Document:

Exhibit 10.34.1

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

PURCHASER:                   PAINE WEBBER REAL ESTATE SECURITIES INC.

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

SELLER:                      AMERICAN HOME MORTGAGE

ADDRESS:                     12 EAST 49TH STREET, 28TH FLOOR
                             NEW YORK, NEW YORK  10017
                             ATTENTION: _____________________________

DATE OF AGREEMENT:           FEBRUARY 26, 1999
<PAGE>

                                TABLE OF CONTENTS

                                                                          Page
                                                                          ----

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

Section 2.  Procedures for Purchases of Mortgage Loans ....................  7

Section 3.  Sale of Mortgage Loans to Takeout Investor ....................  8

Section 4.  Servicing of the Mortgage Loans ...............................  9

Section 5.  Trade Assignments ............................................. 11

Section 6.  Transfers of Mortgage Loans by Purchaser ...................... 11

Section 7.  Record Title to Mortgage Loans; Intent of Parties; Security
            Interest ...................................................... 11

Section 8.  Representations and Warranties ................................ 12

Section 9.  Covenants of Seller ........................................... 19

Section 10. Term .......................................................... 22

Section 11. Exclusive Benefit of Parties; Assignment ...................... 22

Section 12. Amendments; Waivers; Cumulative Rights ........................ 22

Section 13. Execution in Counterparts ..................................... 22

Section 14. Effect of Invalidity of Provisions ............................ 22

Section 15. Governing Law ................................................. 22

Section 16. Notices ....................................................... 22

Section 17. Entire Agreement .............................................. 23

Section 18. Costs of Enforcement .......................................... 23

Section 19. Consent to Service ............................................ 23

Section 20. Construction .................................................. 23

                                      -i-
<PAGE>

Exhibit A   Loan Purchase Detail

Exhibit B-1 Warehouse Lender's Release

Exhibit B-2 Warehouse Lender's Wire Instructions

Exhibit C-1 Seller's Release

Exhibit C-2 Seller's Wire Instructions

Exhibit D   Purchaser's Wire Instructions to Seller

Exhibit E   UCC- 1 Financing Statement

                                      -ii-
<PAGE>

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

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

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

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

            The parties hereto hereby agree as follows:

            Section 1. Definitions. Capitalized terms used but not defined
herein shall have the meanings set forth in the Custodial Agreement. As used in
this Agreement, the following terms shall have the following meanings:

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

            "Applicable Guide": The Takeout Investor's eligibility requirements
for Mortgage Loans, as applicable, and as each may be amended or supplemented
from time to time.

            "Applicable Purchase Agreement": The applicable agreement, providing
for the purchase by Takeout Investor of Mortgage Loans from Seller as such
agreement may be amended from time to time.

            "Assignee": The Chase Manhattan Bank, National Association, as agent
for certain beneficiaries pursuant to certain Repurchase Transaction Tri-Party
Custody Agreements.

            "Assignment of Mortgage Note and Pledge Agreement": With respect to
each Cooperative Loan, an assignment of the related Mortgage Note and Pledge
Agreement.

                                      -1-
<PAGE>

            "Assignment of Proprietary Lease": With respect to each Cooperative
Loan, an assignment of the related Proprietary Lease executed by the related
Mortgagor in blank.

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

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

            "Commitment Date": The date set forth in a Takeout Commitment as the
commitment date.

            "Commitment Expiration Date": With respect to any Mortgage Loan, the
date occurring 30 calendar days after the Purchase Date.

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

            "Conduit": As defined in the Custodial Agreement.

            "Conduit Submission Package": As defined in the Custodial Agreement.

            "Cooperative": The private, non-profit cooperative apartment
corporation which owns all of the real property that comprises the Project,
including the land, separate dwelling units and all common areas.

            "Cooperative Apartment": The specific dwelling unit relating to a
Cooperative Loan.

            "Cooperative Lien Search": A search for (a) federal tax liens,
mechanics' liens, lis pendens, judgments of record or otherwise against (i) the
Cooperative, (ii) the seller of the Cooperative Apartment and (iii) the
Mortgagor if the Cooperative Loan is a Refinanced Loan, (b) filings of Financing
Statements and (c) the deed of the Project into the Cooperative.

            "Cooperative Loan": A Loan that is secured by a first lien on and a
perfected security interest in Cooperative Shares and the related Proprietary
Lease granting exclusive rights to occupy the related Cooperative Apartment in
the building owned by the related Cooperative.

            "Cooperative Shares": The shares of stock issued by the Cooperative,
owned by the Mortgagor, and allocated to a Cooperative Apartment and represented
by a Stock Certificate.

                                      -2-
<PAGE>

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

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

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

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

            "Custodian":  The Chase Manhattan Bank, National Association,  and
its permitted successors.

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

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

            "Document File": The Credit File and the Conduit Submission Package.

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

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

            "Financing Statement": A financing statement in the form of a UCC-l
filed pursuant to the Uniform Commercial Code and sufficient to perfect a
security interest in the applicable state in the Cooperative Shares and Pledge
Instruments.

            "Funding Confirmation": With respect to all Mortgage Loans purchased
by Purchaser from Seller via a single wire funds transaction on a particular
Business Day, the trade confirmation from Purchaser to Seller confirming the
terms of Purchaser's purchase of such Mortgage Loans.

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

                                      -3-
<PAGE>

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

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

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

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

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

            "Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage or Pledge Agreement, as the case may be.

            "Mortgaged Property": Either (i) the property subject to the lien of
the Mortgage securing a Mortgage Note or (ii) in the case of a Cooperative Loan
the underlying property securing the Mortgage Note which consists of the
Cooperative Shares and Proprietary Lease.

            "Mortgagor": The obligor on a Mortgage Note.

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

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

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

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

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

                                      -4-
<PAGE>

            "Pledge Agreement": With respect to each Cooperative Loan, the
specific agreement creating a first lien on and pledge of the Cooperative Shares
and the appurtenant Proprietary Lease securing a Cooperative Loan.

            "Pledge Instruments": With respect to each Cooperative Loan, the
related Stock Power, the Assignment of the Proprietary Lease and the Assignment
of Mortgage Note and Pledge Agreement.

            "Project": With respect to each Cooperative Loan, all real property
owned by the related Cooperative including the land, separate dwelling units and
all common areas.

            "Proprietary Lease": With respect to each Cooperative Loan, a lease
on the related Cooperative Apartment evidencing the possessory interest of the
Mortgagor in such Cooperative Apartment.

            "Purchase Advice": An approved purchase list delivered to Purchaser
by the Takeout Investor via electronic or facsimile transmission, confirming the
amount of Takeout Proceeds allocable to each Mortgage Loan purchased by Takeout
Investor.

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

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

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

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

            "Recognition Agreement": With respect to each Cooperative Loan, an
agreement whereby a Cooperative and a lender with respect to a Cooperative Loan
(i) acknowledge that such lender may make, or intends to make, such Cooperative
Loan, and (ii) make certain agreements with respect to such Cooperative Loan.

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

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

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

                                      -5-
<PAGE>

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

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

            "Settlement Information": The Purchase Advice or group of Purchase
Advices which shall identify each Mortgage Loan by the Mortgagor's name, and of
which the aggregate disbursement amount equals the precise dollar amount of
Takeout Proceeds to be received by Purchaser from Agreement.

            "Stock Certificate": With respect to each Cooperative Loan, the
certificate evidencing ownership of the related Cooperative Shares issued by the
Cooperative.

            "Stock Power": With respect to each Cooperative Loan, an assignment
of the related Stock Certificate or an Assignment of the Cooperative Shares
issued by the Cooperative.

            "Successor  Servicer":  An  entity  designated  by  Purchaser,  in
conformity with Section 16, to replace Seller as servicer for Purchaser.

            "Takeout Commitment": Commitment of Seller to sell one or more
Mortgage Loans to Takeout Investor and of Takeout Investor to purchase one or
more Mortgage Loans from Seller.

            "Takeout Investor": The applicable Conduit.

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

            "Third Party Underwriter": Any third party, including but not
limited to a mortgage loan pool insurer, who underwrites the Mortgage Loan(s)
prior to the purchase by Purchaser.

            "Third Party Underwriter's Certificate": A certificate issued by a
Third Party Underwriter with respect to a Mortgage Loan, certifying that such
Mortgage Loan complies with its underwriting requirements.

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

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

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

                                      -6-
<PAGE>

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

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

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

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

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

            Section 2. Procedures for Purchases of Mortgage Loans. (a)(1)
Purchaser may, in its sole discretion, from time to time, purchase one or more
Mortgage Loans from Seller. Seller shall be deemed to make for the benefit of
Purchaser, as of the applicable dates specified in Section 8, the
representations and warranties set forth in Section 8 in respect of each such
Mortgage Loan.

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

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

                                      -7-
<PAGE>

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

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

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

            Section 3. Sale of Mortgage Loans to Takeout Investor. (a)(1) Upon
the sale to Takeout Investor of a Mortgage Loan previously purchased by
Purchaser hereunder, Seller shall cause Takeout Proceeds relating to such
Mortgage Loan to be paid to Purchaser in accordance with Purchaser's Wire
Instructions to Seller.

            (a)(2) All Takeout Proceeds received by Purchaser from Takeout
Investor after 3:00 P.M. New York City time on a Business Day (or at any time on
a day which is not a Business Day) shall be deemed, with regard to determining
the Settlement Date, received by Purchaser on the next succeeding Business Day.

            (b)(1) If any Mortgage Loan is rejected by Takeout Investor because
it is a Defective Mortgage Loan, Seller shall promptly notify Purchaser. If any
Mortgage Loan is a Defective Mortgage Loan on the Purchase Date and in
Purchaser's sole judgement the defects in such Mortgage Loan will not be cured
(or in fact are not cured) by Seller prior to the Commitment Expiration Date,
the Pass-Through Rate applicable to such Defective Mortgage Loan shall, on such
Commitment Expiration Date, increase by the Incremental Pass-Through Rate and
Purchaser, at its election, may require that Seller, upon receipt of notice from
Purchaser, immediately repurchase Purchaser's ownership interest in such
Defective Mortgage Loan by remitting to Purchaser (in immediately available
funds in accordance with Purchaser's instructions) the amount paid by Purchaser
for such Defective Mortgage Loan plus interest at the Pass-Through Rate on the
principal amount thereof from the Purchase Date of such Mortgage Loan to the
date of such repurchase. If at any time prior to the repurchase of a Defective
Mortgage Loan by Seller or the purchase of a Mortgage Loan by Takeout Investor,
Seller receives the Mortgage Note or any other portion of the Conduit Submission
Package, Seller shall promptly forward such Mortgage Note and/or other portion
of the Conduit Submission Package to Purchaser.

                                      -8-
<PAGE>

            (b)(2) If Seller fails to comply with its obligations in the manner
described in Section 3(b)(1), upon receipt by Seller of notice from Purchaser,
Seller's rights and obligations to service Mortgage Loans, as provided in this
Agreement, shall terminate. If an Act of Insolvency occurs at any time, Seller's
rights and obligations to service the Mortgage Loans, as provided in this
Agreement, shall terminate immediately, without any notice or action by
Purchaser. Upon any such termination, Purchaser is hereby authorized and
empowered as the exclusive agent for Seller to sell and transfer such rights to
service the Mortgage Loans for such price and on such terms and conditions as
Purchaser shall reasonably determine, and Seller shall not otherwise attempt to
sell or transfer such rights to service without the prior consent of Purchaser.
Seller shall perform all acts and take all action so that all files and
documents relating to the Mortgage Loans held by Seller, together with all
escrow amounts relating to such Mortgage Loans, are delivered to Successor
Servicer. To the extent that the approval of a Third Party Underwriter or any
other person is required for any such sale or transfer, Seller shall fully
cooperate with Purchaser to obtain such approval. Upon exercise by Purchaser of
its remedies under this Section 3(b)(2), Seller hereby authorizes Purchaser to
receive all amounts paid by any purchaser of such rights to service the Mortgage
Loans and to remit such amounts to Seller subject to Purchaser's rights of
set-off under this Agreement. Upon exercise by Purchaser of its remedies under
this Section 3(b)(2), Purchaser's obligation to pay and Seller's right to
receive any portion of the Performance Fee relating to such Mortgage Loans shall
automatically be canceled and become null and void, provided that such
cancellation shall in no way relieve Sel1er or otherwise affect the obligation
of Seller to indemnify and hold Purchaser harmless as specified in Section 3(c).

