OR ANY ATTEMPT IS MADE TO TRANSFER TO A PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF ERISA, A PLAN SUBJECT TO SECTION 4975 OF
THE CODE OR A PLAN SUBJECT TO SIMILAR LAW, OR A PERSON ACTING ON BEHALF OF ANY
SUCH PLAN OR ARRANGEMENT OR USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT,
SUCH ATTEMPTED TRANSFER OR ACQUISITION SHALL BE VOID AND OF NO EFFECT.

Certificate No.                          :              1

Cut-off Date                             :               March 1, 2002

First Distribution Date                  :              April 25, 2002

Percentage Interest of this              :              100%
Certificate ("Denomination")

CUSIP                                    :

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.

            Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1
               Mortgage Pass-Through Certificates, Series 2002-NC1

                                     Class R

         evidencing a percentage interest in the distributions allocable
         to the Certificates of the above-referenced Class.

                                      C-1
<PAGE>

         Distributions in respect of this Certificate is distributable monthly
as set forth herein. This Class R Certificate has no Certificate Balance and is
not entitled to distributions in respect of principal or interest. This
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Servicer, the Responsible Party or the Trustee
referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.

         This certifies that Morgan Stanley & Co. Incorporated is the registered
owner of the Percentage Interest specified above of any monthly distributions
due to the Class R Certificates pursuant to a Pooling and Servicing Agreement
dated as of the Cut-Off Date specified above (the "Agreement") among Morgan
Stanley Dean Witter Capital I Inc., as depositor (the "Depositor"), The
Provident Bank, as servicer (the "Servicer"), NC Capital Corporation, as
responsible party (the "Responsible Party") and U.S. Bank National Association,
as trustee (the "Trustee"). To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

         Any distribution of the proceeds of any remaining assets of the Trust
Fund will be made only upon presentment and surrender of this Class R
Certificate at the offices designated by the Trustee for such purposes or the
office or agency maintained by the Trustee in New York, New York.

         No transfer of a Class R Certificate shall be made unless the Trustee
shall have received a representation letter 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 or
arrangement subject to Section 406 of ERISA, a plan or arrangement subject to
Section 4975 of the Code or a plan subject to Similar Law, or a person acting on
behalf of any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such transfer, which representation letter shall not be an
expense of the Trustee, the Servicer or the Trust Fund. In the event that such
representation is violated, or any attempt is made to transfer to a plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section 4975 of
the Code or a plan subject to Similar Law, or a person acting on behalf of any
such plan or arrangement or using the assets of any such plan or arrangement,
such attempted transfer or acquisition shall be void and of no effect.

         Each Holder of this Class R Certificate shall be deemed by the
acceptance or acquisition an Ownership Interest in this Class R Certificate to
have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in this Class R Certificate are
expressly subject to the following provisions: (i) each Person holding or
acquiring any Ownership Interest in this Class R 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 this Class R Certificate may be registered on the Closing Date or
thereafter transferred, and the Trustee shall not register the Transfer of this
Certificate unless, in addition to the certificates required to be delivered to
the Trustee under Section 5.02(b) of the Agreement, the Trustee shall have been
furnished with a Transfer Affidavit of the initial owner or the proposed
transferee in the form attached as Exhibit G to the

                                      C-2
<PAGE>

Agreement, (iii) each Person holding or acquiring any Ownership Interest in this
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from any
other Person to whom such Person attempts to Transfer its Ownership Interest
this Class R 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 this Class R Certificate and (C) not to Transfer the Ownership
Interest in this Class R Certificate or to cause the Transfer of the Ownership
Interest in this Class R Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee and (iv) any attempted
or purported Transfer of the Ownership Interest in this Class R Certificate in
violation of the provisions herein shall be absolutely null and void and shall
vest no rights in the purported Transferee.

         Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                      C-3
<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:

                                      U.S. BANK NATIONAL ASSOCIATION,
                                        not in its individual capacity,
                                        but solely as Trustee

                                      By
                                        -------------------------------

Countersigned:

By
  -------------------------------
  Authorized Signatory of
  U.S. BANK NATIONAL ASSOCIATION,
  not in its individual capacity,
  but solely as Trustee

                                      C-4
<PAGE>

            Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1
                       Mortgage Pass-Through Certificates

         This Certificate is one of a duly authorized issue of Certificates
designated as Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account 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 thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the last Business Day of the month next preceding the month of such
Distribution Date.

         Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent

                                      C-5
<PAGE>

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 in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the offices designated by the Trustee for such purposes or the
office or agency maintained by the Trustee in New York, New York, accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust Fund will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Responsible Party and the Trustee and
any agent of the Depositor or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor, the Trustee, nor any such agent shall be affected by any notice
to the contrary.

         On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, the Servicer will have the option to repurchase, in
whole, from the Trust Fund all remaining Mortgage Loans and all property
acquired in respect of the Mortgage Loans at a purchase price determined as
provided in the Agreement. The obligations and responsibilities created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.

         Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

                                      C-6
<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

         I (We) further direct the Trustee 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

                                      C-7
<PAGE>

                            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.

                                      C-8
<PAGE>

                                    EXHIBIT D

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, AS AMENDED (THE "CODE").

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, OR, IF THE TRANSFEREE IS AN INSURANCE COMPANY, A
REPRESENTATION LETTER THAT IT IS USING THE ASSETS OF ITS GENERAL ACCOUNT AND
THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE ARE COVERED UNDER SECTIONS I
AND III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 OR AN OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE AND THE SERVICER, TO THE EFFECT THAT THE PURCHASE OR
HOLDING OF THIS CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND
BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE OR SIMILAR VIOLATION OF SIMILAR LAW AND WILL
NOT SUBJECT THE TRUSTEE OR THE SERVICER TO ANY OBLIGATION IN ADDITION TO THOSE
EXPRESSLY UNDERTAKEN IN THIS AGREEMENT OR TO ANY LIABILITY. NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE
TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE
WITHOUT THE REPRESENTATION LETTER AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.

Certificate No.                            :            1

Cut-off Date                               :             March 1, 2002

First Distribution Date                    :            April 25, 2002

Percentage Interest of this Certificate
("Denomination")                           :            100%

                                      D-1
<PAGE>

CUSIP                                      :

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.

            Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1
               Mortgage Pass-Through Certificates, Series 2002-NC1

                                     Class X

         evidencing a percentage interest in the distributions allocable
         to the Certificates of the above-referenced Class.

         Distributions in respect of this Certificate are distributable monthly
as set forth herein. This Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Servicer, the
Responsible Party or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.

         This certifies that U.S. Bank National Association, as Indenture
Trustee, is the registered owner of the Percentage Interest evidenced by this
Certificate (obtained by dividing the denomination of this Certificate by the
aggregate of the denominations of all Certificates of the Class to which this
Certificate belongs) in certain monthly distributions pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among Morgan Stanley Dean Witter Capital I Inc., as depositor (the
"Depositor"), The Provident Bank, as servicer (the "Servicer"), NC Capital
Corporation, as responsible party (the "Responsible Party") and U.S. Bank
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.

         This Certificate does not have a Certificate Balance or Pass-Through
Rate and will be entitled to distributions only to the extent set forth in the
Agreement. In addition, any distribution of the proceeds of any remaining assets
of the Trust will be made only upon presentment and surrender of this
Certificate at the offices designated by the Trustee for such purposes or the
office or agency maintained by the Trustee.

         No transfer of a Certificate of this Class shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with the 1933 Act and such laws. In the event of any
such transfer, the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached to the Pooling and Servicing
Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis

                                      D-2
<PAGE>

therefor, from the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall be an expense of the transferor.

         No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter 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 or Section 4975 of the
Code or any materially similar provisions of applicable Federal, state or local
law ("Similar Law") or a person acting on behalf of or investing plan assets of
any such plan, which representation letter shall not be an expense of the
Trustee, or (ii) if the transferee is an insurance company, a representation
letter that it is purchasing such Certificates with the assets of its general
account and that the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, or (iii) in the case of a Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA, or a plan or arrangement subject to Section 4975 of the Code (or
comparable provisions of any subsequent enactments) or a plan subject to Similar
Law, or a trustee of any such plan or any other person acting on behalf of any
such plan or arrangement or using such plan's or arrangement's assets, an
Opinion of Counsel satisfactory to the Trustee and the Servicer, which Opinion
of Counsel shall not be an expense of the Trustee, the Servicer or the Trust
Fund, addressed to the Trustee, to the effect that the purchase or holding of
such Certificate will not result in the assets of the Trust Fund being deemed to
be "plan assets" and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee or the Servicer to any obligation
in addition to those expressly undertaken in this Agreement or to any liability.

         Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.

                                     * * *

                                      D-3
<PAGE>

         IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:

                                      U.S. BANK NATIONAL ASSOCIATION,
                                        not in its individual capacity,
                                        but solely as Trustee

                                      By
                                        -------------------------------

Countersigned:

By
  -------------------------------
  Authorized Signatory of
  U.S. BANK NATIONAL ASSOCIATION,
  not in its individual capacity,
  but solely as Trustee

                                      D-4
<PAGE>

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.
            Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1
                       Mortgage Pass-Through Certificates

         This Certificate is one of a duly authorized issue of Certificates
designated as Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the "Certificates"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.

         The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account 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 thereby, and the rights,
duties and immunities of the Trustee.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

         Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.

         The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. 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

                                      D-5
<PAGE>

transfer hereof or in exchange therefor 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 in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the offices designated by the Trustee for such purposes or the
office or agency maintained by the Trustee in New York, New York, accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust Fund will be issued to the designated
transferee or transferees.

         The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         The Depositor, the Servicer, the Responsible Party and the Trustee and
any agent of the Depositor or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor, the Trustee, nor any such agent shall be affected by any notice
to the contrary.

         On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Principal Balance, the Servicer will have the option to repurchase, in whole,
from the Trust Fund all remaining Mortgage Loans and all property acquired in
respect of the Mortgage Loans at a purchase price determined as provided in the
Agreement. The obligations and responsibilities created by the Agreement will
terminate as provided in Section 9.01 of the Agreement.

         Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.

                                      D-6

<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)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.

         I (We) further direct the Trustee 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

                                      D-7
<PAGE>

                            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.

                                      D-8
<PAGE>

                                    EXHIBIT E

                    FORM OF INITIAL CERTIFICATION OF TRUSTEE

                                     [date]

[Depositor]

[Servicer]

[Originator]

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

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

          Re:  Pooling and Servicing Agreement among Morgan Stanley Dean
               Witter Capital I Inc., as Depositor, The Provident Bank,
               as and Servicer, NC Capital Corporation, as Responsible Party,
               and U.S. Bank National Association, as Trustee, Morgan Stanley
               Dean Witter Capital I Inc. Trust, Series 2002-NC1

Gentlemen:

         In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), for each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan listed
in the attached schedule), it has received:

         (i) the original Mortgage Note, endorsed as provided in the following
     form: "Pay to the order of ________, without recourse"; and

         (ii) a duly executed assignment of the Mortgage (which may be included
     in a blanket assignment or assignments).

         Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.

         The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability 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.

                                      E-1
<PAGE>

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.

                                      U.S. BANK NATIONAL ASSOCIATION,
                                        as Trustee

                                      By:
                                         ---------------------------------------

                                      Name:
                                           -------------------------------------

                                      Title:
                                            -----------------------------------

                                      E-2
<PAGE>

                                    EXHIBIT F

                         FORM OF DOCUMENT CERTIFICATION
                         AND EXCEPTION REPORT OF TRUSTEE

                                     [date]

[Depositor]

[Servicer]

[Originator]

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

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

         Re:   Pooling and Servicing Agreement among Morgan Stanley Dean
               Witter Capital I Inc., as Depositor, The Provident Bank,
               as and Servicer, NC Capital Corporation, as Responsible Party,
               and U.S Bank National Association, as Trustee, Morgan Stanley
               Dean Witter Capital I Inc. Trust, Series 2002-NC1,

Gentlemen:

         In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or listed on the
attached Document Exception Report) it has received:

         (i) The original Mortgage Note, endorsed in the form provided in
     Section 2.01 of the Pooling and Servicing Agreement, with all intervening
     endorsements showing a complete chain of endorsement from the originator to
     the last endorsee.

         (ii) The original recorded Mortgage.

         (iii) A duly executed assignment of the Mortgage in the form provided
     in Section 2.01 of the Pooling and Servicing Agreement; or, if the
     Responsible Party has certified or the Trustee otherwise knows that the
     related Mortgage has not been returned from the applicable recording
     office, a copy of the assignment of the Mortgage (excluding information to
     be provided by the recording office).

         (iv) The original or duplicate original recorded assignment or
     assignments of the Mortgage showing a complete chain of assignment from the
     originator to the last endorsee.

