Document:

<PAGE>

                                                                Exhibit 10.1

                           MICHAEL F. SHANAHAN SR.

                            EMPLOYMENT AGREEMENT
                            --------------------

         THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st
day of September, 1998 by and between ENGINEERED SUPPORT SYSTEMS, INC., a
Missouri corporation (hereinafter called "Employer"), and MICHAEL F.
SHANAHAN SR. (hereinafter called "Employee").

         WHEREAS, Employee desires to be employed by Employer and Employer
desires to employ Employee under the terms and conditions set forth in this
Agreement; and

         WHEREAS, it is Employer's intention to employ Employee upon the
terms and conditions herein, which recognize and compensate Employee for the
obligations of Employee undertaken hereunder, including specifically, but
not by way of limitation, the agreement of Employee not to compete with the
business of Employer, as provided in paragraph 8, for the period provided in
paragraph 8 upon the cessation of Employee's employment by Employer for any
reason.

         NOW, THEREFORE, in consideration of the foregoing and the promises
and agreements herein contained, the parties agree as follows:

         1. Employment. Employer hereby employs Employee in the capacity of
            ----------
Chairman of the Board and Chief Executive Officer, and Employee hereby
accepts such employment from Employer upon the terms and conditions
hereinafter set forth. This Agreement replaces any and all other employment
agreements by and between Employee and Employer dated prior to the date of
this Employment Agreement.

         2. Term of Employment. The term of Employee's employment under this
            ------------------
Agreement shall be for the period commencing as of November 1, 1998, and
continuing through October 31, 2001, and thereafter continuing from year to
year unless terminated by either party at any time during any such further
term upon the giving of thirty (30) days notice of termination and/or
termination pay, or upon the earlier occurrence of any of the following
events:

         (a) Upon the death of Employee.

         (b) At Employee's option upon thirty (30) days written notice.

         (c) In the event of Employee's Disability (defined as the failure
substantially to discharge Employee's duties under this Agreement for ninety
(90) consecutive days or one hundred twenty (120) days in any calendar year,
whether or not consecutive, as a result of an injury, disease, sickness or
other physical or mental incapacity). A determination of Employee's
Disability shall be made by a qualified licensed physician chosen by the
Employer subject to Employee's approval, which approval shall not be
unreasonably withheld. In the event Employer and Employee cannot agree on
the choice of a physician, then such physician shall be

                                     1

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chosen by the dean of the St. Louis University School of Medicine, St.
Louis, Missouri, or if said dean is unwilling or unable to do so, by the
dean of another medical school of recognized national repute. The cost of
such determination shall be borne by Employer, and in the absence of fraud
or bad faith, shall be binding on all parties hereto. Upon termination for
any of the foregoing causes, Employee shall be entitled to receive only the
compensation accrued and unpaid as of the date of termination and shall not
be entitled to additional compensation or other consideration except as
otherwise expressly provided in this Agreement, or such other compensation
plans in effect in which Employee is a participant at the time of
termination.

         (d) For cause upon seven (7) days written notice. For purposes of
this Agreement "cause" shall mean default of Employee's faithful performance
of the terms and conditions of this Agreement and such failure or such other
action which materially adversely affects or is materially detrimental to
the operation of Employer's business.

         3. Duties of Employee. During Employee's employment by Employer,
            ------------------
Employee shall serve Employer to the best of Employee's ability and shall
perform such duties and in such capacities as are assigned to Employee from
time to time by the Board of Directors of Employer. Employee agrees during
such period to devote substantial time and efforts to the business of
Employer, and to be loyal and faithful at all times, constantly endeavoring
to improve Employee's ability and knowledge of the business of Employer in
an effort to increase the value of Employee's services for the mutual
benefit of Employee and Employer. Additionally, Employee agrees to do and
perform the specific function set out on Exhibit "A" attached hereto and
incorporated herein by reference.

         4. Base Compensation. Subject to the other provisions of this
            -----------------
Agreement and in consideration of services rendered hereunder, Employer
agrees to pay the Employee, for Employee's service during the term of
Employee's employment, a Base Salary as follows:

         For the period of November 1, 1998 through October 31, 1999, annual
compensation of Five Hundred Fifty Thousand ($550,000.00) payable in
bi-monthly installments of Twenty-Two Thousand Nine Hundred Sixteen Dollars
and Sixty-Six Cents ($22,916.66) on the 15th day and last day of each month,
or upon such other installments as agreed by Employee and Employer.

         5. Bonus Compensation.
            ------------------

         (a) In addition to the Base Compensation provided in Paragraph 4
hereof, Employer shall pay to Employee an annual bonus to be paid in full in
an amount equal to the amount applying the Bonus Formula contained in a
certain Bonus Plan for the Chairman and CEO of Engineered Support Systems,
Inc. dated September 1, 1998 adopted by the Board of Directors and as from
time to time amended. Such amounts shall be payable on or before October 31
for each fiscal year during the term of this Agreement. A copy of the Bonus
Plan dated September 1, 1998 labeled Exhibit "A" is attached hereto and
incorporated herein by reference.

         (b) Employee shall be entitled to such other salary, bonuses or
deferred compensation pay as from time to time adopted by the Board of
Directors of the Company or Engineered Support Systems, Inc.

                                     2

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         6. Deferred Compensation. Upon the retirement of Employee in
            ---------------------
accordance with the terms and conditions of the Engineered Air Systems
Employee Stock Ownership Plan, or its successor plan, or in the event of the
death or disability of Employee, Employer agrees to pay to Employee, or his
designated beneficiary if applicable, the following:

         (a) In the event of death or retirement, twenty-four (24) equal
monthly installments of Twenty Seven Thousand Five Hundred Dollars
($27,500.00) payable on the first day of the first month following death or
retirement and the first day of each month thereafter for twenty-three (23)
months.

         (b) In the event of disability as defined herein, monthly
installments of Twenty Seven Thousand Five Hundred ($27,500.00) commencing
on the first day of the first month that Employee is so disabled as herein
provided, and on the first day of each month thereafter until Employee
returns to work as herein provided, but in no event for more than sixty (60)
consecutive months. If Employee returns to the service of the Employer
within said sixty (60) consecutive days and receives a written opinion of
his then attending physician that he is capable of performing his duties
hereunder, then the 60-day period will commence to run again in the event he
shall later become disabled.

         7. Extent of Service. Employee will devote such time, attention and
            -----------------
energy to the business as is reasonable necessary to perform his duties.

         8. Covenants of Employee.
            ---------------------

         (a) During the term of Employee's employment with Employer, and for
a period of one (1) year after the cessation of such employment, for
whatever reason, Employee covenants and agrees that Employee will not
(except as required in Employee's duties to Employer), in any manner
directly or indirectly:

                  (i) Disclose or divulge to any person, entity, firm or
company whatsoever, or use for Employee's own benefit or the benefit of any
other person, entity, firm or company, directly or indirectly, in
competition with the business of Employer, as the same may exist at the date
of such cessation, any knowledge, formulae, devices, information, business
methods, techniques, customer lists, supplier lists, business plans or other
information or data of Employer, without regard to whether all of the
foregoing matters will otherwise be deemed confidential, material or
important, the parties hereto stipulating that as between them, the same are
important, material and confidential and greatly affect the effective and
successful conduct of the business and the goodwill of Employer, and that
any breach of this Agreement.

                  (ii) Engage, directly or indirectly, either personally or
as an employee, partner, associate, officer, manager, agent, advisor,
consultant or otherwise, or by means of any corporate or other entity or
device, in any business which is competitive (as hereinafter defined) with
the business of Employer.