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

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

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

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

            Section 4. Servicing of the Mortgage Loans. (a) Seller shall service
and administer each Mortgage Loan on behalf of Purchaser in accordance with
prudent mortgage loan servicing standards and procedures generally accepted in
the mortgage banking industry and

                                      -9-
<PAGE>

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

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

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

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

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

            (3) If a Mortgage Loan is not purchased by Takeout Investor on or
      before the Commitment Expiration Date, during the period thereafter that
      Seller remains as servicer,

                                      -10-
<PAGE>

      all amounts deposited in the Custodial Account shall be released only in
      accordance with a Purchaser's written instructions.

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

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

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

            Section 7. Record Title to Mortgage Loans; Intent of Parties;
Security Interest. (a) From and after the delivery of the related Conduit
Submission Package, and subject to the remedies of Purchaser in Section 3,
Seller shall remain the last named payee or endorsee of each Mortgage Note and
the mortgagee or assignee of record of each Mortgage in trust for the benefit of
Purchaser, for the sole purpose of facilitating the servicing of such Mortgage
Loan.

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

            (c) Purchaser and Seller confirm that the transactions contemplated
herein are intended to be sales of the Mortgage Loans by Seller to Purchaser
rather than borrowings secured by the Mortgage Loans. In the event, for any
reason, any transaction is construed by any court or regulatory authority as a
borrowing rather than as a sale, the Seller and Purchaser intend that Purchaser
or Assignee, as the case may be, shall have a perfected first priority security
interest in the Collateral, free and clear of adverse claims. In such case,
Seller shall be deemed to have hereby granted to Purchaser or Assignee, as the
case may be, a first priority security interest in and lien upon the Collateral,
free and clear of adverse claims. In such event, this Agreement shall constitute
a security agreement, the Custodian shall be deemed to be an independent

                                      -11-
<PAGE>

custodian for purposes of perfection of the security interest granted to
Purchaser or Assignee, as the case may be, and Purchaser or Assignee, as the
case may be, shall have all of the rights of a secured party under applicable
law. Seller shall, not later than the date of the first purchase of a Mortgage
Loan by Purchaser under this Agreement, deliver to Purchaser a UCC- 1 Financing
Statement, executed by Seller, containing a description of collateral in the
form attached hereto in Exhibit E.

            Section 8. Representations and Warranties. (a) Seller hereby
represents and warrants to Purchaser as of the date hereof and as of the date of
each delivery of a Conduit Submission Package that:

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

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

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

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

                                      -12-
<PAGE>

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

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

            (vii) There is no action, suit, proceeding, inquiry or
      investigation, at law or in equity, or before, or by any court, public
      board or body pending or, to Seller's knowledge, threatened against or
      affecting Seller (or, to Seller's knowledge, any basis therefor) wherein
      an unfavorable decision, ruling or finding would adversely affect the
      validity of enforceability of this Agreement, the Custodial Agreement or
      any agreement or instrument to which Seller is a party and which is used
      or contemplated for use in the consummation of the transactions
      contemplated hereby, would adversely affect the proceedings of Seller in
      connection herewith or would or could materially and adversely affect
      Seller's ability to carry out its obligations hereunder.

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

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

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

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

            (iv) Each Mortgage is a valid and subsisting first or second lien on
      the property therein described as indicated on the related Loan Purchase
      Detail delivered by Seller to Purchaser, and the Mortgaged Property is
      free and clear of all encumbrances and liens having priority over the lien
      of the Mortgage except for liens for real estate taxes and special
      assessments not yet due and payable and, in the case of any second lien,
      the mortgage that secures the related first lien mortgage loan. Any pledge
      account, security agreement, chattel mortgage or equivalent document
      related to, and delivered to Purchaser with the Mortgage, establishes in
      Seller a valid and subsisting first lien on the

                                      -13-
<PAGE>

      property described therein, and Seller has full right to sell and assign
      the same to Purchaser;

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

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

            (vii) There is no default, breach, violation or event of
      acceleration existing under the Mortgage or Pledge Agreement, as the case
      may be, or the related 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 of acceleration;
      and Seller has not waived any default, breach, violation or event of
      acceleration;

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

            (ix) The Mortgage Note and the related Mortgage or Pledge Agreement
      are genuine and each is the legal, valid and binding obligation of the
      maker thereof, enforceable in accordance with its terms. All parties to
      the Mortgage Note and the

                                      -14-
<PAGE>

      related Mortgage or Pledge Agreement had legal capacity to execute the
      Mortgage Note and the related Mortgage or Pledge Agreement and each
      Mortgage Note and related Mortgage or Pledge Agreement have been duly and
      properly executed by the Mortgagor. No Mortgagor is a partnership, trust
      or corporation;

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

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

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

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

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

            (xv) The Mortgage Loan was originated free of any "original issue
      discount" with respect to which the owner of the Mortgage Loan could be
      deemed to have income pursuant to Sections 1271 et seq. of the Internal
      Revenue Code;

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

            (xvii) With respect to any Mortgage that is a first lien at
      origination, the Mortgaged Property was free and clear of all mechanics'
      and materialmen's liens or liens

                                      -15-
<PAGE>

      in the nature thereof which are or could be prior to the Mortgage lien,
      and no rights are outstanding that under law could give rise to any such
      lien;

            (xviii) At origination, all of the improvements which were included
      for the purpose of determining the appraised value of the Mortgaged
      Property lay wholly within the boundaries and building restriction lines
      of such property, and no improvements on adjoining properties encroach
      upon the Mortgaged Property;

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

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

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

                                      -16-
<PAGE>

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

            (xxiii) Except to the extent not required by the Applicable Guide,
      at the time that the related Mortgage Loan was made the Mortgagor
      represented that the Mortgagor would occupy such Mortgaged Property as
      Mortgagor's primary residence;

            (xxiv) Except with respect to Cooperative Loans, the Mortgaged
      Property consists of a single parcel of real property;

            (xxv) There are no circumstances or conditions with respect to the
      Mortgage or Pledge Agreement, as the case may be, the Mortgaged Property,
      the Mortgagor or the Mortgagor's credit standing that can be reasonably
      expected to cause Takeout Investor or private institutional investors to
      regard the Mortgage Loan as an unacceptable investment, cause the Mortgage
      Loan to become delinquent or adversely affect the value or marketability
      of the Mortgage Loan;

            (xxvi) The Document File contains or shall contain prior to the
      Commitment Expiration Date each of the documents and instruments specified
      to be included therein duly executed and in due and proper form and each
      such document or instrument is in form acceptable to Takeout Investor.
      Each Mortgage Note, Mortgage and Pledge Agreement are on forms approved by
      Takeout Investor;

            (xxvii) Except with respect to Cooperative Loans, each Mortgage Loan
      is covered by a mortgage title insurance policy acceptable to Takeout
      Investor, issued by, and the valid and binding obligation of, a title
      insurer acceptable to Takeout Investor, and qualified to do business in
      the jurisdiction where the property subject to the Mortgage is located,
      insuring Seller, its successors and assigns, as to the first priority lien
      of the Mortgage in the original principal amount of the Mortgage Loan.
      Seller is the named insured and the sale insured of such mortgage title
      insurance policy, the assignment to Purchaser of Seller's interest in such
      mortgage title insurance policy does not require the consent of or
      notification to the insurer, such mortgage title insurance policy is in
      full force and effect and will be in full force and effect and inure to
      the benefit of Purchaser upon the consummation of the transactions
      contemplated by this Agreement and no claims have been made under such
      mortgage title insurance policy and no prior holder of the related
      Mortgage, including Seller, has done, by act or omission, anything which
      would impair the coverage of such mortgage title insurance policy;

            (xxviii) The loan-to-value ratio of each Mortgage Loan does not
      exceed the maximum loan-to-value ratio permitted by the Applicable Guide.
      All provisions of each related primary mortgage insurance policy have been
      and are being complied with, and such policy is written with a private
      mortgage insurance company acceptable to the Takeout Investor, is the
      binding obligation of such insurer, is in full force and effect, and all
      premiums due thereunder have been paid. Seller has not engaged in any act
      or omission, and Seller has no knowledge of any act or omission by or on
      behalf of the

                                      -17-
<PAGE>

      related Mortgagor or any other person, which act or omission would impair
      the coverage or validity of any such primary mortgage insurance policy,
      the benefit of the endorsement provided for in the Applicable Guide, or
      the validity or binding effect of either. Any Mortgage Loan subject to a
      primary mortgage insurance policy obligates the Mortgagor thereunder to
      maintain such primary mortgage insurance policy and to pay all premiums
      and charges in connection therewith. The interest rate for the Mortgage
      Loan is net of any such insurance premiums;

            (xxix) With respect to each Cooperative Loan, each Pledge Agreement
      creates a valid, enforceable and subsisting first security interest in the
      Collateral securing the related Mortgage Note subject only to (a) the lien
      of the related Cooperative for unpaid assessments representing the
      Obligor's pro rata share of the Cooperative's payments for its blanket
      mortgage, current and future real property taxes, insurance premiums,
      maintenance fees and other assessments to which like collateral is
      commonly subject and (b) other matters to which like collateral is
      commonly subject which do not materially interfere with the benefits of
      the security intended to be provided by the Pledge Agreement; provided,
      however, that the appurtenant Proprietary Lease may be subordinated or
      otherwise subject to the lien of any mortgage on the Project. There are no
      liens against or security interests in the Collateral which have priority
      over the lender's security interest in the Collateral, and such priority
      interest cannot be created in the future;

            (xxx) With respect to each Cooperative Loan, all parties to the
      Mortgage Note and the Mortgage Loan had legal capacity to execute and
      deliver the Mortgage Note, the Pledge Agreement, the Proprietary Lease,
      the Stock Power, the Recognition Agreement, the Financing Statement and
      the Assignment of the Proprietary Lease and such documents have been duly
      and properly executed by such parties. Each Stock Power (i) has all
      signatures guaranteed or (ii) if all signatures are not guaranteed, then
      such Cooperative Shares will be transferred by the stock transfer agent of
      the Cooperative if the Company undertakes to convert the ownership of the
      collateral securing the related Cooperative Loan;

            (xxxi) With respect to each Cooperative Loan, there is no default in
      complying with the terms of the Mortgage Note, the Pledge Agreement and
      the Proprietary Lease and all maintenance charges and assessments
      (including assessments payable in the future installments, which
      previously became due and owing) have been paid. The Company has the right
      under the terms of the Mortgage Note, Pledge Agreement and Recognition
      Agreement to pay any maintenance charges or assessments owed by the
      Mortgagor;

            (xxxii) With respect to each Cooperative Loan, a Cooperative Lien
      Search has been made by a company competent to make the same which company
      is acceptable to FNMA and qualified to do business in the jurisdiction
      where the Cooperative Apartment is located and each entity that holds
      title (fee or an acceptable leasehold estate) to the real property and
      improvements constituting the Cooperative Apartment qualifies as a
      "cooperative housing corporation" as defined in Section 216 of the Code;

                                      -18-
<PAGE>

            (xxxiii) With respect to each Cooperative Loan, (i) the terms of the
      related Proprietary Lease is longer than the terms of the Cooperative
      Loan, (ii) there is no provision in any Proprietary Lease which requires
      the Mortgagor to offer for sale the Cooperative Shares owned by such
      Mortgagor first to the Cooperative, (iii) there is no prohibition in any
      Proprietary Lease against pledging the Cooperative Shares or assigning the
      Proprietary Lease and (iv) the Recognition Agreement is on a form of
      agreement published by the Aztech Document Systems, Inc. or includes
      provisions which are no less favorable to the lender than those contained
      in such agreement; and

            (xxxiv) With respect to each Cooperative Loan, the related
      Cooperative Apartment, 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 Cooperative Apartment and the
      related Project and, with respect to the use and occupancy of the same,
      including but not limited to certificates of occupancy, have been made or
      obtained from the appropriate authorities.