         (v) The original or duplicate original lender's title policy and all
     riders thereto or, any one of an original title binder, an original
     preliminary title report or an original title commitment, or a copy thereof
     certified by the title company.

                                      F-1
<PAGE>

         Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) the information set forth in items (1), (2), (7), and (9)
of the Mortgage Loan Schedule and items (1), (9) and (17) of the Data Tape
Information accurately reflects information set forth in the Custodial File.

         The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review of the Custodial File
specifically required in the Pooling and Servicing Agreement. The Trustee makes
no representations as to: (i) the validity, legality, sufficiency,
enforceability 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. Notwithstanding anything herein to the contrary, the Trustee has
made no determination and makes no representations as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as Noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or sufficient to effect the assignment
of and transfer to the assignee thereof, under the Mortgage to which the
assignment relates.

         Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.

                                      U.S. BANK NATIONAL ASSOCIATION,
                                        as Trustee

                                      By:
                                         ---------------------------------------

                                      Name:
                                           -------------------------------------

                                      Title:
                                            -----------------------------------

                                      F-2
<PAGE>

                                    EXHIBIT G

                               TRANSFER AFFIDAVIT

            Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC1,
                       Mortgage Pass-Through Certificates,
                                 Series 2002-NC1

STATE OF          )
                  ) ss.:
COUNTY OF         )

         The undersigned, being first duly sworn, deposes and says as follows:

         1. The undersigned is an officer of ___________________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the "Certificate")
issued pursuant to the Pooling and Servicing Agreement, (the "Agreement"),
relating to the above-referenced Series, by and among Morgan Stanley Dean Witter
Capital I Inc., as depositor (the "Depositor"), The Provident Bank, as servicer,
NC Capital Corporation, as Responsible Party, and U.S. Bank National
Association, as Trustee. Capitalized terms used, but not defined herein or in
Exhibit 1 hereto, shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this affidavit
on behalf of the Transferee for the benefit of the Depositor and the Trustee.

         2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate for its own account. The Transferee has no
knowledge that any such affidavit is false.

         3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.

         4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a

                                      G-1
<PAGE>

regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives and, except as
may be provided in Treasury Regulations, persons holding interests in
pass-through entities as a nominee for another Person.)

         5. The Transferee has reviewed the provisions of Section 5.02(c) of the
Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.

         6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit H to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.

         7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.

         8. The Transferee's taxpayer identification number is __________.

         9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).

         10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.

         11. *[The Transferee has computed any consideration paid to it to
acquire the Class [R][LR] Certificate in accordance with proposed U.S. Treasury
Regulations Sections 1.860E-1(a)(4)(iii) and 1.860E-1(c)(5) (or, after they have
been finalized, the final regulations) by computing present values using a
discount rate equal to the applicable Federal rate prescribed by Section 1274(d)
of the Code, compounded semi-annually.]

         [The Transferee has computed any consideration paid to it to acquire
the Class [R][LR] Certificate in accordance with proposed U.S. Treasury
Regulations Sections 1.860E-

----------------------------
*  Insert appropriate paragraph, if applicable.

                                      G-2
<PAGE>

1(a)(4)(iii) and 1.860E-1(c)(5) (or, after they have been finalized, the final
regulations) by computing present values using a discount rate at least equal to
the rate at which the Transferee regularly borrows, in the ordinary course of
its trade or business, substantial funds from unrelated third parties. The
Transferee has provided all information necessary to demonstrate to the
transferor that it regularly borrows at such rate.]

         [The transfer of the Class [R][LR] Certificate complies with Section 6
of Revenue Procedure 2001-12 (the "Revenue Procedure"), 2001-3 I.R.B. 335
(January 16, 2001) (or comparable provisions of applicable final U.S. Treasury
Regulations) and, accordingly,

         (i)   the Transferee is an "eligible corporation," as defined in
               Section 860L(a)(2) of the Code, as to which income from Class
               [R][LR] Certificate will only be taxed in the United States;

         (ii)  at the time of the transfer, and at the close of the Transferee's
               two fiscal years preceding the year of the transfer, the
               Transferee had gross assets for financial reporting purposes
               (excluding any obligation of a person related to the Investor
               within the meaning of Section 860L(g) of the Code) in excess of
               $100 million and net assets in excess of $10 million;

         (iii) the Transferee will transfer the Class [R][LR] Certificate only
               to another "eligible corporation," as defined in Section
               860(a)(2) of the Code, in a transaction that satisfies the
               requirements of Section 4 of the Revenue Procedure; and

         (iv)  the Transferee determined the consideration paid to it to acquire
               the Class [R][LR] Certificate based on reasonable market
               assumptions (including, but not limited to, borrowing and
               investment rates, prepayment and loss assumptions, expense and
               reinvestment assumptions, tax rates and other factors specific to
               the Transferee) that it has determined in good faith.]