         (b) For purposes hereof, a business will be deemed competitive if
it is conducted in

                                     3

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whole or in part within the continental United States where Employer then
conducts its business and if it involves the manufacture or sale of
environmental control systems for government or commercial use, or any other
business which is in any manner competitive, during or as of the date of
cessation of Employee's employment, with any business then being conducted
by Employer or as to which Employer has then formulated definitive plans to
enter.

         (c) All of the covenants on behalf of Employee contained in the
paragraph 8, shall be construed as agreements independent of any other
provision of this Agreement, and the existence of any claim or cause of
action against Employer, whether predicted on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Employer of these
covenants.

         (d) It is the intention of the parties to restrict the activities
of Employee under this paragraph 8 only to the extent necessary for the
protection of legitimate business interests of Employer, and the parties
specifically covenant and agree that should any of the clauses or provisions
set forth herein, under any set of circumstances not now foreseen by the
parties, be held by a court of competent jurisdiction to be illegal, invalid
or unenforceable under present or future laws effective during the term of
this Agreement, then and in that event, it is the intention of the parties
hereto that, in lieu of each such clause or provision there shall be
substituted or added, and there is hereby substituted or added, as a part of
this Agreement a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be legal, valid and
enforceable.

         9. Expenses.
            --------

         (a) The Employer shall pay One Thousand Five Hundred Dollars
($1,500.00) per month as an expense allowance.

         (b) During the period of Employee's employment, Employer will pay
directly, or reimburse Employee, for reasonable and necessary expenses as
from time to time authorized by the Board of Directors of Employer and
incurred by Employee in the interest of the business of Employer. All such
expenses paid by Employee, will be reimbursed by Employer upon presentation
by Employee, from time to time, of an itemized account of such expenditures,
to the extent necessary to permit the deductibility thereof for Federal
income tax purposes in accordance with the from time to time company policy.

         (c) Employer agrees to pay for the monthly dues and charges for
Employee's country club memberships and memberships at other clubs,
including but not limited to, St. Albans Country Club, Old Warson Country
Club, Boone Valley Country Club, Norwood Country Club, the Media Club, the
Missouri Athletic Club, the University Club, Stadium Club, St. Louis Club.
To the extent that any such payments are not deductible as ordinary and
necessary business expenses, in accordance with the Internal Revenue Code,
such expenditures will be treated at additional salary to Employee.

         10. Automobile. During the period of this Agreement, Employer shall
             ----------
pay a car allowance as from time to time adopted by the Board of Directors
but in no event less than Five Hundred Dollars ($500.00) per month.

                                     4

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         11. Documents. Employee agrees that all documents, instruments,
             ---------
drawings, plans, contracts, proposals, records, notebooks, invoices,
statements and correspondence, including all copies thereof, relating to the
business of Employer shall be the property of Employer; and upon the
cessation of Employee's employment with Employer, for whatever reason, all
of the same then in Employee's possession, whether prepared by Employee of
others, will be left with or immediately delivered to Employer.

         12. Additional Employee Benefits. The Employee shall automatically
             ----------------------------
become enrolled in the Employer's medical, life insurance, disability
income, profit sharing trust and 401(k) programs at such time as he becomes
eligible to participate in the respective programs pursuant to the terms of
the respective programs.

         13. Vacation. Employee shall be entitled to five (5) weeks paid
             --------
vacation each calendar year.

         14. Remedies. In the event of the violation of Employee of any of
             --------
the terms of this Agreement, notwithstanding anything to the contrary
contained in this Agreement, Employer may terminate the employment of the
Employee by written notice thereof to Employee and with compensation to
Employee only to the date of such termination. It is further agreed that any
breach or evasion of any of the terms of this Agreement by Employee will
result in immediate and irreparable injury to Employer and will authorize
recourse to injunction and/or specific performance as well as to all other
legal or equitable remedies to which Employer may be entitled. No remedy
conferred by and of the specific provisions of this Agreement is intended to
be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity, by status or otherwise. The
election of any one or more remedies by Employer shall not constitute a
waiver of the right to pursue other available remedies at any time or
cumulatively from time to time. Employee represents and admits that in the
event of the cessation of Employee's employment for any reason, Employee's
experience and capabilities are such that Employee can obtain employment in
business engaged in other lines or of a different nature, and that the
enforcement of a remedy by way of injunction will not prevent Employee from
earning a livelihood. In the event it becomes necessary for Employer to
institute a suit at law or in equity for the purpose of enforcing any of the
provisions of this Agreement, Employer shall be entitled to recover from
Employee, Employer's reasonable attorneys' fees plus court costs and
expenses.

         15. Severability. All agreements and covenants herein contained are
             ------------
severable, and in the event any of them shall be held to be invalid or
unenforceable by any court of competent jurisdiction, this Agreement shall
continue in full force and effect and shall be interpreted as if such
invalid agreement or covenant were not contained herein.

         16. Waiver of Modification. No amendment, waiver of modification of
             ----------------------
this Agreement or of any covenant, condition or limitation herein contained
shall be valid unless in writing and duly executed by the party to be
charged therewith, and no evidence of any amendment, waiver or modification
shall be offered or received in evidence in any proceeding, arbitration or
litigation between parties hereto arising out of or affecting this
Agreement, or the

                                     5

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rights or obligations of the parties hereunder, unless such amendment,
waiver or modification is in writing, duly executed as aforesaid, and the
parties further agree that the provisions of this paragraph may not be
waived or modified except as herein set forth. Failure of Employee or
Employer to exercise or otherwise act with respect to any rights granted
hereunder in the event of a breach of any of the terms or conditions hereof
by the other party, shall not be construed as a waiver of such breach, not
prevent Employee or Employer from thereafter enforcing strict compliance
with any and all of the terms and conditions hereof.

         17. Notices. All notices requests, demands or other communication
             -------
hereunder ("Notice") shall be in writing and shall be given by registered or
certified mail, return receipt requested, if to Employer to:

                              Engineered Support Systems, Inc.
                              Attention: David D. Mattern
                              1270 North Price Road
                              St. Louis, Missouri 63132

                     If to Employee, to:

                              Michael F. Shanahan Sr.
                              12058 Carberry Place
                              St. Louis, Missouri 63131

or to such other addresses as to which the parties hereto give Notice in
accordance with this Paragraph 17.

         18. Construction. This Agreement shall be governed by and construed
             ------------
and interpreted according to the laws of the State of Missouri,
notwithstanding the place of execution hereof, nor the performance of any
acts in connection herewith or hereunder in any other jurisdiction. For all
purposes hereof, reference to Employer shall include each and every
subsidiary and affiliated company of Employer.

         19. Assignability. The services to be performed by Employee
             -------------
hereunder are personal in nature and therefore Employee shall not assign his
rights or delegate his obligations under this Agreement, and any attempted
or purported assignment or delegation not herein permitted shall be null and
void.

         20. Successors. Subject to the provisions of paragraph 19, this
             ----------
Agreement shall be binding upon and shall inure to the benefit of Employer
and Employee and their respective heirs, executors, administrators, legal
representatives, successors and assigns.

         21. Termination Compensation. In the event that Employer terminates
             ------------------------
Employee's employment for any reason except for cause, then in such event
Employee shall be entitled to

                                     6

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termination pay equal to twice the total compensation paid to Employee for
the fiscal year ending prior to the year of termination. This termination
pay shall be payable in twenty-four (24) equal monthly installments
commencing on the first day of the first month after such termination. For
purposes of this Agreement, "total compensation" shall include all
compensation deducted by the Employer for the Employee for the prior fiscal
year, the amounts contributed to any Employee retirement plan, the value of
benefits, including medical insurance, disability insurance, automobile club
dues and the like, and contributions to company retirement plans.