            The representations and warranties of Seller in this Section 8 are
unaffected by and supersede any provision in any endorsement of any Mortgage
Loan or in any assignment with respect to such Mortgage Loan to the effect that
such endorsement or assignment is without recourse or without representation or
warranty. With respect to each Mortgage Loan purchased by Purchaser hereunder,
to the extent that any representation or warranty made by Seller is either not
required by Takeout Investor or is waived by Takeout Investor, Purchaser hereby
agrees to waive such representation or warranty if such Mortgage Loan is
purchased by Takeout Investor from Purchaser, in accordance with the terms of
the related Takeout Commitment.

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

            (a)   Seller shall deliver to Purchaser:

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

            (ii) Within sixty (60) days after the end of each of the first three
      fiscal quarters of each fiscal year of Seller, unaudited consolidated
      balance sheets and consolidated statements of income, all to be in a form
      acceptable to Purchaser, showing the financial condition and results of
      operations of Seller and its consolidated subsidiaries on a consolidated
      basis as of the end of each such quarter and for the then elapsed portion
      of the fiscal year. setting forth, in each case, in comparative form the
      corresponding figures for the corresponding periods of the preceding
      fiscal year, certified by a financial officer

                                      -19-
<PAGE>

      of Seller (acceptable to Purchaser) as presenting fairly the financial
      position and results of operations of Seller and its consolidated
      subsidiaries and as having been prepared in accordance with generally
      accepted accounting principles consistently applied, in each case, subject
      to normal year-end audit adjustments;

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

            (iv) Promptly upon becoming aware thereof, notice of (l) the
      commencement of, or any determination in, any legal, judicial or
      regulatory proceedings, (2) any dispute between Seller or its Parent
      Company and any governmental or regulatory body, (3) any event or
      condition, which, in any case of (1) or (2) if adversely determined, would
      have a material adverse effect on (A) the validity or enforceability of
      this Agreement, (B) the financial condition or business operations of
      Seller, or (C) the ability of Seller to fulfill its obligations under this
      Agreement or (4) any material adverse change in the business, operations,
      prospects or financial condition of Seller, including, without limitation,
      the insolvency of Seller or its Parent Company;

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

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

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

            (viii) A copy of (1) the articles of incorporation of Seller and any
      amendments thereto, certified by the Secretary of State of Seller's state
      of incorporation, (2) a copy of Seller's by-laws, together with any
      amendments thereto, (3) a copy of the resolutions adopted by Seller's
      Board of Directors authorizing Seller to enter into this Agreement and the
      Custodial Agreement and authorizing one or more of Seller's officers to
      execute

                                      -20-
<PAGE>

      the documents related to this Agreement and Custodial Agreement, and (4) a
      certificate of incumbency and signature of each officer of Seller
      executing any document in connection with this Agreement.

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

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

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

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

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

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

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

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

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

            (k) The Seller acknowledges that the Purchaser has the right to
perform continuing due diligence reviews with respect to the Mortgage Loans, for
purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and the Seller agrees that upon
reasonable (but no less than one (1) Business Day's) prior notice to the Seller,
the Purchaser or its authorized representatives will be permitted during normal
business hours to examine, inspect, make copies of, and make extracts of, the
Mortgage Files and

                                      -21-
<PAGE>

any and all documents, records, agreements, instruments or information relating
to such Mortgage Loans in possession, or under the control, of the Seller and/or
Custodian. The Seller also shall make available to the Purchaser a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Mortgage Files and Mortgage Loans. The Seller and Purchaser
further agree that all out-of-pocket costs and expenses incurred by the
Purchaser in connection with the Purchaser's activities pursuant to this Section
9(k) shall be paid for by the Seller, provided that, Purchaser shall pay any
such costs if such due diligence is conducted more often than two (2) times in a
calendar year.

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

            Section 11. Exclusive Benefit of Parties; Assignment. This Agreement
is for the exclusive benefit of the parties hereto and their respective
successors and assigns and shall not be deemed to give any legal or equitable
right to any other person, including the Custodian. Except as provided in
Section 6, no rights or obligations created by this Agreement may be assigned by
any party hereto without the prior written consent of the other parties.

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

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

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

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

            Section 16. Notices. Any notices, consents, elections, directions
and other communications given under this Agreement shall be in writing and
shall be deemed to have been duly given when telecopied or delivered by
overnight courier to, personally delivered to, or

                                      -22-
<PAGE>

on the third day following the placing thereof in the mail, first class postage
prepaid to, the respective addresses set forth on the cover page hereof for
Seller and Purchaser, or to such other address as either party shall give notice
to the other party pursuant to this Section 16. Notices to Assignee shall be
given to such address as Assignee shall provide to Seller in writing.

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

            Section 18. Costs of Enforcement. In addition to any other indemnity
specified in this Agreement, in the event of a breach by Seller of this
Agreement, the Custodial Agreement or a Takeout Commitment, Seller agrees to pay
the reasonable attorneys' fees and expenses of Purchaser and, when applicable,
Assignee incurred as a consequence of such breach.

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

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

                                      -23-
<PAGE>

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

                                   PAINE WEBBER REAL ESTATE
                                      SECURITIES INC.

                                   By: /s/ George A. Mangiaracina
                                       ----------------------------------------
                                       Name:   GEORGE A. MANGIARACINA
                                       Title:  SENIOR VICE PRESIDENT

                                   AMERICAN HOME MORTGAGE
                                      (Seller's Name)

                                   By: /s/ Michael Strauss
                                       ----------------------------------------
                                       Name:    Michael Strauss
                                       Title:   President
                                       Address: (if different from cover page):

                                      -24-Exhibit 10.34.2

                       MORTGAGE LOAN REPURCHASE AGREEMENT
                       ----------------------------------

PURCHASER:              PAINE WEBBER REAL ESTATE SECURITIES

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

SELLER:                 AMERICAN HOME MORTGAGE

ADDRESS:                12 EAST 49th STREET, 28th FLOOR
                        NEW YORK, NEW YORK 10017
                        ATTENTION:______________________

DATE OF AGREEMENT:      FEBRUARY 26, 1999
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

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

Section 2.  Procedures for Purchases of Mortgage Loans......................11

Section 3.  Procedure for Repurchases of Mortgage Loans.....................15

Section 4.  Terms of Each Transaction.......................................17

Section 5.  Cash Account....................................................18

Section 6.  Servicing of the Mortgage Loans.................................18

Section 7.  Remedies........................................................19

Section 8.  Transfers of Mortgage Loan by Purchaser.........................21

Section 9.  Record Title to Mortgage Loans; Intent of Parties; Security
            Interest........................................................21

Section 10. Representations and Warranties..................................22

Section 11. Covenants of Seller.............................................30

Section 12. Term............................................................32

Section 13. Exclusive Benefit of Parties; Assignment........................32

Section 14. Amendments; Waivers; Cumulative Rights..........................32

Section 15. Execution in Counterparts.......................................33

Section 16. Effect of Invalidity of Provisions..............................33

Section 17. Governing Law...................................................33

Section 18. Notices.........................................................33

Section 19. Entire Agreement................................................33

Section 20. Costs of Enforcement............................................33

Section 21. Consent to Service..............................................33

Section 22. Construction....................................................33

                                      -i-
<PAGE>

Exhibit A   Closing Loan Purchase Detail

Exhibit B   Rewarehousing Loan Purchase Detail

Exhibit C   Conversion Loan Purchase Detail

Exhibit D   Withdrawal/Deposit Notice

Exhibit E   Cash Account Wire Instructions

Exhibit F   Cash Account Adjustment Notice

Exhibit G   Escrow Agent Standing Wire Instructions

Exhibit H   Purchaser's Wire Instructions to Seller

Exhibit I   UCC- 1 Financing Statement

Exhibit J   Seller's Delivery Instructions

Exhibit K   Seller's Release

Exhibit L   Seller's Wire Instructions

Exhibit M   Warehouse Lender's Release

Exhibit N   Warehouse Lender's Release

Exhibit O   Warehouse Lender's Wire Instructions

Exhibit P   MBS Swap Funding Program Selection Notice

Exhibit Q   Request For Mortgage Loan Shipment

Exhibit R   MBS Swap Shipment Documents

                                      -ii-
<PAGE>

                          MORTGAGE REPURCHASE AGREEMENT
                          -----------------------------

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

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

Seller is engaged, among other pursuits, in the business of originating,
purchasing and selling Mortgage Loans. Purchaser is engaged in, among other
pursuits, the business of purchasing Mortgage Loans.

Seller has requested Purchaser, and Purchaser is willing from time to time, to
enter into repurchase agreements with Seller in accordance with this Agreement
for the purpose of facilitating Seller's origination of Mortgage Loans. It is
contemplated by the parties hereto that the Mortgage Loans subject to this
Agreement, from time to time, will become the subject of transactions in which
Purchaser purchases such Mortgage Loans from Seller subject to an obligation of
Seller to repurchase such Mortgage Loans, and Seller subsequently will offer to
sell such Mortgage Loans to Purchaser, and Purchaser, pursuant to one of the
PWRES Purchase Programs, may elect to purchase such Mortgage Loans from Seller.

      The parties hereto hereby agree as follows:

      Section 1. Definitions.

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

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

            "Assignee": The Chase Manhattan Bank, National Association, as agent
      for certain beneficiaries pursuant to certain Repurchase Transaction
      Tn-Party Custody Agreements.

            "Assignment of Mortgage Note and Pledge Agreement": With respect to
      each Cooperative Loan, an assignment of the related Mortgage Note and
      Pledge Agreement.

            "Assignment of Proprietary Lease": With respect to each Cooperative
      Loan, an assignment of the related Proprietary Lease executed by the
      related Mortgagor in blank.

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

            "Cash Account": A separate cash account established and maintained
      by Seller at Paine Webber Real Estate Securities Inc. under the conditions
      set forth in Section 5.

            "Cash Account Adjustment": An adjustment to the Cash Account Balance
      pursuant to a Cash Account Adjustment Notice.

            "Cash Account Adjustment Notice": The cash account adjustment
      notice, in the form of Exhibit F, to be used by Purchaser to notify Seller
      of any adjustments to the Cash Account Balance.

            "Cash Account Balance": The net amount of funds in the Cash Account.

            "Cash Account Interest Accrual": The simple interest calculation
      posted on the last Business Day of each month resulting from the product
      of each Business Day's Cash Account Balance and Cash Account Interest
      Rate.

            "Cash Account Interest Rate": With respect to each month, the
      average opening federal funds rate for such month. The opening federal
      funds rate on a Business Day shall be counted as the Cash Account Interest
      Rate until the next Business Day.

            "Cash Account Wire Instructions": The wire instructions, set forth
      in a letter in the form of Exhibit E, to be used for the payment of funds
      to Seller.

            "Cash Window Funding Program": A program designed by Purchaser in
      which Seller may now or hereafter participate pursuant to the terms of the
      Custodial Agreement and Purchaser's Cash Window Mortgage Loan Purchase
      Agreement, between Seller and Purchaser as amended from time to time.

            "Cash Window Submission Package": The documents required to be
      delivered by Seller to Custodian under the Cash Window Funding Program.

                                      -2-
<PAGE>

            "Closing Loan Purchase Detail": A loan purchase detail, prepared by
      Seller and delivered concurrently by Seller to Purchaser and Custodian via
      facsimile transmission in the form of Exhibit A or via electronic
      transmission in a form acceptable to Purchaser, containing certain
      information regarding the characteristics of a Mortgage Loan being offered
      for sale by Seller to Purchaser under a Closing Transaction.

            "Closing Transaction": Any sale of a Mortgage Loan by Seller to
      Purchaser, structured as either a Wet Funding or a Dry Funding, wherein
      Purchaser wires the Disbursement Amount in accordance with the Escrow
      Agent Standing Wire Instructions subject to an obligation of Seller to
      repurchase such Mortgage Loan pursuant to this Agreement.

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

            "Collateral Receipt": With respect to each Wet Mortgage Loan, the
      receipt by Custodian on a Business Day of a Dry Submission Package, Cash
      Window Submission Package, or Conduit Submission Package.

            "Collateral Receipt Adjustment": The process initiated by Collateral
      Receipt wherein the Pass-Through Rate on a Wet Mortgage Loan is reduced,
      effective from the date of Collateral Receipt through one calendar day
      prior to the Repurchase Date.