         [Reserved]

         12. (i)______[Class A, Class M, Class B. The Transferee qualifies as an
accredited investor as defined in Rule 501(a)(1) of Regulation D of the
Securities Act.]

         (ii) [Class P, Class X. The Transferee either (i) is not an employee
benefit plan which is subject to ERISA or a plan which is subject to Section
4975 of the Code, or a plan subject to any federal, state or local law that is
substantially similar to Section 406 of ERISA or Section 4975 of the Code, and
the Transferee is not acting on behalf of or investing plan assets of such a
plan or (ii) is an insurance company using the assets of its general account
(within the meaning of PTCE 95-60) to effect such purpose and is eligible for
and satisfies all of the conditions set forth in Sections I and III of PTCE
95-60 or (iii) the purchase or holding of this Certificate will not result in
the assets of the Trust Fund being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code or similar violation of
Similar Law and will not subject the Trustee or the Servicer to any obligation
in addition to those expressly undertaken in this Agreement or to any
liability.]

                                      G-3
<PAGE>

         (iii) [Class R. The Transferee is not an employee benefit plan that is
subject to ERISA or a plan that is subject to Section 4975 of the Code or a plan
subject to any Federal, state or local law that is substantially similar to
Section 406 of ERISA, and the Transferee is not acting on behalf of or investing
plan assets of such a plan.

                                      * * *

                                      G-4
<PAGE>

         IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this _____ day of _____________, 20__.

                                     --------------------------------------
                                     Print Name of Transferee

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

[Corporate Seal]

ATTEST:

------------------------------------
[Assistant] Secretary

         Personally appeared before me the above-named __________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ___________ of the Transferee, and acknowledged that he executed the same
as his free act and deed and the free act and deed of the Transferee.

         Subscribed and sworn before me this ___ day of ________, 20__.

                                     --------------------------------------
                                     NOTARY PUBLIC

                                     My Commission expires the __ day
                                     of _________, 20__

                                      G-5
<PAGE>

                                    EXHIBIT H

                         FORM OF TRANSFEROR CERTIFICATE

                                                                __________, 20__

Morgan Stanley Dean Witter Capital I Inc.
1585 Broadway
New York, New York 10036
Attention:  Cecilia Tarrant

U.S. Bank National Association,
as Trustee,
U.S. Bank Trust Center
180 E. Fifth Street, Mezzanine Level
St. Paul, MN  55101

          Re:  Morgan Stanley Dean Witter Capital I Inc. Trust,
               Series  2002-NC1, Mortgage Pass-Through Certificates,
               Series 2002-NC1, Class ___

Ladies and Gentlemen:

         In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act and (c)
to the extent we are disposing of a Residual Certificate, we have no knowledge
the Transferee is not a Permitted Transferee.

                                          Very truly yours,

                                          --------------------------------------
                                          Print Name of Transferor

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

                                      H-1

<PAGE>

                                    EXHIBIT I

                            FORM OF RULE 144A LETTER

                                                              ____________, 20__

Morgan Stanley Dean Witter Capital I Inc.
1585 Broadway
New York, New York 10036
Attention:  Cecilia Tarrant

U.S. Bank National Association,
as Trustee,
U.S. Bank Trust Center
180 E. Fifth Street, Mezzanine Level
St. Paul, MN  55101

          Re:  Morgan Stanley Dean Witter Capital I Inc. Trust,
               Series 2002-NC1, Mortgage Pass-Through Certificates,
               Series 2002-NC1, Class ___

Ladies and Gentlemen:

         In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either we are purchasing a Class A-1 Certificate,
Class M-1 Certificate, Class M-2 Certificate or we are not an employee benefit
plan that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan or arrangement that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended, nor are we acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such acquisition or, with respect to a Class X Certificate, the purchaser
is an insurance company that is purchasing this certificate with funds contained
in an "insurance company general account" (as such term is defined in Section
V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and that the
purchase and holding of such Certificates are covered under Sections I and III
of PTCE 95-60, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the

                                      I-1
<PAGE>

Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (f) to the extent that the Certificate transferred
is a Class X Certificate, we are a bankruptcy-remote entity and (g) we are a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act and have completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2. We are aware that the sale to us
is being made in reliance on Rule 144A. We are acquiring the Certificates for
our own account or for resale pursuant to Rule 144A and further, understand that
such Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the
Securities Act.