         22. Split Dollar Life Agreements. The Employer agrees to keep in
             ----------------------------
full force and effect until Employee agrees in writing a certain life
insurance policy subject to a Split Dollar Agreement dated on or about April
25, 1988, as well as such other split dollar policies that may be put in to
place in the future.

             IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.

                                        "EMPLOYEE"

                                 /s/ Michael F. Shanahan Sr.
                                 --------------------------------
                                 MICHAEL F. SHANAHAN SR.

                                        "EMPLOYER"

                                 ENGINEERED SUPPORT SYSTEMS, INC.

                              By: /s/ David D. Mattern
                                 --------------------------------
                                 David D. Mattern, Secretary

                                     7

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                                                                   Exhibit A

                                 BONUS PLAN
                    CHAIRMAN AND CHIEF EXECUTIVE OFFICER
                      ENGINEERED SUPPORT SYSTEMS, INC.

          EARNINGS PER SHARE                       BONUS
          ------------------                       -----
             $.40 - .50                           $300,000
             $.51 - .60                           $350,000
             $.61 - .70                           $400,000
             $.71 - .80                           $450,000
             $.81 - .90                           $500,000
             $.91 - 1.00                          $550,000

Dated: September 1, 1998

                                     8RESIDENTIAL ASSET MORTGAGE PRODUCTS, INC.,

                                   Depositor,

                        RESIDENTIAL FUNDING CORPORATION,

                                Master Servicer,

                                       and

                      DEUTSCHE BANK TRUST COMPANY AMERICAS

                                     Trustee

                         POOLING AND SERVICING AGREEMENT

                             Dated as of May 1, 2003

                 Mortgage Asset-Backed Pass-Through Certificates

                                 Series 2003-RM2

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<TABLE>
<CAPTION>

                                      TABLE OF CONTENTS

                                                                                          Page

ARTICLE I

<S>                                                                                         <C>
        DEFINITIONS..........................................................................6
        Section  1.01 Definitions............................................................6
                      -----------
        Section  1.02 Determination of LIBOR................................................61
                      ----------------------

ARTICLE II

        CONVEYANCE OF MORTGAGE LOANS;
        ORIGINAL ISSUANCE OF CERTIFICATES...................................................63
        Section  2.01 Conveyance of Mortgage Loans..........................................63
                      ----------------------------
        Section  2.02 Acceptance by Trustee.................................................66
                      ---------------------
        Section  2.03 Representations, Warranties and Covenants of the Master Servicer and the
                      ------------------------------------------------------------------------
                      Depositor.............................................................68
                      ---------
        Section  2.04 Representations and Warranties of Residential Funding.................71
                      -----------------------------------------------------
        Section  2.05 Execution and Authentication of Certificates; Conveyance of Uncertificated
                      --------------------------------------------------------------------------
                      Regular Interests.....................................................73
                      -----------------

ARTICLE III

        ADMINISTRATION AND SERVICING
        OF MORTGAGE LOANS...................................................................74
        Section  3.01 Master Servicer to Act as Servicer....................................74
                      ----------------------------------
        Section  3.02 Subservicing Agreements Between Master Servicer and Subservicers;
                      -----------------------------------------------------------------
                      Enforcement of Subservicers' Obligations; Special Servicing...........75
                      -----------------------------------------------------------
        Section  3.03 Successor Subservicers................................................77
                      ----------------------
        Section  3.04 Liability of the Master Servicer......................................77
                      --------------------------------
        Section  3.05 No Contractual Relationship Between Subservicer and Trustee or
                      --------------------------------------------------------------
                      Certificateholders....................................................77
                      ------------------
        Section  3.06 Assumption or Termination of Subservicing Agreements by Trustee.......78
                      ---------------------------------------------------------------
        Section  3.07 Collection of Certain Mortgage Loan Payments; Deposits to Custodial
                      -------------------------------------------------------------------
                      Account...............................................................78
                      -------
        Section  3.08 Subservicing Accounts; Servicing Accounts.............................80
                      -----------------------------------------
        Section  3.09 Access to Certain Documentation and Information Regarding the Mortgage
                      ----------------------------------------------------------------------
                      Loans.................................................................82
                      -----
        Section  3.10 Permitted Withdrawals from the Custodial Account......................82
                      ------------------------------------------------
        Section  3.11 Maintenance of Primary Insurance Coverage.............................84
                      -----------------------------------------
        Section  3.12 Maintenance of Fire Insurance and Omissions and Fidelity Coverage
                      -----------------------------------------------------------------
                       .....................................................................85
        Section  3.13 Enforcement of Due-on-Sale Clauses; Assumption and Modification
                      ---------------------------------------------------------------
                      Agreements; Certain Assignments.......................................86
                      -------------------------------
        Section  3.14 Realization Upon Defaulted Mortgage Loans.............................88
                      -----------------------------------------
        Section  3.15 Trustee to Cooperate; Release of Mortgage Files.......................91
                      -----------------------------------------------
        Section  3.16 Servicing and Other Compensation; Compensating Interest...............92
                      -------------------------------------------------------
        Section  3.17 Reports to the Trustee and the Depositor..............................94
                      ----------------------------------------
        Section  3.18 Annual Statement as to Compliance.....................................94
                      ---------------------------------
        Section  3.19 Annual Independent Public Accountants' Servicing Report...............94
                      -------------------------------------------------------
        Section  3.20 Right of the Depositor in Respect of the Master Servicer..............95
                      --------------------------------------------------------

ARTICLE IV

        PAYMENTS TO CERTIFICATEHOLDERS......................................................96
        Section  4.01 Certificate Account...................................................96
                      -------------------
        Section  4.02 Distributions.........................................................96
                      -------------
        Section  4.03 Statements to Certificateholders; Exchange Act Reporting.............107
                      --------------------------------------------------------
        Section  4.04 Distribution of Reports to the Trustee and the Depositor; Advances by the
                      -------------------------------------------------------------------------
                      Master Servicer......................................................110
                      ---------------
        Section  4.05 Allocation of Realized Losses........................................111
                      -----------------------------
        Section  4.06 Reports of Foreclosures and Abandonment of Mortgaged Property........114
                      -------------------------------------------------------------
        Section  4.07 Optional Purchase of Defaulted Mortgage Loans........................115
                      ---------------------------------------------
        Section  4.08 Distributions on the Uncertificated Regular Interests................115
                      -----------------------------------------------------

ARTICLE V

        THE CERTIFICATES...................................................................118
        Section  5.01 The Certificates.....................................................118
                      ----------------
        Section  5.02 Registration of Transfer and Exchange of Certificates................120
                      -----------------------------------------------------
        Section  5.03 Mutilated, Destroyed, Lost or Stolen Certificates....................125
                      -------------------------------------------------
        Section  5.04 Persons Deemed Owners................................................126
                      ---------------------
        Section  5.05 Appointment of Paying Agent..........................................126
                      ---------------------------

ARTICLE VI

        THE DEPOSITOR AND THE MASTER SERVICER..............................................127
        Section  6.01 Respective Liabilities of the Depositor and the Master Servicer......127
                      ---------------------------------------------------------------
        Section  6.02 Merger or Consolidation of the Depositor or the Master Servicer; Assignment
                      ---------------------------------------------------------------------------
                      of Rights and Delegation of Duties by Master Servicer................127
                      -----------------------------------------------------
        Section  6.03 Limitation on Liability of the Depositor, the Master Servicer and Others
                      ------------------------------------------------------------------------
                       ....................................................................128
        Section  6.04 Depositor and Master Servicer Not to Resign..........................129
                      -------------------------------------------