            "Collateral Receipt Date": With respect to each Wet Mortgage Loan,
      the Business Day on which a Collateral Receipt occurs.

            "Conduit Funding Program": A program designed by Purchaser in which
      Seller participates pursuant to the terms of the Custodial Agreement and
      Purchaser's Conduit Mortgage Loan Purchase Agreement dated as of the date
      set forth on the cover sheet thereof, between Seller and Purchaser as
      amended from time to time.

            "Conduit Submission Package": The documents required to be delivered
      by Seller to Custodian under the Conduit Funding Program.

            "Conforming Mortgage Loan": A Mortgage Loan having an original
      principal balance that does not exceed the maximum principal balance of a
      mortgage loan that is eligible for sale to FNMA.

            "Conversion Loan Purchase Detail": A loan purchase detail, prepared
      by Seller and delivered concurrently by Seller to Purchaser and Custodian
      via facsimile transmission in the form of Exhibit C or via electronic
      transmission in a form acceptable to Purchaser, containing certain
      information regarding the characteristics of a Mortgage Loan that is
      subject to repurchase and that is subsequently offered to Purchaser under
      the Cash Window Funding Program or the Conduit Funding Program.

                                      -3-
<PAGE>

            "Cooperative": The private, non-profit cooperative apartment
      corporation which owns all of the real property that comprises the
      Project, including the land, separate dwelling units and all common areas.

            "Cooperative Apartment": The specific dwelling unit relating to a
      Cooperative Loan.

            "Cooperative Lien Search": A search for (a) federal tax liens,
      mechanics' liens, lis pendens, judgments of record or otherwise against
      (i) the Cooperative, (ii) the seller of the Cooperative Apartment and
      (iii) the Mortgagor if the Cooperative Loan is a Refinanced Loan, (b)
      filings of Financing Statements and (c) the deed of the Project into the
      Cooperative.

            "Cooperative Loan": A Loan that is secured by a first lien on and a
      perfected security interest in Cooperative Shares and the related
      Proprietary Lease granting exclusive rights to occupy the related
      Cooperative Apartment in the building owned by the related Cooperative.

            "Cooperative Shares": The shares of stock issued by the Cooperative,
      owned by the Mortgagor, and allocated to a Cooperative Apartment and
      represented by a Stock Certificate.

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

            "Custodial Account": A separate custodial account, established and
      maintained by Seller under the conditions set forth in Section 6(b), for
      the deposit by Seller of all collections in respect of a Mortgage Loan
      that are payable to Purchaser as the owner of the Mortgage Loan.

            "Custodial Agreement": The Mortgage Loan Custodial Agreement, dated
      as of the date set forth on the cover sheet thereof, among Seller,
      Purchaser and Custodian, as amended from time to time. Such Mortgage Loan
      Custodial Agreement governs Purchaser's Whole Loan Finance Program, Cash
      Window Funding Program and Conduit Funding Program.

            "Custodial Fee": A fee payable to Custodian by Seller in the amount
      set forth on the related Funding Confirmation or as provided pursuant to
      Section 8 of the Custodial Agreement.

            "Custodian": Bankers Trust Company, and its permitted successors
      hereunder.

            "Defective Mortgage Loan": A Mortgage Loan that is not in compliance
      with this Agreement.

                                      -4-
<PAGE>

            "Desired Funding Date": The Business Day indicated by the Seller on
      the Closing Loan Purchase Detail or the Rewarehousing Loan Purchase
      Detail, on which Seller desires Purchaser to purchase a Mortgage Loan via
      a Wet Funding or a Dry Funding.

            "Disbursement Amount": With respect to a Mortgage Loan, the amount
      set forth on the related Closing Loan Purchase Detail or Rewarehousing
      Loan Purchase Detail as the "Disbursement Amount."

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

            "Document File": The Credit File and the Dry Submission Package.

            "Dry Funding": Either (i) a Closing Transaction initiated by the
      delivery by Seller, either via electronic or facsimile transmission to
      Purchaser and Custodian of a Closing Loan Purchase Detail and the receipt
      by Custodian of a Dry Submission Package or (ii) a Rewarehousing
      Transaction initiated by the delivery by Seller, either via electronic or
      facsimile transmission concurrently to Purchaser and Custodian, of a
      Rewarehousing Loan Purchase Detail, a Warehouse Lender's or Seller's
      Release and the Custodian's receipt of a Dry Submission Package.

            "Dry Mortgage Loan": A Mortgage Loan with respect to which (i)
      Custodian has received a Dry Submission Package and (ii) no Repurchase has
      occurred.

            "Dry Submission Package": The documents identified in Exhibit B-l to
      the Custodial Agreement.

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

            "Escrow Agent": The agent appointed by the Title Insurance Company
      to administer the closing of a Mortgage Loan.

            "Escrow Agent Standing Wire Instructions": The wire instructions set
      forth in a letter in the form of Exhibit G, from Seller and the Escrow
      Agent to Purchaser for use when Purchaser wires Disbursement Amounts for
      Wet Fundings and Dry Fundings structured as Closing Transactions.

            "Event of Default": The occurrence of any of the following events:
      (i) an Act of Insolvency with respect to Seller or Parent Company; (ii)
      any representation or warranty made by Seller hereunder, other than as to
      a particular Mortgage Loan, shall have been incorrect or untrue in any
      material respect when made or when deemed to have been made; or (iii)
      Seller shall fail to perform, or shall admit to Purchaser its inability
      to, or its intention not to, perform any of its obligations hereunder.

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

                                      -5-
<PAGE>

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

            "Financing Statement": A financing statement in the form of a UCC-l
      filed pursuant to the Uniform Commercial Code and sufficient to perfect a
      security interest in the applicable state in the Cooperative Shares and
      Pledge Instruments.

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

            "Funding Confirmation": With respect to each Mortgage Loan purchased
      by Purchaser from Seller via a single wire funds transaction on a
      particular Business Day, the trade confirmation from Purchaser to Seller
      confirming Seller's obligation to repurchase such Mortgage Loan from
      Purchaser by the Scheduled Repurchase Date.

            "GNMA": The Government National Mortgage Association or any
      successor thereto.

            "Guidelines": The written underwriting and servicing guidelines
      established by Seller and approved in writing by Purchaser.

            "Incremental Pass-Through Rate": The amount by which the
      Pass-Through Rate increases upon the occurrence of any event giving
      Purchaser the right to elect a remedy pursuant to Section 7, which amount
      shall be set forth in the applicable Funding Confirmation as the
      "Incremental Pass-Through Rate."

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

            "MBS Swap Custodial Agreement": The custodial agreement, dated as of
      the date set forth on the cover sheet thereof, among Seller, Purchaser and
      custodian, as amended from time to time. Such custodial agreement governs
      Purchaser's MBS Swap Funding Program.

            "MBS Swap Funding Program": A program designed by Purchaser and in
      which Seller participates pursuant to the terms of (i) the Purchaser's MBS
      Swap Mortgage Loan Participation Agreement dated as of the date set forth
      on the cover sheet thereof, among Seller and Purchaser as amended from
      time to time and (ii) the MBS Swap Custodial Agreement dated as of the
      date set forth on the cover sheet thereof, among Seller, Purchaser and the
      custodian identified therein, as amended from time to time.

            "MBS Swap Funding Program Selection Notice": A notification that
      identifies Mortgage Loans intended for the MBS Swap Funding Program
      provided by Seller to Purchaser either (i) on the Closing Loan Purchase
      Detail or Rewarehousing Loan Purchase Detail via the "MBS Swap Funding
      Program Designation" field or (ii) via a

                                      -6-
<PAGE>

      facsimile transmission in the form of Exhibit P, received by Purchaser
      prior to the Scheduled Repurchase Date, for any Mortgage Loans previously
      Purchased without the "MBS Swap Funding Program Designation".

            "MBS Swap Shipment Documents": With respect to each Mortgage Loan
      for which an MBS Swap Funding Program Selection Notice has been provided,
      the documents required, as listed in Exhibit R, to be received by
      Purchaser from Seller via facsimile transmission, prior to Purchaser's
      carrying out Seller's instructions for the Request for Mortgage Loan
      Shipment.

            "MBS Swap Submission Package": The documents required to be provided
      by Seller to Purchaser with respect to each purchase under the MBS Swap
      Funding Program, as described in the MBS Swap Mortgage Loan Participation
      Agreement and MBS Swap Custodial Agreement.

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

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

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

            "Mortgage Note": The note or other evidence of the indebtedness of a
      Mortgagor secured by a Mortgage or Pledge Agreement, as the case may be.

            "Mortgaged Property": Either (i) the property subject to the lien of
      the Mortgage securing a Mortgage Note or (ii) in the case of a Cooperative
      Loan the underlying property securing the Mortgage Note which consists of
      the Cooperative Shares and Proprietary Lease.

            "Mortgagor": The obligor on a Mortgage Note.

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

            "Non-Conforming Mortgage Loan": A Mortgage Loan having an original
      principal balance that exceeds the maximum principal balance of a mortgage
      loan that is eligible for sale to FNMA.

            "Note Rate": The rate of interest borne by a Mortgage Note.

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

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

                                      -7-
<PAGE>

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

            "Pledge Agreement": With respect to each Cooperative Loan, the
      specific agreement creating a first lien on and pledge of the Cooperative
      Shares and the appurtenant Proprietary Lease securing a Cooperative Loan.

            "Pledge  Instruments":  With respect to each Cooperative Loan, the
      related Stock Power,  the  Assignment of the  Proprietary  Lease and the
      Assignment of Mortgage Note and Pledge Agreement.

            "Project": With respect to each Cooperative Loan, all real property
      owned by the related Cooperative including the land, separate dwelling
      units and all common areas.

            "Proprietary Lease": With respect to each Cooperative Loan, a lease
      on the related Cooperative Apartment evidencing the possessory interest of
      the Mortgagor in such Cooperative Apartment.

            "PWRES Purchase Program": Purchaser's Cash Window Funding Program,
      Conduit Funding Program, or MBS Swap Funding Program as applicable.

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

            "Purchase Price": With respect to each Mortgage Loan, an amount
      equal to the face amount of the Mortgage Loan less the Discount.

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

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

            "Recognition Agreement": With respect to each Cooperative Loan, an
      agreement whereby a Cooperative and a lender with respect to a Cooperative
      Loan (i) acknowledge that such lender may make, or intends to make, such
      Cooperative Loan, and (ii) make certain agreements with respect to such
      Cooperative Loan.

            "Repurchase": With respect to any Mortgage Loan, the transaction by
      which the Seller remits the Repurchase Price to Purchaser and
      simultaneously Purchaser purchases the Mortgage Loan with a netting of
      funds resulting, governed by the terms of the applicable PWRES Purchase
      Program.

            "Repurchase Date": With respect to any Mortgage Loan, the date that
      Seller remits the Repurchase Price to Purchaser.

                                      -8-
<PAGE>

            "Repurchase Price": With respect to each Mortgage Loan, an amount
      equal to the Purchase Price plus the product of the Purchase Price of the
      Mortgage Loan, the Pass- Through Rate and the number of calendar days from
      the Purchase Date to the Repurchase Date divided by 360.

            "Request for Mortgage Loan Shipment": Notification provided by
      Seller to Purchaser via facsimile transmission in the form of Exhibit Q,
      which presents Mortgage Loans to be delivered by Purchaser to the
      custodian as set forth on the cover page of the MBS Swap Funding Program
      Custodial Agreement or under the appropriate circumstances, FHLMC.

            "Rewarehousing Loan Purchase Detail": A loan purchase detail,
      prepared and submitted by Seller and delivered concurrently by Seller to
      Purchaser and Custodian via facsimile transmission in the form of Exhibit
      B or via electronic transmission in a form acceptable to Purchaser,
      containing certain information regarding the characteristics of a Mortgage
      Loan being offered for sale by Seller to Purchaser under a Rewarehousing
      Transaction.

            "Rewarehousing Transaction": Any sale of a Mortgage Loan by Seller
      to Purchaser structured as either a Wet Funding or Dry Funding wherein
      Purchaser wires the Disbursement Amount to the Warehouse Lender's Wire
      Instructions or Seller's Wire Instructions, as applicable, subject to an
      obligation of Seller to repurchase such Mortgage Loan pursuant to this
      Agreement.