                                      I-2
<PAGE>

                                                            ANNEX 1 TO EXHIBIT I

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

         [For Transferees Other Than Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

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

         2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $______(1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.

         ____  Corporation, etc. The Buyer is a corporation (other than a bank,
               savings and loan association or similar institution),
               Massachusetts or similar business trust, partnership, or
               charitable organization described in Section 501(c)(3) of the
               Internal Revenue Code of 1986, as amended.

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

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

----------------
(1) Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.

                                      I-3
<PAGE>

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

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

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

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

         ____  Investment Advisor. The Buyer is an investment advisor registered
               under the Investment Advisors Act of 1940.

         ____  Small Business Investment Company. Buyer is a small business
               investment company licensed by the U.S. Small Business
               Administration under Section 301(c) or (d) of the Small Business
               Investment Act of 1958.

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

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

         4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

                                      I-4
<PAGE>

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

         6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                         ---------------------------------------
                                         Print Name of Transferor

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

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

                                      I-5
<PAGE>

                                                            ANNEX 2 TO EXHIBIT I
                                                            --------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

         [For Transferees That are Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:

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

         2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

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

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

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

         4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase

                                      I-6
<PAGE>

agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.

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

         6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

                                         ---------------------------------------
                                         Print Name of Transferor

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

                                        IF AN ADVISER:

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

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

                                      I-7
<PAGE>

                                    EXHIBIT J

                               REQUEST FOR RELEASE
                                  (for Trustee)

To:  [Address]

     Re:

         In connection with the administration of the Mortgage Loans held by you
as the Trustee on behalf of the Certificateholders, we request the release, and
acknowledge receipt, of the (Custodial File/[specify documents]) for the
Mortgage Loan described below, for the reason indicated.

Mortgagor's Name, Address & Zip Code:
-------------------------------------

Mortgage Loan Number:
---------------------

Send Custodial File to:
-----------------------

Reason for Requesting Documents (check one)
-------------------------------

____1.    Mortgage Loan Paid in Full. (The Company hereby certifies that all
          amounts received in connection therewith have been credited to the
          Collection Account as provided in the Pooling and Servicing
          Agreement.)

____2.    Mortgage Loan Repurchase Pursuant to Subsection 2.03 of the Pooling
          and Servicing Agreement. (The Company hereby certifies that the
          repurchase price has been credited to the Collection Account as
          provided in the Pooling and Servicing Agreement.)

____3.    Mortgage Loan Liquidated By _________________. (The Company hereby
          certifies that all proceeds of foreclosure, insurance, condemnation or
          other liquidation have been finally received and credited to the
          Collection Account pursuant to the Pooling and Servicing Agreement.)

____4.    Mortgage Loan in Foreclosure.

____5.    Other (explain).  ____________________________________________________

          If box 1, 2 or 3 above is checked, and if all or part of the Custodial
File was previously released to us, please release to us our previous request
and receipt on file with you, as well as any additional documents in your
possession relating to the specified Mortgage Loan.

                                       J-1
<PAGE>

          If box 4 or 5 above is checked, upon our return of all of the above
documents to you as the Trustee, please acknowledge your receipt by signing in
the space indicated below, and returning this form.

                                     THE PROVIDENT BANK

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

                                      J-2
<PAGE>

                                    EXHIBIT K

                         CONTENTS OF EACH MORTGAGE FILE

         With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by the Servicer or delivered to and
retained by the Trustee, as applicable:

         (a)   The original Mortgage Note bearing all intervening endorsements,
               showing a complete chain of endorsement from the originator to
               the last endorsee endorsed "Pay to the order of
               _________________without recourse" and signed (which may be by
               facsimile signature) in the name of the last endorsee by an
               authorized officer. To the extent that there is no room on the
               face of the Mortgage Notes for endorsements, the endorsement may
               be contained on an allonge, if state law so allows and the
               Trustee is so advised by the Responsible Party that state law so
               allows.