                                              i

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ARTICLE VII

        DEFAULT............................................................................130
        Section  7.01 Events of Default....................................................130
                      -----------------
        Section  7.02 Trustee or Depositor to Act; Appointment of Successor................132
                      -----------------------------------------------------
        Section  7.03 Notification to Certificateholders...................................133
                      ----------------------------------
        Section  7.04 Waiver of Events of Default..........................................133
                      ---------------------------

ARTICLE VIII

        CONCERNING THE TRUSTEE.............................................................134
        Section  8.01 Duties of Trustee....................................................134
                      -----------------
        Section  8.02 Certain Matters Affecting the Trustee................................136
                      -------------------------------------
        Section  8.03 Trustee Not Liable for Certificates or Mortgage Loans................137
                      -----------------------------------------------------
        Section  8.04 Trustee May Own Certificates.........................................138
                      ----------------------------
        Section  8.05 Master Servicer to Pay Trustee's Fees and Expenses; Indemnification
                      -------------------------------------------------------------------
                       ....................................................................138
        Section  8.06 Eligibility Requirements for Trustee.................................139
                      ------------------------------------
        Section  8.07 Resignation and Removal of the Trustee...............................139
                      --------------------------------------
        Section  8.08 Successor Trustee....................................................140
                      -----------------
        Section  8.09 Merger or Consolidation of Trustee...................................141
                      ----------------------------------
        Section  8.10 Appointment of Co-Trustee or Separate Trustee........................141
                      ---------------------------------------------
        Section  8.11 Appointment of Custodians............................................142
                      -------------------------
        Section  8.12 Appointment of Office or Agency......................................142
                      -------------------------------

ARTICLE IX

        TERMINATION OR OPTIONAL PURCHASE OF ALL CERTIFICATES...............................143
        Section  9.01 Optional Purchase by the Master Servicer of All Certificates; Termination
                      Upon Purchase by the Master Servicer or Liquidation of All Mortgage Loans
                       ....................................................................143
        Section  9.02 Additional Termination Requirements..................................146
                      -----------------------------------

ARTICLE X

        REMIC PROVISIONS...................................................................147
        Section  10.01REMIC Administration.................................................147
                      --------------------
        Section  10.02Master Servicer, REMIC Administrator and Trustee Indemnification
                      ----------------------------------------------------------------
                       ....................................................................151

ARTICLE XI

        MISCELLANEOUS PROVISIONS...........................................................152

                                              ii

<PAGE>

        Section  11.01Amendment............................................................152
                      ---------
        Section  11.02Recordation of Agreement; Counterparts...............................154
                      --------------------------------------
        Section  11.03Limitation on Rights of Certificateholders...........................155
                      ------------------------------------------
        Section  11.04Governing Law........................................................156
                      -------------
        Section  11.05Notices..............................................................156
                      -------
        Section  11.06Notices to Rating Agencies...........................................156
                      --------------------------
        Section  11.07Severability of Provisions...........................................157
                      --------------------------
        Section  11.08Supplemental Provisions for Resecuritization.........................157
                      --------------------------------------------

Exhibit A      Form of Class A Certificate
Exhibit B      Form of Class M Certificate
Exhibit C      Form of Class B Certificate
Exhibit D      Form of Class R Certificate
Exhibit E      Form of Custodial Agreement
Exhibit F-1    Group I Loan Schedule
Exhibit F-2    Group II Loan Schedule
Exhibit F-3    Group III Loan Schedule
Exhibit G      Forms of Request for Release
Exhibit H-1    Form of Transfer Affidavit and Agreement
Exhibit H-2    Form of Transferor Certificate
Exhibit I      Form of Investor Representation Letter
Exhibit J      Form of Transferor Representation Letter
Exhibit K      Text of Amendment to Pooling and Servicing Agreement Pursuant to Section
               11.01(e) for a Limited Guaranty
Exhibit L      Form of Limited Guaranty
Exhibit M      Form of Lender Certification for Assignment of Mortgage Loan
Exhibit N      Form of Rule  144A  Investment  Representation
Exhibit  O     Form of ERISA  Letter
Exhibit P-1    Group I Discount  Fractions
Exhibit P-2    Group II Discount  Fractions
Exhibit P-3    Group III  Discount  Fractions
Exhibit Q      PAC I  Aggregate  Planned
               Principal Balances and PAC II Aggregate Planned
               Principal Balances
Exhibit R-1    Form 10-K Certification
Exhibit R-2    Form 10-K Back-up Certification

</TABLE>

                                             iii

<PAGE>

        This Pooling and Servicing Agreement, effective as of May 1, 2003, among
RESIDENTIAL ASSET MORTGAGE PRODUCTS,  INC., as the depositor  (together with its
permitted  successors  and  assigns,   the  "Depositor"),   RESIDENTIAL  FUNDING
CORPORATION,  as master  servicer  (together  with its permitted  successors and
assigns, the "Master Servicer"), and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New
York banking corporation, as trustee (together with its permitted successors and
assigns, the "Trustee").

                                    PRELIMINARY STATEMENT:

        The  Depositor  intends  to  sell  mortgage  asset-backed   pass-through
certificates  (collectively,  the  "Certificates"),  to be issued  hereunder  in
thirty-four classes,  which in the aggregate will evidence the entire beneficial
ownership interest in the Mortgage Loans (as defined herein).

                                     REMIC I

        As provided  herein,  the REMIC  Administrator  will make an election to
treat the segregated pool of assets consisting of the Group I Loans and Group II
Loans and certain  other  related  assets  subject to this  Agreement  as a real
estate mortgage  investment conduit (a "REMIC") for federal income tax purposes,
and such  segregated  pool of assets will be  designated as "REMIC I." The Class
R-I Certificates will represent the sole class of "residual  interests" in REMIC
I for purposes of the REMIC  Provisions (as defined herein) under federal income
tax law. The following table irrevocably sets forth the designation,  remittance
rate (the "Uncertificated REMIC I Pass-Through Rate") and initial Uncertificated
Principal  Balance for each of the "regular  interests" in REMIC I (the "REMIC I
Regular Interests").  The "latest possible maturity date" (determined solely for
purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii)) for each
REMIC I Regular  Interest  shall be the  Distribution  Date  following  the last
scheduled  monthly  payment  of the  Group I Loans.  None of the REMIC I Regular
Interests will be certificated.
<TABLE>
<CAPTION>

                      UNCERTIFICATED REMIC     UNCERTIFICATED REMIC I       LATEST POSSIBLE
    DESIGNATION        I PASS-THROUGH RATE        PRINCIPAL BALANCE          MATURITY DATE

<S>                           <C>                <C>                              <C> <C>
      LT-I-SUB                5.50%              $        714.95              May 25, 2033
      LT-I-AV              Variable(1)                   (2)                  May 25, 2033
      LT-I-AP                 0.00%              $  1,967,663.00              May 25, 2033
      LT-I-ZZZ                5.50%              $253,363,992.65              May 25, 2033
     LT-II-SUB                5.00%                       217.65              May 25, 2033
      LT-II-AV             Variable(1)                   (3)                  May 25, 2033
      LT-II-AP                0.00%              $    425,520.00              May 25, 2033
     LT-II-ZZZ                5.00%              $774,274,273.87              May 25, 2033
</TABLE>

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

(1)  Calculated  as  provided  in  the  definition  of  Uncertificated  REMIC  I
     Pass-Through  Rate.

(2)  REMIC I Regular Interest LT-I-AV will accrue interest on an  Uncertificated
     Notional  Amount equal to the  aggregate  Stated  Principal  Balance of the
     Group I Non-Discount Mortgage Loans.

                                              1

<PAGE>

(3)     REMIC  I  Regular   Interest   LT-II-AV  will  accrue   interest  on  an
        Uncertificated  Notional Amount equal to the aggregate  Stated Principal
        Balance of the Group II Non-Discount Mortgage Loans.