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

            "Scheduled Collateral Receipt Date": With respect to each Wet
      Mortgage Loan, the Business Day, as set forth on the Funding Confirmation
      as the "Collateral Receipt Date", by which a Collateral Receipt is
      required to occur, such date to be (i) within five Business Days of a Wet
      Funding structured as a Closing Transaction and (ii)within one Business
      Day of a Wet Funding structured as a Rewarehousing Transaction.

            "Scheduled Repurchase Date": With respect to each Mortgage Loan, the
      Business Day as set forth on the Funding Confirmation as the "Repurchase
      Date", by which a repurchase is required to occur, such date to be (i)
      within five Business Days after the Purchase Date with respect to a Wet
      Mortgage Loan, (ii) within ten (10) Business Days after the Purchase Date
      with respect to a Dry Mortgage Loan or (iii) within twenty Business Days
      after the Purchase date with respect to a Dry Mortgage Loan for which
      Seller has provided Purchaser with a MBS Swap Funding Program Selection
      Notice, unless such date has been accelerated in connection with either an
      Event of Default pursuant to Section 7(a) or a Defective Mortgage Loan
      pursuant to Section 7(b).

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

            "Seller's Delivery Instructions": With respect to each Mortgage Loan
      for which Seller has remitted the Repurchase Price to Purchaser and which
      Purchaser concurrently

                                      -9-
<PAGE>

      does not elect to purchase under a PWRES Purchase Program, the
      notification provided by Seller to Purchaser via facsimile transmission in
      the Form of Exhibit J, instructing Purchaser to deliver the Dry Submission
      Package for such Mortgage Loan to the indicated address.

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

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

            "Stock Certificate": With respect to each Cooperative Loan, the
      certificate evidencing ownership of the related Cooperative Shares issued
      by the Cooperative.

            "Stock Power": With respect to each Cooperative Loan, an assignment
      of the related Stock Certificate or an Assignment of the Cooperative
      Shares issued by the Cooperative.

            "Submission Package": A Cash Window Submission Package, a Conduit
      Submission Package, a Dry Submission Package or a MBS Swap Submission
      Package, as applicable.

            "Successor Servicer": An entity designated by Purchaser, in
      conformity with Section 18, to replace Seller as servicer for Purchaser.

            "Supplemental Amount": With respect to each Mortgage Loan, an amount
      equal to the Disbursement Amount less the Purchase Price.

            "Title Insurance Company": A title insurance company acceptable to
      Purchaser.

            "Transaction": Any sale of a Mortgage Loan by Seller to Purchaser
      subject to an obligation of Seller to repurchase such Mortgage Loan
      pursuant to a Funding Confirmation in accordance with this Agreement.

            "Warehouse Lender": Any lender providing financing to Seller in any
      fractional amount for the purpose of originating or purchasing Mortgage
      Loans, which lender has a security interest in such Mortgage Loans as
      collateral for the obligations of Seller to such lender.

            "Warehouse Lender's Release": A letter in the form of Exhibit M, or
      Exhibit N with respect to any Wet Funding structured as a Rewarehousing
      Transaction, from a Warehouse Lender to Purchaser, conditionally releasing
      all of Warehouse Lender's right, title and interest in certain Mortgage
      Loans identified therein upon receipt of payment by Warehouse Lender.

                                      -10-
<PAGE>

            "Warehouse Lender's Wire Instructions": The wire instructions set
      forth in a letter in the form of Exhibit O, from a Warehouse Lender who
      has an interest in the Mortgage Loans to which such payment relates.

            "Wet Funding": Either (i) a Closing Transaction initiated by the
      delivery by Seller, either via electronic or facsimile transmission to
      Purchaser, of a Closing Loan Purchase Detail and a pledge by Seller to
      Purchaser to deliver to Custodian a Dry Submission Package, Cash Window
      Submission Package or Conduit Submission Package by the Scheduled
      Collateral Receipt Date or (ii) a Rewarehousing Transaction initiated by
      the delivery by Seller, either via electronic or facsimile transmission to
      Purchaser, of a Rewarehousing Loan Purchase Detail, a Warehouse Lender's
      Release and a pledge by Seller to Purchaser to deliver to Custodian a Dry
      Submission Package, Cash Window Submission Package or Conduit Submission
      Package by the Scheduled Collateral Receipt Date.

            "Wet Mortgage Loan": A Mortgage Loan for which Purchaser, via
      Custodian, does not have physical possession of the related Dry Submission
      Package and which Seller has agreed to pledge to Purchaser all right,
      title and interest in, to and under such Mortgage Loan, free and clear of
      all liens, pledges, charges, encumbrances or security interests of any
      nature.

            "Whole Loan Finance Program": A program designed by Purchaser in
      which Seller participates pursuant to the terms of the Custodial Agreement
      and this Agreement.

            "Withdrawal/Deposit Notice": A notice, substantially in the form of
      Exhibit D, delivered by Seller to Purchaser, from time to time, in
      connection with withdrawals from and deposits to the Cash Account.

            "Wire Fee": For each disbursement relating to a Closing Transaction,
      a fee payable to Purchaser by Seller as set forth in the Funding
      Confirmation.

      Section 2.  Procedures for Purchases of Mortgage Loans.

      (a)   General Procedures for Purchases of Mortgage Loans.

            (1)   Pursuant to either a Wet Funding or a Dry Funding, Purchaser
                  may, in its sole discretion, from time to time, purchase one
                  or more Mortgage Loans from Seller subject to an obligation of
                  Seller to repurchase such Mortgage Loans and subsequently to
                  offer to sell such Mortgage Loans to Purchaser pursuant to one
                  of the PWRES Purchase Programs. Seller shall be deemed to make
                  for the benefit of Purchaser, as of the applicable dates
                  specified in Section 10, the representations and warranties
                  set forth in Section 10 in respect of each such Mortgage Loan.

            (2)   Notwithstanding the satisfaction by Seller of the conditions
                  specified in this Section, Purchaser is not obligated to
                  purchase any Mortgage Loan offered to it hereunder and the
                  decision of Purchaser to purchase such Mortgage Loan shall be
                  at Purchaser's sole discretion. In the event that

                                      -11-
<PAGE>

                  Purchaser elects to reject a Mortgage Loan offered by Seller
                  for purchase by Purchaser in a Wet Funding or a Dry Funding
                  for any reason and/or does not transmit the Disbursement
                  Amount, any Dry Submission Package delivered to Custodian in
                  anticipation of such purchase shall be returned by Custodian
                  in accordance with the terms of the Custodial Agreement.

      (b)   Specific Procedures for Purchases of Mortgage Loans related to
            Wet Fundings structured as Closing Transactions.

            (1)   Prior to Purchaser's election to purchase any Mortgage Loan
                  pursuant to a Wet Funding structured as a Closing Transaction,
                  Purchaser shall have received from Seller a Closing Loan
                  Purchase Detail, either electronically, or via facsimile
                  transmission, and the Seller's Cash Account Balance shall not
                  be less than the sum of the Supplemental Amount plus the Wire
                  Fee. The terms and conditions of each such purchase shall be
                  set forth in this Agreement and in the applicable Funding
                  Confirmation.

            (2)   If Purchaser elects to purchase any Mortgage Loan pursuant to
                  a Wet Funding structured as a Closing Transaction, Purchaser
                  shall (i) withdraw the Supplemental Amount, if any, and the
                  Wire Fee from the Cash Account and (ii) pay the Disbursement
                  Amount for such Mortgage Loans to the Escrow Agent by wire
                  transfer of immediately available funds in accordance with the
                  Escrow Agent Standing Wire Instructions.

            (3)   With respect to each Wet Funding structured as a Closing
                  Transaction, simultaneously with the payment by Purchaser of
                  the Disbursement Amount for a Mortgage Loan in accordance with
                  the Escrow Agent Standing Wire Instructions, (i) Seller hereby
                  conveys to Purchaser all of Seller's right, title and interest
                  in, to and under such Mortgage Loan, free and clear of all
                  liens, pledges, charges, encumbrances or security interests of
                  any nature, and (ii) Seller hereby covenants to cause to occur
                  a Collateral Receipt by the Scheduled Collateral Receipt Date
                  and to provide Purchaser with a Conversion Loan Purchase
                  Detail for any Collateral Receipt relating to a Cash Window
                  Submission Package or a Conduit Submission Package.

            (4)   With respect to each Wet Funding structured as a Closing
                  Transaction, if by the Scheduled Collateral Receipt Date (i) a
                  Collateral Receipt has occurred and (ii) Seller is not in
                  breach of this Agreement or the Custodial Agreement then (a)
                  with respect to any Collateral Receipt containing a Dry
                  Submission Package, a Collateral Receipt Adjustment will occur
                  and (b) with respect to any Collateral Receipt containing a
                  Cash Window Submission Package or a Conduit Submission Package
                  a Repurchase will occur. If a Collateral Receipt does not
                  occur by the Scheduled Collateral Receipt Date, Purchaser may
                  elect a remedy pursuant to Section 7 including, without
                  limitation, the application of an Incremental

                                      -12-
<PAGE>

                  Pass-Through Rate. Seller shall give Purchaser and
                  Custodian not less than one Business Day's prior written
                  notice of each Collateral Receipt.

      (c)   Specific Procedures for Purchases of Mortgage Loans related to
            Wet Fundings structured as Rewarehousing Transactions.

            (1)   Prior to Purchaser's election to purchase any Mortgage Loan
                  pursuant to a Wet Funding structured as a Rewarehousing
                  Transaction, Purchaser shall have received from Seller a
                  Rewarehousing Loan Purchase Detail, either electronically or
                  via facsimile transmission, a Warehouse Lender's Release in
                  the form of Exhibit N, and the Cash Account Balance shall not
                  be less than the sum of the Supplemental Amount. The terms and
                  conditions of each such purchase shall be set forth in this
                  Agreement and in the applicable Funding Confirmation.

            (2)   If Purchaser elects to purchase any Mortgage Loan pursuant to
                  a Wet Funding structured as a Rewarehousing Transaction,
                  Purchaser shall (i) withdraw the Supplemental Amount, if any,
                  from the Cash Account and (ii) pay the Disbursement Amount for
                  such Mortgage Loans to the Warehouse Lender by wire transfer
                  of immediately available funds in accordance with the
                  Warehouse Lender's Wire Instructions.

            (3)   With respect to each Wet Funding structured as a Rewarehousing
                  Transaction, simultaneously with the payment by Purchaser of
                  the Disbursement Amount for a Mortgage Loan in accordance with
                  the Warehouse Lender's Wire Instructions, (i) Seller hereby
                  conveys to Purchaser all of Seller's right, title and interest
                  in, to and under such Mortgage Loan, free and clear of all
                  liens, pledges, charges, encumbrances or security interests of
                  any nature and (ii) Seller hereby covenants to cause to occur
                  a Collateral Receipt by the Scheduled Collateral Receipt Date
                  and to provide Purchaser with a Conversion Loan Purchase
                  Detail for any Collateral Receipt containing a Cash Window
                  Submission Package or a Conduit Submission Package.

            (4)   With respect to each Wet Funding structured as a Rewarehousing
                  Transaction, if by the Scheduled Collateral Receipt Date (i) a
                  Collateral Receipt has occurred and (ii) Seller is not in
                  breach of this Agreement or the Custodial Agreement then (a)
                  with respect to any Collateral Receipt containing a Dry
                  Submission Package a Collateral Receipt Adjustment will occur
                  and (b) with respect to any Collateral Receipt containing a
                  Cash Window Submission Package or a Conduit Submission Package
                  a Repurchase will occur. If a Collateral Receipt does not
                  occur by the Scheduled Collateral Receipt Date, Purchaser may
                  elect a remedy pursuant to Section 7 including, without
                  limitation, the application of an Incremental Pass-Through
                  Rate. Seller shall give Purchaser and Custodian not less than
                  one Business Day's prior written notice of each Collateral
                  Receipt.

                                      -13-
<PAGE>

      (d)   Specific Procedures for Purchases of Mortgage Loans related to
            Dry Fundings structured as Closing Transactions.