         (b)   The original of any guaranty executed in connection with the
               Mortgage Note.

         (c)   The original Mortgage, with evidence of recording thereon or a
               certified true copy of such Mortgage submitted for recording. If
               in connection with any Mortgage Loan, the Responsible Party
               cannot deliver or cause to be delivered the original Mortgage
               with evidence of recording thereon on or prior to the Closing
               Date because of a delay caused by the public recording office
               where such Mortgage has been delivered for recordation or because
               such Mortgage has been lost or because such public recording
               office retains the original recorded Mortgage, the Responsible
               Party shall deliver or cause to be delivered to the Trustee, a
               photocopy of such Mortgage, together with (i) in the case of a
               delay caused by the public recording office, an Officer's
               Certificate of the Responsible Party or a certificate from an
               escrow company, a title company or closing attorney stating that
               such Mortgage has been dispatched to the appropriate public
               recording office for recordation and that the original recorded
               Mortgage or a copy of such Mortgage certified by such public
               recording office to be a true and complete copy of the original
               recorded Mortgage will be promptly delivered to the Trustee upon
               receipt thereof by the Responsible Party; or (ii) in the case of
               a Mortgage where a public recording office retains the original
               recorded Mortgage or in the case where a Mortgage is lost after
               recordation in a public recording office, a copy of such Mortgage
               certified by such public recording office to be a true and
               complete copy of the original recorded Mortgage.

         (d)   The originals of all assumption, modification, consolidation or
               extension agreements, with evidence of recording thereon or a
               certified true copy of such agreement submitted for recording.

                                      K-1
<PAGE>

         (e)   The original Assignment of Mortgage for each Mortgage Loan
               endorsed in blank.

         (f)   Originals of all intervening assignments of mortgage (if any)
               evidencing a complete chain of assignment from the applicable
               originator to the last endorsee with evidence of recording
               thereon or a certified true copy of such intervening assignments
               of mortgage submitted for recording, or if any such intervening
               assignment has not been returned from the applicable recording
               office or has been lost or if such public recording office
               retains the original recorded assignments of mortgage, the
               Responsible Party shall deliver or cause to be delivered to the
               Trustee, a photocopy of such intervening assignment, together
               with (i) in the case of a delay caused by the public recording
               office, an Officer's Certificate of the Responsible Party or a
               certificate from an escrow company, a title company or a closing
               attorney stating that such intervening assignment of mortgage has
               been dispatched to the appropriate public recording office for
               recordation and that such original recorded intervening
               assignment of mortgage or a copy of such intervening assignment
               of mortgage certified by the appropriate public recording office
               to be a true and complete copy of the original recorded
               intervening assignment of mortgage will be promptly delivered to
               the Trustee upon receipt thereof by the Responsible Party; or
               (ii) in the case of an intervening assignment where a public
               recording office retains the original recorded intervening
               assignment or in the case where an intervening assignment is lost
               after recordation in a public recording office, a copy of such
               intervening assignment certified by such public recording office
               to be a true and complete copy of the original recorded
               intervening assignment.

         (g)   The original mortgagee title insurance policy or attorney's
               opinion of title and abstract of title.

         (h)   The original of any security agreement, chattel mortgage or
               equivalent document executed in connection with the Mortgage (if
               provided).

         (i)   Residential loan application.

         (j)   Mortgage Loan closing statement.

         (k)   Verification of employment and income, if applicable.

         (l)   Verification of acceptable evidence of source and amount of
               downpayment.

         (m)   Credit report on Mortgagor.

         (n)   Residential appraisal report.

                                      K-2
<PAGE>

         (o)   Photograph of the Mortgaged Property.

         (p)   Survey of the Mortgaged Property.

         (q)   Copy of each instrument necessary to complete identification of
               any exception set forth in the exception schedule in the title
               policy, i.e., map or plat, restrictions, easements, sewer
               agreements, home association declarations, etc.

         (r)   All required disclosure statements.

         (s)   If required in an appraisal, termite report, structural
               engineer's report, water potability and septic certification.

         (t)   Sales Contract, if applicable.

Evidence of payment of taxes and insurance, insurance claim files,
correspondence, current and historical computerized data files (which include
records of tax receipts and payment history from the date of origination), and
all other processing, underwriting and closing papers and records which are
customarily contained in a mortgage loan file and which are required to document
the Mortgage Loan or to service the Mortgage Loan.

                                       K-3

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