                                           REMIC II

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

                  UNCERTIFICATED REMIC  UNCERTIFICATED REMIC II  LATEST POSSIBLE
    DESIGNATION   II PASS-THROUGH RATE      PRINCIPAL BALANCE      MATURITY DATE
      LT-IIIA             6.00%           $153,959,077.37           May 25, 2033
     LT-III-AV         Variable(1)        $(2)                      May 25, 2033
     LT-III-AP            0.00%           $3,143,800.00             May 25, 2033
---------------

(1)  Calculated  as  provided  in the  definition  of  Uncertificated  REMIC  II
     Pass-Through Rate.

(2)  REMIC  I  Regular   Interest   LT-III-AV   will   accrue   interest  on  an
     Uncertificated  Notional  Amount equal to the  aggregate  Stated  Principal
     Balance of the Group III Non-Discount Mortgage Loans.

                                          REMIC III

        As provided  herein,  the REMIC  Administrator  will make an election to
treat the segregated pool of assets  consisting of the REMIC I Regular Interests
and REMIC II Regular  Interests and certain other related assets subject to this
Agreement as a REMIC for federal income tax purposes,  and such  segregated pool
of assets will be designated as "REMIC III." The Class R-III  Certificates  will
represent  the sole class of "residual  interests"  in REMIC III for purposes of
the  REMIC  Provisions  under  federal  income  tax  law.  The  following  table
irrevocably  sets forth the  designation,  remittance rate (the  "Uncertificated
REMIC III Pass-Through Rate") and initial  Uncertificated  Principal Balance for
the  "regular  interest" in REMIC III (the "REMIC III Regular  Interests").  The
"latest possible  maturity date"  (determined  solely for purposes of satisfying
Treasury  regulation  Section  1.860G-1(a)(4)(iii))  for the REMIC  III  Regular
Interest shall be the  Distribution  Date  following the last scheduled  monthly
payment  of the  Group I Loans.  The  REMIC III  Regular  Interests  will not be
certificated.

                                              2

<PAGE>

                  UNCERTIFICATED REMIC  UNCERTIFICATED REMIC III LATEST POSSIBLE
    DESIGNATION   III PASS-THROUGH RATE   PRINCIPAL BALANCE       MATURITY DATE

      LT3-AI1             4.50%           $68,720,000.00         May 25, 2033
      LT3-AI3             4.50%           $37,105,000.00         May 25, 2033
      LT3-AI4             4.50%           $4,533,000.00          May 25, 2033
      LT3-AI5             8.50%           $36,786,000.00         May 25, 2033
      LT3-AI6             5.50%           $7,701,000.00          May 25, 2033
      LT3-AI7             5.50%           $14,233,000.00         May 25, 2033
      LT3-AI8             5.50%           $11,225,000.00         May 25, 2033
      LT3-AI9              (1)            $48,335,466.00         May 25, 2033
      LT3-AI10             (2)            $17,576,534.00         May 25, 2033
      LT3-API             0.00%           $1,967,663.00          May 25, 2033
      LT3-AVI              (3)                    (4)            May 25, 2033
      LT3-AII             5.00%           $75,098,000.00         May 25, 2033
      LT3-APII            0.00%           $425,520.00            May 25, 2033
      LT3-AVII             (5)                   (6)             May 25, 2033
      LT3-AIII            6.00%           $145,318,000.00        May 25, 2033
     LT3-APIII            0.00%           $3,143,800.00          May 25, 2033
     LT3-AVIII             (7)                    (8)            May 25, 2033
       LT3-R              5.50%           $100.00                May 25, 2033
       LT3-M1              (9)            $4,497,000.00          May 25, 2033
       LT3-M2              (9)            $1,831,600.00          May 25, 2033
       LT3-M3              (9)            $1,165,600.00          May 25, 2033
     LT3-MIII1            6.00%           $3,927,900.00          May 25, 2033
     LT3-MIII2            6.00%           $1,806,600.00          May 25, 2033
     LT3-MIII3            6.00%           $1,178,200.00          May 25, 2033
       LT3-B1              (9)            $499,500.00            May 25, 2033
       LT3-B2              (9)            $666,000.00            May 25, 2033
       LT3-B3              (9)            $666,299.13            May 25, 2033
     LT3-BIII1            6.00%           $549,800.00            May 25, 2033
     LT3-BIII2            6.00%           $392,700.00            May 25, 2033
     LT3-BIII3            6.00%           $785,877.37            May 25, 2033

(1)  Calculated  as  provided  in the  definition  of  Uncertificated  REMIC III
Pass-Through   Rate.   (2)   Calculated   as  provided  in  the   definition  of
Uncertificated REMIC III Pass-Through Rate.

                                              3

<PAGE>

(3) REMIC III  Regular  Interest  LT3-AVI  will be  entitled  to 100% of amounts
distributed on REMIC I Regular Interest LT-I-AV.  (4) REMIC III Regular Interest
LT3-AVI will not have an Uncertificated  Principal Balance, but will be entitled
to 100% of amounts distributed on REMIC I Regular Interest LT-I-AV.
(5) REMIC III  Regular  Interest  LT3-AVII  will be  entitled to 100% of amounts
distributed on REMIC I Regular Interest LT-II-AV. (6) REMIC III Regular Interest
LT3-AVII will not have an Uncertificated Principal Balance, but will be entitled
to 100% of amounts distributed on REMIC I Regular Interest LT-II-AV.
(7) REMIC III  Regular  Interest  LT3-AVIII  will be entitled to 100% of amounts
distributed  on REMIC II  Regular  Interest  LT-III-AV.  (8) REMIC  III  Regular
Interest LT3-AVIII will not have an Uncertificated  Principal Balance,  but will
be  entitled  to 100% of  amounts  distributed  on  REMIC  II  Regular  Interest
LT-III-AV.
(9)  Calculated  as  provided  in the  definition  of  Uncertificated  REMIC III
Pass-Through Rate.

                                           REMIC IV

            As provided herein, the REMIC Administrator will make an election to
treat  the  segregated  pool of  assets  consisting  of the  REMIC  III  Regular
Interests  subject to this Agreement as a REMIC for federal income tax purposes,
and such  segregated  pool of assets will be designated as "REMIC IV." The Class
R-IV Certificates will represent the sole class of "residual interests" in REMIC
IV for  purposes  of the REMIC  Provisions  under  federal  income tax law.  The
following table  irrevocably  sets forth the  designation,  remittance rate (the
"Uncertificated   REMIC  IV  Pass-Through  Rate")  and  initial   Uncertificated
Principal Balance for each of the "regular interests" in REMIC IV (the "REMIC IV
Regular Interests").  The "latest possible maturity date" (determined solely for
purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii)) for each
REMIC IV Regular  Interest  shall be the  Distribution  Date  following the last
scheduled  monthly payment of the Mortgage  Loans.  None of the REMIC IV Regular
Interests will be certificated.