            (1)   Prior to Purchaser's election to purchase any Mortgage Loan
                  pursuant to a Dry Funding structured as a Closing Transaction,
                  Purchaser and Custodian shall have received from Seller a
                  Closing Loan Purchase Detail, either electronically or via a
                  facsimile transmission. Custodian shall also have received all
                  applicable documents required, with respect to Conduit
                  Transactions (as defined in the Custodial Agreement), by
                  Subsections 2 and 3 of Section 2 of the Custodial Agreement,
                  and the Cash Account Balance shall not be less than the sum of
                  the Supplemental Amount plus the Wire Fee. The terms and
                  conditions of each such purchase shall be set forth in this
                  Agreement and in the applicable Funding Confirmation.

            (2)   If Purchaser elects to purchase any Mortgage Loan pursuant to
                  a Dry Funding structured as a Closing Transaction, Purchaser
                  shall (i) withdraw the Supplemental Amount, if any, and the
                  Wire Fee from the Cash Account and (ii) pay the Disbursement
                  Amount for such Mortgage Loans to the Escrow Agent by wire
                  transfer of immediately available funds in accordance with the
                  Escrow Agent Standing Wire Instructions.

            (3)   With respect to each Dry Funding structured as a Closing
                  Transaction, simultaneously with the payment by Purchaser of
                  the Disbursement Amount for a Mortgage Loan in accordance with
                  the Escrow Agent Standing Wire Instructions, Seller hereby
                  conveys to Purchaser all of Seller's right, title and interest
                  in, to and under such Mortgage Loan, free and clear of all
                  liens, pledges, charges, encumbrances or security interests of
                  any nature.

            (4)   With respect to each Dry Funding structured as a Closing
                  Transaction, if a Repurchase has not occurred by the Scheduled
                  Repurchase Date and if Seller has not repurchased the related
                  Mortgage Loan(s), Purchaser may elect a remedy pursuant to
                  Section 7 including, without limitation, the application of an
                  Incremental Pass-Through Rate.

      (e)   Specific Procedures for Purchases of Mortgage Loans related to
            Dry Fundings structured as Rewarehousing Transactions.

            (1)   Prior to Purchaser's election to purchase any Mortgage Loan
                  pursuant to a Dry Funding structured as a Rewarehousing
                  Transaction, Purchaser and Custodian shall have received from
                  Seller a Rewarehousing Loan Purchase Detail, either
                  electronically or via a facsimile transmission, an original of
                  a Warehouse Lender's or Seller's Release, and the Cash Account
                  Balance shall not be less than the sum of the Supplemental
                  Amount. Custodian shall also have received all applicable
                  documents required, with respect to Conduit Transactions (as
                  defined in the Custodial Agreement), by Subsections 2 and 3 of
                  Section 2 of the Custodial

                                      -14-
<PAGE>

                  Agreement. The terms and conditions of each such purchase
                  shall be set forth in this Agreement and in the applicable
                  Funding Confirmation.

            (2)   If Purchaser elects to purchase any Mortgage Loan pursuant to
                  a Dry Funding structured as a Rewarehousing Transaction,
                  Purchaser shall (i) withdraw the Supplemental Amount, if any,
                  from the Cash Account and (ii) pay the Disbursement Amount for
                  such Mortgage Loans to the Warehouse Lender or Seller by wire
                  transfer of immediately available funds in accordance with the
                  Warehouse Lender's Wire Instructions or Seller's Wire
                  Instructions.

            (3)   With respect to each Dry Funding structured as a Rewarehousing
                  Transaction, simultaneously with the payment by Purchaser of
                  the Disbursement Amount for a Mortgage Loan, in accordance
                  with the Warehouse Lender's or Seller's Wire Instructions,
                  Seller hereby conveys to Purchaser all of Seller's right,
                  title and interest in, to and under such Mortgage Loan, free
                  and clear of all liens, pledges, charges, encumbrances or
                  security interests of any nature.

            (4)   With respect to each Dry Funding structured as a Rewarehousing
                  Transaction, if a Repurchase has not occurred by the Scheduled
                  Repurchase Date and if Seller has not repurchased the related
                  Mortgage Loan(s), Purchaser may elect a remedy pursuant to
                  Section 7 including the application of an Incremental
                  Pass-Through Rate.

      The Closing Loan Purchase Detail, Conversion Loan Purchase Detail and the
Rewarehousing Loan Purchase Detail are referred to in the Custodial Agreement as
Requests for Certification.

      Section 3.  Procedure for Repurchases of Mortgage Loans.

      (a)   Prior to Seller's repurchase of any Mortgage Loan that Seller
intends to subsequently offer for sale to Purchaser under the Cash Window
Funding Program or Conduit Funding Program and at least five Business Days prior
to Seller's repurchase of any Mortgage Loan that Seller intends to offer for
sale to Purchaser under the MBS Swap Funding Program, all agreements related to
the applicable PWRES Purchase Program must be executed by the Seller, the
Purchaser and where applicable the custodian, and all requirements of such
agreements must be satisfied as a condition precedent to the following:

            (i)   For Mortgage Loans that Seller intends to repurchase and offer
                  to Purchaser under the Cash Window Funding Program or Conduit
                  Purchase Program the following must occur on or before the
                  Scheduled Repurchase Date:

                        (1) Seller shall transmit either electronically or via a
                  facsimile transmission a Conversion Loan Purchase Detail to
                  Purchaser. Custodian shall have received all applicable
                  documents required by Section 2 of the

                                      -15-
<PAGE>

                  Custodial Agreement to be in a Cash Window Submission Package
                  or Conduit Submission Package, as applicable;

                        (2) Seller shall remit the Repurchase Price to Purchaser
                  and Purchaser shall assign, transfer and convey to Seller all
                  of Purchaser's right, title and interest in, to and under such
                  Mortgage Loan, free and clear of all liens, pledges, charges,
                  claims, encumbrances or security interests of any nature: and

                        (3) Purchaser shall remit the purchase price to Seller
                  pursuant to the terms of the Cash Window Funding Program or
                  Conduit Funding Program and Seller shall assign, transfer and
                  convey to Purchaser pursuant to the applicable PWRES Purchase
                  Program all of Seller's right, title and interest in, to and
                  under such Mortgage Loan, free and clear of all liens,
                  pledges, charges, claims, encumbrances or security interests
                  of any nature.

                        (4) Transfer of funds under (2) and (3) shall be netted.

            (ii)  For Mortgage Loans that Seller intends to repurchase and
                  subsequently offer for sale to Purchaser under the MBS Swap
                  Funding Program the following:

                        (1) Seller shall transmit to Purchaser, via a facsimile
                  transmission, the applicable MBS Swap Shipment Documents at
                  least five Business Days before the Scheduled Repurchase Date;

                        (2) Purchaser will instruct Custodian to ship the
                  Mortgage Loans referenced on the Request for Mortgage Loan
                  Shipment to the referenced location via overnight courier;

                        (3) Seller shall deliver to Purchaser, via overnight
                  courier, on or before the Scheduled Repurchase Date the
                  related MBS Swap Submission Package;

                        (4) upon Purchaser's review of the MBS Swap Submission
                  Package and election to purchase such Mortgage Loans, Seller
                  shall remit the Repurchase Price to Purchaser and Purchaser
                  shall assign, transfer and convey to Seller all of Purchaser's
                  right, title and interest in, to and under such Mortgage Loan
                  , free and clear of all liens, pledges, charges, claims,
                  encumbrances or security interests of any nature; and

                        (5) Purchaser shall remit the purchase price to Seller
                  pursuant to the terms of the MBS Swap Purchase Program and
                  Seller shall assign, transfer and convey to Purchaser pursuant
                  to the PWRES Purchase Program all of Seller's right, title and
                  interest in, to and under such Mortgage Loan, free and clear
                  of all liens, pledges, charges, claims, encumbrances or
                  security interests of any nature.

                                      -16-
<PAGE>

                        (6) Transfer of funds under (4) and (5) shall be netted.

      (b)   With respect to any Wet Mortgage Loan or Dry Mortgage Loan , if
Seller has provided Purchaser with an MBS Swap Funding Program Selection Notice
and Seller subsequently provides Purchaser with a Conversion Loan Purchase
Detail and a corresponding Conduit Submission Package or Cash Window Submission
Package subsequent to the Scheduled Repurchase Date for such Mortgage Loan, then
Purchaser may elect a remedy pursuant to Section 7 and may retroactively apply
an Incremental Pass-Through Rate for such Mortgage Loan for the period from the
Scheduled Repurchase Date through one day prior to the Repurchase Date.

      (c)   With respect to each Mortgage Loan, on either the Scheduled
Collateral Receipt Date or the Scheduled Repurchase Date, if Seller has not
satisfied the requirements of this Agreement or Purchaser has elected not to
purchase such Mortgage Loan:

            (i)   the  Pass-Through  Rate shall  increase  by the  Incremental
                  Pass-Through Rate;

            (ii)  the Seller shall remit the Repurchase Price to Purchaser and
                  Purchaser shall assign, transfer and convey to Seller all of
                  Purchaser's right, title and interest in, to and under such
                  Mortgage Loan, free and clear of all liens, pledges, charges,
                  claims, encumbrances or security interests of any nature; and

            (iii) upon receipt of the Repurchase Price and Seller's Delivery
                  Instructions from Seller, Purchaser shall direct Custodian to
                  deliver the Dry Submission Package, Cash Window Submission
                  Package or Conduit Submission Package related to such Mortgage
                  Loan pursuant to the Seller's Delivery Instructions.

      Section 4.  Terms of Each Transaction.

      (a)   The obligations of the parties hereto shall, with respect to each
Transaction, begin on a Purchase Date and terminate on the Repurchase Date or on
the satisfaction by Seller of its obligations pursuant to Section 7.

      (b)   The terms and conditions of each Transaction, including, without
limitation, the Purchase Date, the Scheduled Repurchase Date, the Mortgage Loan
subject thereto, the Purchase Price, the Pass-Through Rate, the Incremental
Pass-Through Rate, the Scheduled Collateral Receipt Date for Wet Fundings only,
the Custodial Fee and, if applicable, the Wire Fee, shall be set forth in the
related Funding Confirmation. Each Funding Confirmation shall be deemed to be
controlling as to the related terms and provisions of the purchase of a Mortgage
Loan, absent manifest error, without regard to any other oral or written
communication between Purchaser and Seller with respect to the purchase of such
Mortgage Loan. With respect to the purchase or repurchase of a Mortgage Loan, in
the event of any conflict between the terms and the provisions of this Agreement
and the terms and provisions of the related Funding Confirmation, the terms and
provisions of the related Funding Confirmation will prevail over the terms and
provisions of this Agreement.

                                      -17-
<PAGE>

      Section 5.  Cash Account.

      (a)   Seller hereby authorizes and directs Purchaser to create the Cash
Account. The Cash Account shall be held in trust for Seller subject to the terms
and conditions of this Agreement. Purchaser shall notify Seller, via electronic
or facsimile transmission, of the Cash Account Balance on each Business Day when
the Cash Account Balance is greater than zero and on each Business Day on which
a Transaction occurs hereunder.

      (b)   Purchaser shall credit the Cash Account for (i) any deposits therein
by Seller upon Seller's written direction pursuant to a Withdrawal/Deposit
Notice, (ii) any amounts due Seller and payable by Purchaser under any PWRES
Purchase Program, (iii) any Supplemental Amount for any Mortgage Loan upon the
refunding to Purchaser of the Disbursement Amount for such Mortgage Loan by the
Escrow Agent upon any failure to apply the Disbursement Amount in connection
with the proposed funding of a Mortgage Loan, (iv) any credit pursuant to a Cash
Account Adjustment and (v) any Cash Account Interest Accruals.

      (c)   Purchaser shall debit the Cash Account for (i) any withdrawals
therefrom by Seller upon Seller's written direction pursuant to a
Withdrawal/Deposit Notice, (ii) any amounts due Purchaser and payable by Seller
under any PWRES Purchase Program, (iii) the Supplemental Amount for any Mortgage
Loan upon payment of the Disbursement Amount for such Mortgage Loan to the
Escrow Agent in accordance with Section 2(c)(I), (iv) any debit pursuant to a
Cash Account Adjustment and (v) any Wire Fees.

      (d)   Upon termination of this Agreement and payment in full of all
obligations owing by Seller hereunder and under the Custodial Agreement,
Purchaser shall remit to Seller the Cash Account Balance.