<TABLE>
<CAPTION>

                                        Aggregate Initial
                          Pass-Through  Certificate-Principal               Maturity Date
 Designation      Type        Rate            Balance         Features                      Initial Ratings
                                                                                             Fitch    S&P
<S>        <C>                <C>       <C>                                      <C> <C>
 Class A-I-1     Senior       4.00%     $   68,720,000.00   Senior/PAC I     May 25, 2033     AAA     AAA
 Class A-I-2     Senior       1.00%     $            0.00 Senior/Interest OnlMay 25, 2033     AAA     AAA
 Class A-I-3     Senior       4.50%     $   37,105,000.00   Senior/PAC I     May 25, 2033     AAA     AAA
 Class A-I-4     Senior       4.50%     $    4,533,000.00   Senior/PAC I     May 25, 2033     AAA     AAA
 Class A-I-5     Senior       8.50%     $   36,786,000.00   Senior/PAC I     May 25, 2033     AAA     AAA
 Class A-I-6     Senior       5.50%     $    7,701,000.00   Senior/PAC I     May 25, 2033     AAA     AAA
 Class A-I-7     Senior       5.50%     $   14,233,000.00   Senior/PAC II    May 25, 2033     AAA     AAA
 Class A-I-8     Senior       5.50%     $   11,225,000.00   Senior/PAC II    May 25, 2033     AAA     AAA
 Class A-I-9               Adjustable                     Senior/Companion/
                 Senior      Rate(1)    $   48,335,466.00      Floater       May 25, 2033     AAA     AAA

                                              4

<PAGE>

 Class A-I-10              Adjustable                     Senior/Companion/
                 Senior      Rate(1)    $      17,576,534.00 Inverse Floater   May 25, 2033     AAA     AAA
  Class AP-I     Senior       0.00%     $       1,967,663.00 Senior/Principal OnMay 25, 2033     AAA     AAA
  Class AV-I     Senior   Variable Rate(2)$             0.00 Senior/Interest OnlMay 25, 2033     AAA     AAA
  Class A-II     Senior       5.00%     $      75,098,000.00   Senior        May 25, 2018     AAA     AAA
 Class AP-II     Senior       0.00%     $         425,520.00 Senior/Principal OnMay 25, 2018     AAA     AAA
 Class AV-II     Senior   Variable Rate(3)$             0.00 Senior/Interest OnlMay 25, 2018     AAA     AAA
 Class A-III     Senior       6.00%     $     145,318,000.00   Senior        May 25, 2033     AAA     AAA
 Class AP-III    Senior       0.00%     $       3,143,800.00 Senior/Principal OnMay 25, 2033     AAA     AAA
 Class AV-III    Senior   Variable Rate(4)$             0.00 Senior/Interest OnlMay 25, 2033     AAA     AAA
  Class R-I     Residual      5.50%     $             100.00 Senior/Residual   May 25, 2033     AAA     AAA
  Class R-II    Residual      6.00%     $             100.00 Senior/Residual   May 25, 2033     AAA     AAA
 Class R-III    Residual      5.50%     $             100.00 Senior/Residual   May 25, 2033     AAA     AAA
  Class R-IV    Residual      5.50%     $             100.00 Senior/Residual   May 25, 2033     AAA     AAA
  Class M-1    Mezzanine  Variable Rate(5)$     4,497,000.00  Mezzanine      May 25, 2033     AA      AA
  Class M-2    Mezzanine  Variable Rate(5)$     1,831,600.00  Mezzanine      May 25, 2033      A       A
  Class M-3    Mezzanine  Variable Rate(5)$     1,165,600.00  Mezzanine      May 25, 2033     BBB     BBB
Class M-III-1  Mezzanine      6.00%     $       3,927,900.00  Mezzanine      May 25, 2033     AA      AA
Class M-III-2  Mezzanine      6.00%     $       1,806,600.00  Mezzanine      May 25, 2033      A       A
Class M-III-3  Mezzanine      6.00%     $       1,178,200.00  Mezzanine      May 25, 2033     BBB     BBB
  Class B-1    SubordinateVariable Rate(5)$       499,500.00 Subordinate     May 25, 2033     BB      BB
  Class B-2    SubordinateVariable Rate(5)$       666,000.00 Subordinate     May 25, 2033      B       B
  Class B-3    SubordinateVariable Rate(5)$       666,299.13 Subordinate     May 25, 2033     N/R     N/R
Class B-III-1  Subordinate    6.00%     $         549,800.00 Subordinate     May 25, 2033     BB      BB
Class B-III-2  Subordinate    6.00%     $         392,700.00 Subordinate     May 25, 2033      B       B
Class B-III-3  Subordinate    6.00%     $         785,877.37 Subordinate     May 25, 2033     N/R     N/R

</TABLE>

----------
(1) The Class A-I-9 and Class A-I-10  Certificates will accrue interest based on
the applicable Pass-Through Rate as defined herein.

(2) The Pass-Through  Rate for the Class AV-I  Certificates will be equal to the
excess of the  weighted  average of the Net  Mortgage  Rate of each Group I Loan
over 5.50%.

(3) The Pass-Through Rate for the Class AV-II  Certificates will be equal to the
excess of the weighted  average of the Net  Mortgage  Rate of each Group II Loan
over 5.00%.

                                              5

<PAGE>

(4) The Pass-Through Rate for the Class AV-III Certificates will be equal to the
excess of the weighted  average of the Net Mortgage  Rate of each Group III Loan
over 6.00%.

(5) The  Pass-Through  Rate for the Class M-1,  Class M-2, Class M-3, Class B-1,
Class B-2 and Class B-3  Certificates  varies from not less than 5.00% per annum
to not more than 5.50% per annum, according to the weighted average of the Class
A-I  Certificates   weighted  average  Pass-Through  Rate  and  the  Class  A-II
Certificates  weighted  average Pass-  Through Rate, as described  herein in the
definition of "Pass-Through Rate".

        The Group I Loans have an aggregate Cut-off Date Principal Balance equal
to $255,332,470.60.  The Group I Loans are fixed-rate,  fully amortizing,  first
lien  mortgage  loans having terms to maturity at  origination  of generally not
more than 30 years. The Group II Loans have an aggregate  Cut-off Date Principal
Balance  equal to  $77,700,011.52.  The Group II Loans are  fixed-  rate,  fully
amortizing, first lien mortgage loans having terms to maturity at origination of
generally not more than 15 years. The Group III Loans have an aggregate  Cut-off
Date Principal  Balance equal to  approximately  $157,102,977.37.  The Group III
Loans are fixed-rate,  fully amortizing,  first lien mortgage loans having terms
to maturity at origination of generally not more than 30 years.

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

                                    ARTICLE I

                                   DEFINITIONS

        Section  1.01 Definitions.

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

        Accrued Certificate Interest: With respect to each Distribution Date, as
to any Class of Certificates  (other than the Class AP-I,  Class AP-II and Class
AP-III  Certificates),  interest  accrued during the preceding  Interest Accrual
Period at the related Pass-Through Rate on the Certificate  Principal Balance or
Notional Amount thereof  immediately  prior to such Distribution  Date.  Accrued
Certificate  Interest  will  be  calculated  on the  basis  of a  360-day  year,
consisting of twelve 30-day months. In each case Accrued Certificate Interest on
any Class of  Certificates  (other  than the Class  AP-I,  Class AP-II and Class
AP-III Certificates) will be reduced by the amount of:

               (i) Prepayment  Interest  Shortfalls on the Mortgage Loans in the
        related Loan Group (to the extent not offset by the Master Servicer with
        Compensating Interest as provided in Section 3.16(e)),

               (ii) the interest portion  (adjusted to the Net Mortgage Rate (or
        the Modified Net Mortgage  Rate in the case of a Modified  Mortgage Loan
        in the related  Loan Group)) of Excess  Special  Hazard  Losses,  Excess
        Fraud Losses, Excess Bankruptcy Losses and

                                              6

<PAGE>

          Extraordinary  Losses on the Mortgage Loans in the related Loan Group,
          to the extent allocated to the related Certificates,

               (iii)  the  interest  portion  of  Advances  that  were made with
        respect to  delinquencies  that were ultimately  determined to be Excess
        Special Hazard Losses,  Excess Fraud Losses, Excess Bankruptcy Losses or
        Extraordinary  Losses on the Mortgage Loans in the related Loan Group to
        the extent allocated to the related Certificates, and

               (iv) any other  interest  shortfalls on the Mortgage Loans in the
        related  Loan Group not  covered by the  subordination  provided  by the
        related Class M Certificates and related Class B Certificates, including
        interest  that is not  collectible  from the  Mortgagor  pursuant to the
        Relief Act or similar  legislation or regulations as in effect from time
        to  time,  with  all  such   reductions   allocated  among  all  of  the
        Certificates  in  proportion  to their  respective  amounts  of  Accrued
        Certificate  Interest  payable on such  Distribution  Date  absent  such
        reductions.  In addition to that portion of the reductions  described in
        the preceding  sentence that are allocated to any related Class of Class
        B  Certificates  or any related Class of Class M  Certificates,  Accrued
        Certificate Interest on such Class of Class B Certificates or such Class
        of  Class  M  Certificates  will  be  reduced  by the  interest  portion
        (adjusted  to the  Net  Mortgage  Rate)  of  Realized  Losses  that  are
        allocated  solely to such Class of Class B Certificates or such Class of
        Class M Certificates pursuant to Section 4.05.

     Adjustable Rate  Certificates:  Any one of the Class A-I-9 Certificates and
Class A-I-10 Certificates.

        Adjusted  Mortgage Rate:  With respect to any Mortgage Loan and any date
of determination, the Mortgage Rate borne by the related Mortgage Note, less the
rate at which the related Subservicing Fee accrues.

        Adjustment Date: As to each adjustable rate Mortgage Loan, each date set
forth in the related  Mortgage  Note on which an adjustment to the interest rate
on such Mortgage Loan becomes effective.

        Advance:  As to any  Mortgage  Loan,  any  advance  made  by the  Master
Servicer, pursuant to Section 4.04.

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

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

                                              7

<PAGE>

        Amount Held for Future  Distribution:  As to any Distribution  Date, the
total of the amounts held in the  Custodial  Account at the close of business on
the  preceding  Determination  Date  on  account  of (i)  Liquidation  Proceeds,
Insurance Proceeds, Principal Prepayments, Mortgage Loan purchases made pursuant
to  Section  2.02,  2.03,  2.04 or 4.07 and  Mortgage  Loan  substitutions  made
pursuant  to  Section  2.03  or 2.04  received  or  made  in the  month  of such
Distribution Date (other than such Liquidation Proceeds,  Insurance Proceeds and
purchases  of Mortgage  Loans that the Master  Servicer  has deemed to have been
received  in the  preceding  month in  accordance  with  Section  3.07(b)),  and
Principal Prepayments in Full made after the related Prepayment Period, and (ii)
payments which  represent  early receipt of scheduled  payments of principal and
interest  due on a date or dates  subsequent  to the Due Date in the related Due
Period.

        Appraised  Value: As to any Mortgaged  Property,  the appraised value of
such Mortgaged Property based upon the appraisal or appraisals (or field review)
made at the time of the origination of the related Mortgage Loan.

        Assignment:  An  assignment  of the  Mortgage,  notice  of  transfer  or
equivalent  instrument,  in recordable  form,  sufficient  under the laws of the
jurisdiction  wherein  the related  Mortgaged  Property is located to reflect of
record  the  sale  of the  Mortgage  Loan to the  Trustee  for  the  benefit  of
Certificateholders,   which   assignment,   notice  of  transfer  or  equivalent
instrument  may be in the  form  of one or  more  blanket  assignments  covering
Mortgages  secured  by  Mortgaged  Properties  located  in the same  county,  if
permitted by law and accompanied by an Opinion of Counsel to that effect.

        Assignment Agreement: The Assignment and Assumption Agreement, dated the
Closing Date,  between  Residential  Funding and the  Depositor  relating to the
transfer and assignment of the Mortgage Loans.

     Available  Distribution Amount: The Group I Available  Distribution Amount,
Group II  Available  Distribution  Amount  or Group III  Available  Distribution
Amount, as applicable.

        Bankruptcy  Amount:  As  to  Loan  Group  I and  Loan  Group  II in  the
aggregate,  and Loan Group III, and as of any date of determination prior to the
first anniversary of the Cut-off Date, an amount equal to the excess, if any, of
(A) $100,000 over (B) the aggregate amount of Bankruptcy  Losses on the Mortgage
Loans in the related Loan Groups or Loan Group  allocated  solely to one or more
specific  Classes  of  Certificates  in  accordance  with  Section  4.05 of this
Agreement.  As of any date of determination on or after the first anniversary of
the Cut-off Date, an amount equal to the excess, if any, of

               (1) the lesser of (a) the related Bankruptcy Amount calculated as
        of the close of business on the Business Day  immediately  preceding the
        most  recent  anniversary  of the  Cut-  off  Date  coinciding  with  or
        preceding such date of determination  (or, if such date of determination
        is an  anniversary  of the Cut-off  Date,  the Business Day  immediately
        preceding such date of determination)  (for purposes of this definition,
        the "Relevant Anniversary") and (b) the greater of

                                              8

<PAGE>

                      (A)  the  greater  of  (i)  0.0006  times  the   aggregate
               principal  balance of all the Mortgage  Loans in the related Loan
               Group as of the Relevant Anniversary having a Loan-to-Value Ratio
               at origination which exceeds 75% and (ii) $100,000; and

                      (B) the greater of (i) the product of (x) an amount  equal
               to the largest  difference in the related Monthly Payment for any
               Non-Primary  Residence  Loan remaining in the related Loan Groups
               or Loan Group which had an original  Loan-to-  Value Ratio of 80%
               or greater that would result if the Net Mortgage Rate thereof was
               equal to the weighted average (based on the principal  balance of
               the Mortgage Loans in the related Loan Groups or Loan Group as of
               the  Relevant  Anniversary)  of the  Net  Mortgage  Rates  of all
               Mortgage Loans in the related Loan Groups or Loan Group as of the
               Relevant  Anniversary less 1.25% per annum, (y) a number equal to
               the weighted average  remaining term to maturity,  in months,  of
               all  Non-Primary  Residence  Loans  remaining in the related Loan
               Groups or Loan Group as of the Relevant Anniversary,  and (z) one
               plus the  quotient  of the number of all Non-  Primary  Residence
               Loans  remaining in the related Loan Groups or Loan Group divided
               by the total number of Outstanding  Mortgage Loans in the related
               Loan  Groups or Loan Group as of the  Relevant  Anniversary,  and
               (ii) $50,000, over (2) the aggregate amount of related Bankruptcy
               Losses  allocated  solely  to one or  more  specific  Classes  of
               Certificates  in accordance  with Section 4.05 since the Relevant
               Anniversary.

        Each  Bankruptcy  Amount may be further  reduced by the Master  Servicer
(including  accelerating the manner in which such coverage is reduced)  provided
that prior to any such  reduction,  the Master Servicer shall (i) obtain written
confirmation  from each Rating Agency that such  reduction  shall not reduce the
rating  assigned to any Class of  Certificates  by such Rating  Agency below the
lower of the then-current  rating or the rating assigned to such Certificates as
of the  Closing  Date by such  Rating  Agency  and (ii)  provide  a copy of such
written confirmation to the Trustee.

        Bankruptcy  Loss:  With  respect  to  any  Mortgage  Loan,  a  Deficient
Valuation or Debt Service Reduction; provided, however, that neither a Deficient
Valuation  nor a Debt  Service  Reduction  shall  be  deemed a  Bankruptcy  Loss
hereunder  so long as the Master  Servicer  has  notified the Trustee in writing
that the Master  Servicer is diligently  pursuing any remedies that may exist in
connection  with the  representations  and warranties made regarding the related
Mortgage  Loan and either (A) the related  Mortgage  Loan is not in default with
regard to payments due  thereunder or (B)  delinquent  payments of principal and
interest  under the related  Mortgage  Loan and any  premiums on any  applicable
primary hazard  insurance  policy and any related escrow  payments in respect of
such Mortgage Loan are being advanced on a current basis by the Master  Servicer
or a  Subservicer,  in either case  without  giving  effect to any Debt  Service
Reduction.