      Section 6.  Servicing of the Mortgage Loans.

      (a)   Seller shall service and administer each Mortgage Loan on behalf of
Purchaser in accordance with the Guidelines and prudent mortgage loan servicing
standards and procedures generally accepted in the mortgage banking industry,
provided that Seller shall at all times comply with applicable law and the
requirements of any applicable insurer or guarantor so that the insurance in
respect of any Mortgage Loan is not voided or reduced. No amendments to the
Guidelines shall become effective for purposes of this Agreement unless such
amendments have received Purchaser's prior written approval. Seller shall at all
times maintain accurate and complete records of its servicing of each Mortgage
Loan, shall supply Purchaser, not less than monthly, with a servicing tape
acceptable to Purchaser, and Purchaser may, at any time during Seller's business
hours, on reasonable notice, examine and make copies of such records. Upon
Purchaser's request, Seller shall deliver to Purchaser reports regarding the
status of each Mortgage Loan, which reports shall include, without limitation,
circumstances that could materially adversely affect any such Mortgage Loan,
Purchaser's ownership of any such Mortgage Loan or the collateral securing any
such Mortgage Loan.

      (b)   Within five Business Days of notice from Purchaser, or immediately
upon notice if an Event of Default has occurred, Seller shall establish and
maintain a Custodial Account entitled "[NAME OF SELLER], in trust for Paine
Webber Real Estate Securities Inc. and its assignees

                                      -18-
<PAGE>

under the Mortgage Loan Repurchase Agreement dated [the date of this Agreement]"
and shall promptly deposit into such Custodial Account, in the form received
with any necessary endorsements, all collections received in respect of each
Mortgage Loan that are payable to Purchaser as the owner of each such Mortgage
Loan.

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

            (1)   All amounts deposited in the Custodial Account shall be paid
                  to Seller upon the repurchase by Seller of the related
                  Mortgage Loans from Purchaser if, and to the extent that, the
                  Repurchase Prices and all other amounts due and payable to
                  Purchaser hereunder with respect to such Mortgage Loans have
                  been paid. The amounts paid to Seller (if any) pursuant to
                  this Section 6(c)(1) shall constitute Seller's sole
                  compensation for servicing the Mortgage Loans as provided in
                  this Section 6.

            (2)   If a Successor Servicer is appointed by Purchaser (either
                  under the circumstances set forth in Section 7 or otherwise),
                  or if an Event of Default has occurred, all amounts deposited
                  in the Custodial Account shall be paid to Purchaser promptly
                  upon such delivery.

            (3)   During the period that Seller acts as servicer, all amounts
                  deposited in the Custodial Account shall be released only in
                  accordance with Purchaser's written instructions.

      Section 7.  Remedies.

      (a)   Upon the occurrence of an Event of Default, at the option of
Purchaser exercised by written notice to Seller (which option shall be deemed to
have been exercised even if no notice is given, immediately upon the occurrence
of an Act of Insolvency with respect to Seller or Parent Company), the Scheduled
Repurchase Date for each Transaction hereunder shall be deemed immediately to
occur and, upon exercise of such option, (i) Seller's obligations hereunder to
repurchase all Mortgage Loans shall thereupon become immediately due and
payable, (ii) the Pass-Through Rate applicable to each Mortgage Loan shall
increase by the Incremental Pass-Through Rate, (iii) all amounts then or
thereafter held in any Custodial Accounts and the Cash Account shall be retained
by Purchaser and applied to the aggregate unpaid Repurchase Prices owed by
Seller and to any other amounts owing by Seller hereunder or under the Custodial
Agreement and (iv) Purchaser may, with concurrent notice to Seller (A)
immediately sell in a recognized market or in any other commercially reasonable
manner at such price or prices as Purchaser may reasonably deem satisfactory,
any or all the Mortgage Loans and apply the proceeds thereof (net of any
expenses of sale) to the aggregate unpaid Repurchase Prices and any other
amounts owing by Seller hereunder or under the Custodial Agreement or (B) in its
sole discretion elect, in lieu of selling all or a portion of such Mortgage
Loans, to give Seller credit for such Mortgage Loans in an amount equal to the
price therefor on such date, obtained from a generally recognized source or the
most recent closing bid quotation from such a source, against the aggregate
unpaid Repurchase Prices and any other amounts

                                      -19-
<PAGE>

owing by Seller hereunder or under the Custodial Agreement, and in either case
upon the determination and receipt by Purchaser of all such amounts owing by
Seller (including, without limitation, any unpaid fees, expenses, legal fees and
expenses of Purchaser's counsel or other amounts owing to Purchaser under this
Agreement or the Custodial Agreement), Purchaser shall transfer any remaining
portion of the Mortgage Loans and proceeds thereof to either (1) Seller, if in
Purchaser's reasonable judgment Seller is legally entitled thereto, (2) such
other entity as is in Purchaser's reasonable judgment legally entitled thereto
or (3) if Purchaser cannot determine in its judgment the entity entitled
thereto, a court of competent jurisdiction; provided that Seller shall be liable
for any deficiency if the proceeds of any sale or other disposition of the
Mortgage Loans and any amounts applied from the Custodial Account and the Cash
Account are insufficient to pay all amounts to which Purchaser is entitled
hereunder.

      (b)   If any Mortgage Loan becomes a Defective Mortgage Loan prior to the
Repurchase Date, the Pass-Through Rate applicable to such Defective Mortgage
Loan shall increase by the Incremental Pass-Through Rate, and Purchaser, at its
election, may immediately accelerate the Scheduled Repurchase Date and require
that Seller, upon receipt of such election, immediately repurchase such
Defective Mortgage Loan by remitting to Purchaser (in immediately available
funds in accordance with Purchaser's Wire Instructions) the Repurchase Price for
such Defective Mortgage Loan.

      (c)   If Seller fails to comply with its obligations in the manner
described in Section 7(b), Seller's rights and obligations to service Mortgage
Loans, as provided in this Agreement, shall terminate. If an Event of Default
occurs, Seller's rights and obligations to service the Mortgage Loans, as
provided in this Agreement, shall terminate immediately, without any notice or
action by Purchaser. Upon any such termination, Purchaser is hereby authorized
and empowered as the exclusive agent for Seller to sell and transfer such rights
to service the Mortgage Loans for such price and on such terms and conditions as
Purchaser shall reasonably determine, and Seller shall not otherwise attempt to
sell or transfer such rights to service without the prior consent of Purchaser.
Seller shall perform all acts and take all action so that the Mortgage Loans and
all files and documents relating to such Mortgage Loans held by Seller, together
with all escrow amounts relating to such Mortgage Loans, are delivered to a
Successor Servicer. To the extent that the approval of any other insurer or
guarantor is required for any such sale or transfer, Seller shall fully
cooperate with Purchaser to obtain such approval. Upon exercise by Purchaser of
its remedies under this Section 7(c), Seller hereby authorizes Purchaser to
receive all amounts paid by any purchaser of such rights to service the Mortgage
Loans and to remit such amounts to Seller subject to Purchaser's rights of
set-off under this Agreement. Purchaser is hereby appointed the attorney-in-fact
of Seller for the purpose of carrying out the provisions of this Agreement and
taking any action and executing or endorsing any instruments that Purchaser may
deem necessary or advisable to accomplish the purposes hereof, including,
without limitation, completing or correcting any endorsement of a Mortgage Note
or Assignment of Mortgage, which appointment as attorney-in-fact is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
Purchaser shall have the right and power when exercising its remedies
contemplated by this Section 7(b) to receive, endorse and collect all checks
made payable to the order of Seller representing any payment on account of the
principal of or interest on any of the Mortgage Notes and to give full discharge
for the same.

                                      -20-
<PAGE>

      (d)   Each Mortgage Loan required to be delivered to a Successor Servicer
by Section 7(b) shall be delivered free of any servicing rights in favor of
Seller and free of any title, interest, lien, encumbrance or claim of any kind
of Seller, and Seller shall deliver or cause to be delivered all files and
documents relating to each Mortgage Loan held by Seller to a Successor Servicer.
Seller shall promptly take such actions and furnish to Purchaser such documents
that Purchaser deems necessary or appropriate to enable Purchaser to cure any
defect in each such Mortgage Loan or to enforce such Mortgage Loans, as
appropriate.

      (e)   Seller agrees to indemnify and hold Purchaser and its assigns
harmless from and against all Losses resulting from or relating to any Event of
Default.

      (f)   No election by Purchaser pursuant to this Section 7 shall relieve
Seller of responsibility or liability for any breach of or under this Agreement.

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

      Section 8. Transfers of Mortgage Loan by Purchaser. Purchaser may, in its
sole discretion, assign all of its right, title and interest in or grant a
security interest in any Mortgage Loan sold by Seller hereunder and all rights
of Purchaser under this Agreement and the Custodial Agreement, in respect of
such Mortgage Loan to Assignee, subject only to an obligation on the part of
Assignee to deliver each such Mortgage Loan to Purchaser to permit Purchaser or
its designee to make delivery thereof to Seller on the Repurchase Date. It is
anticipated that such assignment to Assignee will be made by Purchaser, and
Seller hereby irrevocably consents to such assignment. No notice of such
assignment shall be given by Purchaser to Seller. Assignment by Purchaser of the
Mortgage Loans as provided in this Section 8 shall not release Purchaser from
its obligations otherwise under this Agreement.

      Without limitation of the foregoing, an assignment of a Mortgage Loan to
Assignee, as described in this Section 8, shall be effective upon issuance by
Custodian of a related Trust Receipt.

      Section 9.  Record Title to Mortgage Loans; Intent of Parties; Security
Interest.

      (a)   From and after the delivery of the related Submission Package, and
subject to the remedies of Purchaser in Section 7, Seller shall remain the last
named payee or endorsee of each Mortgage Note and the mortgagee or assignee of
record of each Mortgage in trust for the benefit of Purchaser, for the sole
purpose of facilitating the servicing of such Mortgage Loan.

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

      (c)   Purchaser and Seller confirm that the Transactions contemplated
herein are intended to be sales of the Mortgage Loans by Seller to Purchaser
rather than borrowings secured by the Mortgage Loans. In the event, for any
reason, any Transaction is construed by any court

                                      -21-
<PAGE>

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

      Section 10. Representations and Warranties.

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

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

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

            (iii) The consummation of the transactions contemplated by this
                  Agreement are in the ordinary course of business of Seller and
                  will not result in the breach of any term or provision of the
                  charter or by-laws of Seller or result in the breach of any
                  term or provision of, or conflict with or constitute a default
                  under or result in the acceleration of any obligation under,
                  any

                                      -22-
<PAGE>

                  agreement, indenture or loan or credit agreement or other
                  instrument to which Seller or its property is subject, or
                  result in the violation of any law, rule, regulation, order,
                  judgment or decree to which Seller or its property is subject;

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

            (v)   All information relating to Seller that Seller has delivered
                  or caused to be delivered to Purchaser, including, but not
                  limited to, all documents related to this Agreement, the
                  Custodial Agreement or Seller's financial statements, and all
                  such information hereafter furnished by Seller, does not and
                  will not contain any untrue statement of a material fact or
                  omit to state a material fact necessary to make the statements
                  made therein or herein in light of the circumstances under
                  which they were made, not misleading. Seller has disclosed in
                  writing any and all facts relating to Seller that materially
                  and adversely affect or may affect the business operations or
                  financial condition of Seller or the ability of Seller to
                  perform its obligations under this Agreement;

            (vi)  There are no actions, suits or proceedings pending, or to the
                  knowledge of Seller threatened, including any claims for which
                  an action, suit or proceeding has not been commenced, against
                  or affecting Seller or any of its assets in any court or
                  before any arbitrator or before any governmental commission,
                  board, bureau or other administrative agency that, in any such
                  case, if adversely determined, would have a material adverse
                  effect on the financial condition or business of Seller or the
                  ability of Seller to perform under this Agreement, each
                  Funding Confirmation and the Custodial Agreement; and

            (vii) The principal place of business and chief executive office of
                  Seller is located at the address set forth opposite Seller's
                  name on the cover page hereof.

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

            (i)   The Mortgage Loan conforms in all respects to the requirements
                  of this Agreement and the related Funding Confirmation;

            (ii)  Seller is the sole owner and holder of the Mortgage Loan, free
                  and clear of any and all liens, pledges, charges, claims,
                  encumbrances or security interests of any nature and has full
                  right and authority, subject to no

                                      -23-
<PAGE>

                  interest or participation of, or agreement with, any other
                  party, to sell and assign the same pursuant to this Agreement;

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

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

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

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

                                      -24-
<PAGE>

            (vii) There is no default, breach, violation or event of
                  acceleration existing under the Mortgage or Pledge Agreement,
                  as the case may be, or the related 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 of acceleration; and
                  Seller has not waived any default, breach, violation or event
                  of acceleration;

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

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

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

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

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

                                      -25-
<PAGE>

                  case may be, did not constitute the transaction of business or
                  the doing of business in such jurisdiction;

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

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

            (xv)  The Mortgage Loan was originated free of any "original issue
                  discount" with respect to which the owner of the Mortgage Loan
                  could be deemed to have income pursuant to Sections 1271 et
                  seq. of the Internal Revenue Code;

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

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

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

                                      -26-
<PAGE>

                  required to be made or issued with respect to Property, and
                  with respect to the use and occupancy of the same, including
                  but not limited to certificates of occupancy and fire
                  underwriting certificates, have been made or obtained from the
                  appropriate authorities and the Mortgaged Property is lawfully
                  occupied under applicable law;

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

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

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

           (xxii) Except to the extent not required by the Guidelines, at the
                  time that the related Mortgage Loan was made the Mortgagor
                  represented that the Mortgagor would occupy such Mortgaged
                  Property as Mortgagor's primary residence;

          (xxiii) Except with respect to Cooperative Loans, the Mortgaged
                  Property consists of a single parcel of real property;

                                      -27-
<PAGE>

           (xxiv) There are no circumstances or conditions with respect to the
                  Mortgage or Pledge Agreement, as the case may be, the
                  Mortgaged Property, the Mortgagor or the Mortgagor's credit
                  standing that can be reasonably expected to cause private
                  institutional investors to regard the Mortgage Loan as an
                  unacceptable investment, cause the Mortgage Loan to become
                  delinquent or adversely affect the value or marketability of
                  the Mortgage Loan. As used herein, "knowledge" shall be deemed
                  to include (A) knowledge of facts or conditions of which
                  Seller (including without limitation, any of its directors.
                  officers, agents or employees) either is actually aware or
                  should have been aware under the circumstances with the
                  exercise of reasonable care, due diligence and competence in
                  discharging Seller's duties, (B) all matters of public record,
                  and (C) the making of any representation or warranty that is
                  inaccurate or incomplete, unless Seller can demonstrate
                  otherwise. The term "due diligence" means the care which
                  Seller would exercise in obtaining and verifying information
                  for a loan in which Seller would be entirely dependent on the
                  property securing such loan and on the borrower's
                  creditworthiness as security to protect its investment;

            (xxv) Seller originated such Mortgage Loan in accordance with the
                  requirements of a PWRES Purchase Program;

           (xxvi) With respect to each Cooperative Loan, each Pledge Agreement
                  creates a valid, enforceable and subsisting first security
                  interest in the Collateral securing the related Mortgage Note
                  subject only to (a) the lien of the related Cooperative for
                  unpaid assessments representing the Obligor's pro rata share
                  of the Cooperative's payments for its blanket mortgage,
                  current and future real property taxes, insurance premiums,
                  maintenance fees and other assessments to which like
                  collateral is commonly subject and (b) other matters to which
                  like collateral is commonly subject which do not materially
                  interfere with the benefits of the security intended to be
                  provided by the Pledge Agreement; provided, however, that the
                  appurtenant Proprietary Lease may be subordinated or otherwise
                  subject to the lien of any mortgage on the Project. There are
                  no liens against or security interests in the Collateral which
                  have priority over the lender's security interest in the
                  Collateral, and such priority interest cannot be created in
                  the future;

          (xxvii) With respect to each Cooperative Loan, all parties to the
                  Mortgage Note and the Mortgage Loan had legal capacity to
                  execute and deliver the Mortgage Note, the Pledge Agreement,
                  the Proprietary Lease, the Stock Power, the Recognition
                  Agreement, the Financing Statement and the Assignment of the
                  Proprietary Lease and such documents have been duly and
                  properly executed by such parties. Each Stock Power (i) has
                  all signatures guaranteed or (ii) if all signatures are not
                  guaranteed, then such Cooperative Shares will be transferred
                  by the stock transfer agent of the

                                      -28-
<PAGE>

                  Cooperative if the Company undertakes to convert the ownership
                  of the collateral securing the related Cooperative Loan;

         (xxviii) With respect to each Cooperative Loan, there is no default
                  in complying with the terms of the Mortgage Note, the Pledge
                  Agreement and the Proprietary Lease and all maintenance
                  charges and assessments (including assessments payable in the
                  future installments, which previously became due and owing)
                  have been paid. The Company has the right under the terms of
                  the Mortgage Note, Pledge Agreement and Recognition Agreement
                  to pay any maintenance charges or assessments owed by the
                  Mortgagor;

           (xxix) With respect to each Cooperative Loan, a Cooperative Lien
                  Search has been made by a company competent to make the same
                  which company is acceptable to FNMA and qualified to do
                  business in the jurisdiction where the Cooperative Apartment
                  is located and each entity that holds title (fee or an
                  acceptable leasehold estate) to the real property and
                  improvements constituting the Cooperative Apartment qualifies
                  as a "cooperative housing corporation" as defined in Section
                  216 of the Code;

            (xxx) With respect to each Cooperative Loan, (i) the terms of the
                  related Proprietary Lease is longer than the terms of the
                  Cooperative Loan, (ii) there is no provision in any
                  Proprietary Lease which requires the Mortgagor to offer for
                  sale the Cooperative Shares owned by such Mortgagor first to
                  the cooperative, (iii) there is no prohibition in any
                  Proprietary Lease against pledging the Cooperative Shares or
                  assigning the Proprietary Lease and (iv) the Recognition
                  Agreement is on a form of agreement published by the Aztech
                  Document Systems, Inc. or includes provisions which are no
                  less favorable to the lender than those contained in such
                  agreement; and

           (xxxi) With respect to each Cooperative Loan, the related
                  Cooperative Apartment, 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
                  Cooperative Apartment and the related Project and, with
                  respect to the use and occupancy of the same, including but
                  not limited to certificates of occupancy, have been made or
                  obtained from the appropriate authorities.

      The representations and warranties of Seller in this Section 9 are
unaffected by and supersede any provision in any endorsement of any Mortgage
Loan or in any assignment with respect to such Mortgage Loan to the effect that
such endorsement or assignment is without recourse or without representation or
warranty.

                                      -29-
<PAGE>

      Section 11. Covenants of Seller. Seller hereby covenants and agrees
with Purchaser as follows:

      (a)   Seller shall deliver to Purchaser:

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

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

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

            (iv)  Promptly upon becoming aware thereof, notice of (1) the
                  commencement of, or any determination in, any legal, judicial
                  or regulatory proceedings, (2) any dispute between Seller or
                  its Parent Company and any governmental or regulatory body,
                  (3) any event or condition, which, in any case of(1) or (2),
                  if adversely determined, would have a material adverse effect
                  on (A) the validity or enforceability of this Agreement, (B)
                  the financial condition or business operations of Seller, or
                  (C) the ability of Seller to fulfill its obligations under
                  this Agreement or (4) any material adverse change in the
                  business, operations, prospects or financial condition of
                  Seller, including, without limitation, an Act of Insolvency
                  with respect to Seller or its Parent Company;

                                      -30-
<PAGE>

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

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

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

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

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

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

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

                                      -31-
<PAGE>

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

      (f)   If during the term of a Transaction, Seller gains possession of a
Submission Package that relates to the Transaction, Seller shall hold such
Submission Package in trust for Purchaser, immediately notify Purchaser of the
specific Submission Package being held by Seller and promptly deliver such
Submission Package via overnight courier in accordance with Purchaser's
instructions.

      (g)   The Seller acknowledges that the Purchaser has the right to perform
continuing due diligence reviews with respect to the Mortgage Loans, for
purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and the Seller agrees that upon
reasonable (but no less than one (1) Business Day's) prior notice to the Seller,
the Purchaser or its authorized representatives will be permitted during normal
business hours to examine, inspect, make copies of, and make extracts of, the
Mortgage Files and any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in possession, or under the control,
of the Seller and/or Custodian. The Seller also shall make available to the
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Mortgage Files and Mortgage Loans. The Seller
and Purchaser further agree that all out-of-pocket costs and expenses incurred
by the Purchaser in connection with the Purchaser's activities pursuant to this
Section 11(h) shall be paid for by the Seller, provided that, Purchaser shall
pay any such costs if such due diligence is conducted more often than two (2)
times in a calendar year.

      Section 12. Term. This Agreement shall continue in effect until terminated
as to future transactions by written instruction signed by either Seller or
Purchaser and delivered to the other, provided that no termination will affect
the obligations hereunder as to any outstanding Transaction.

      Section 13. Exclusive Benefit of Parties; Assignment. This Agreement is
for the exclusive benefit of the parties hereto and their respective successors
and assigns and shall not be deemed to give any legal or equitable right to any
other person, including the Custodian. Except as provided in Section 7, no
rights or obligations created by this Agreement may be assigned by any party
hereto without the prior written consent of the other parties.

      Section 14. Amendments; Waivers; Cumulative Rights. This Agreement may be
amended from time to time only by written agreement of Seller and Purchaser. Any
forbearance, failure or delay by either party in exercising any right, power or
remedy hereunder shall not be deemed to be a waiver thereof, and any single or
partial exercise by Purchaser of any right, power or remedy hereunder shall not
preclude the further exercise thereof Every right, power and remedy of Purchaser
shall continue in full force and effect until specifically waived by Purchaser
in writing. No right, power or remedy shall be exclusive, and each such right,
power or remedy

                                      -32-
<PAGE>

shall be cumulative and in addition to any other right, power or remedy, whether
conferred hereby or hereafter available at law or in equity or by statute or
otherwise.

      Section 15. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.

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

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

      Section 18. Notices. Any notices, consents, elections, directions and
other communications given under this Agreement shall be in writing and shall be
deemed to have been duly given when telecopied or delivered by overnight courier
to, personally delivered to, or on the third day following the placing thereof
in the mail, first class postage prepaid to, the respective addresses set forth
on the cover page hereof for Seller and Purchaser, or to such other address as
either party shall give notice to the other party pursuant to this Section 18.
Notices to Assignee shall be given to such address as Assignee shall provide to
Seller in writing.

      Section 19. Entire Agreement. This Agreement, the Funding Confirmations
and the Custodial Agreement contain the entire agreement between the parties
hereto with respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements between them, oral or written, of any nature
whatsoever with respect to the subject matter hereof.

      Section 20. Costs of Enforcement. In addition to any other indemnity
specified in this Agreement, in the event of a breach by Seller of this
Agreement or the Custodial Agreement, Seller agrees to pay the reasonable
attorneys' fees and expenses of Purchaser and, when applicable, Assignee
incurred as a consequence of such breach.

      Section 21. Consent to Service. Each party irrevocably consents to the
service of process by registered or certified mall, postage prepaid, to it at
its address given in or pursuant to Section 18.

      Section 22. Construction. The headings in this Agreement are for
convenience only and are not intended to influence its construction. References
to Sections and Exhibits in this Agreement are to the Sections of and Exhibits
to this Agreement. The Exhibits are part of this Agreement, and are incorporated
herein by reference. The singular includes the plural, the plural the singular,
and the words "and" and "or" are used in the conjunctive or disjunctive as the
sense and circumstances may require.

                                      -33-
<PAGE>

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

                                  PAINE WEBBER REAL ESTATE
                                     SECURITIES INC.

                                  By: /s/ George A. Mangiaracina
                                      ---------------------------------------
                                      Name:  George A. Mangiaracina
                                      Title: Senior Vice President

                                  AMERICAN HOME MORTGAGE
                                     (Seller)

                                  By: /s/ Michael Strauss
                                      ---------------------------------------
                                      Name:   Michael Strauss
                                      Title:  President
                                      Address (if different from cover page):

                                      -34-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}]]