        Bankruptcy Code: The Bankruptcy Code of 1978, as amended.

                                              9

<PAGE>

        Book-Entry  Certificate:  Any Certificate  registered in the name of the
Depository or its nominee.

        Business  Day:  Any day other than (i) a Saturday  or a Sunday or (ii) a
day on which  banking  institutions  in the  State  of New York or the  State of
California (and such other state or states in which the Custodial Account or the
Certificate  Account are at the time  located) are required or authorized by law
or executive order to be closed.

        Calendar  Quarter:  A  Calendar  Quarter  shall  consist  of  one of the
following  time periods in any given year:  January 1 through  March 31, April 1
through June 30, July 1 though September 30, and October 1 through December 31.

        Cash  Liquidation:  As to  any  defaulted  Mortgage  Loan  other  than a
Mortgage Loan as to which an REO Acquisition  occurred,  a determination  by the
Master  Servicer  that  it has  received  all  Insurance  Proceeds,  Liquidation
Proceeds  and  other  payments  or cash  recoveries  which the  Master  Servicer
reasonably and in good faith expects to be finally  recoverable  with respect to
such Mortgage Loan.

     Certificate:  Any  Class  A  Certificate,  Class  M  Certificate,  Class  B
Certificate or Class R Certificate.

        Certificate  Account:  The  account or accounts  created and  maintained
pursuant to Section 4.01,  which shall be entitled  "Deutsche Bank Trust Company
Americas,  as trustee,  in trust for the registered holders of Residential Asset
Mortgage  Products,  Inc.,  Mortgage  Asset-Backed  Pass- Through  Certificates,
Series 2003-RM2" and which must be an Eligible Account.

        Certificate  Account  Deposit Date:  As to any  Distribution  Date,  the
Business Day prior thereto.

        Certificateholder  or Holder:  The Person in whose name a Certificate is
registered  in the  Certificate  Register,  except that  neither a  Disqualified
Organization  nor a  Non-United  States  Person  shall be a holder  of a Class R
Certificate for any purpose hereof. Solely for the purpose of giving any consent
or direction pursuant to this Agreement,  any Certificate,  other than a Class R
Certificate, registered in the name of the Depositor, the Master Servicer or any
Subservicer or any Affiliate  thereof shall be deemed not to be outstanding  and
the Percentage  Interest or Voting Rights  evidenced  thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
or Voting  Rights  necessary to effect any such  consent or  direction  has been
obtained.  All  references  herein to  "Holders" or  "Certificateholders"  shall
reflect the rights of Certificate  Owners as they may  indirectly  exercise such
rights through the  Depository  and  participating  members  thereof,  except as
otherwise  specified  herein;  provided,  however,  that  the  Trustee  shall be
required to  recognize as a "Holder" or  "Certificateholder"  only the Person in
whose name a Certificate is registered in the Certificate Register.

                                              10

<PAGE>

        Certificate Owner: With respect to a Book-Entry Certificate,  the Person
who is the beneficial owner of such Certificate, as reflected on the books of an
indirect participating brokerage firm for which a Depository Participant acts as
agent, if any, and otherwise on the books of a Depository  Participant,  if any,
and otherwise on the books of the Depository.

        Certificate  Principal Balance:  With respect to any Class A (other than
the Class A-I-2, Class AV-I, Class AV-II or Class AV-III Certificates), Class R,
Class M or Class B Certificate, on any date of determination, an amount equal to
(i) the Initial  Certificate  Principal Balance of such Certificate as specified
on the face  thereof,  minus (ii) the sum of (x) the  aggregate  of all  amounts
previously  distributed  with respect to such  Certificate  (or any  predecessor
Certificate) and applied to reduce the Certificate  Principal  Balance or amount
thereof  pursuant to Section  4.02(a) and (y) the aggregate of all reductions in
Certificate  Principal  Balance  deemed  to have  occurred  in  connection  with
Realized  Losses which were  previously  allocated to such  Certificate  (or any
predecessor  Certificate) pursuant to Section 4.05. The Class A-I-2, Class AV-I,
Class AV-II and Class AV-III Certificates will not have a Certificate  Principal
Balance.

        Certificate Register and Certificate Registrar:  The register maintained
and the registrar appointed pursuant to Section 5.02.

     Class:  Collectively,  all of the Certificates or uncertificated  interests
bearing the same designation.

        Class A Certificates:  Any one of the Class A-I, Class AP-I, Class AV-I,
Class A-II, Class AP-II, Class AV-II, Class A-III, Class AP-III and Class AV-III
Certificates.

        Class A-I Certificate:  Any one of the Class A-I-1,  Class A-I-2,  Class
A-I-3,  Class A-I-4,  Class A-I-5,  Class A-I-6, Class A-I-7, Class A-I-8, Class
A-I-9 and Class A-I-10 Certificates executed by the Trustee and authenticated by
the Certificate Registrar substantially in the form annexed hereto as Exhibit A,
senior to the Class M-1,  Class M-2,  Class M-3,  Class B-1, Class B-2 and Class
B-3 Certificates  with respect to  distributions  and the allocation of Realized
Losses in  respect  of the  Mortgage  Loans as set forth in  Section  4.05,  and
evidencing  an  interest  designated  as a  "regular  interest"  in REMIC IV for
purposes of the REMIC Provisions.

        Class AV-I Certificate:  Any one of the Class AV-I Certificates executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed  hereto as Exhibit A, senior to the Class M-1, Class M-2, Class
M-3,  Class  B-1,  Class  B-2  and  Class  B-3  Certificates   with  respect  to
distributions  and the allocation of Realized  Losses in respect of the Mortgage
Loans as set forth in Section 4.05, and  evidencing an interest  designated as a
"regular interest" in REMIC IV for purposes of the REMIC Provisions.

        Class AP-I Certificate:  Any one of the Class AP-I Certificates executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed  hereto as Exhibit A, senior to the Class M-1, Class M-2, Class
M-3, Class B-1, Class B-2 and Class B-3 Certificates with

                                              11

<PAGE>

respect to distributions and the allocation of Realized Losses in respect of the
Mortgage  Loans  as set  forth in  Section  4.05,  and  evidencing  an  interest
designated  as a  "regular  interest"  in REMIC  IV for  purposes  of the  REMIC
Provisions.

        Class AP Collection  Shortfall:  With respect to the Cash Liquidation or
REO Disposition of a Group I Discount  Mortgage Loan, Group II Discount Mortgage
Loan or Group III Discount  Mortgage Loan and any Distribution  Date, the excess
of the amount described in Section 4.02(b)(i)(3)(1) over the amount described in
Section 4.02(b)(i)(3)(2).

      Class AP Principal Distribution Amount:  As defined in Section 4.02(b)(i).

        Class A-II Certificate:  Any one of the Class A-II Certificates executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed  hereto as Exhibit A, senior to the Class M-1, Class M-2, Class
M-3,  Class  B-1,  Class  B-2  and  Class  B-3  Certificates   with  respect  to
distributions  and the allocation of Realized  Losses in respect of the Mortgage
Loans as set forth in Section 4.05, and  evidencing an interest  designated as a
"regular interest" in REMIC IV for purposes of the REMIC Provisions.

        Class  AV-II  Certificate:  Any  one of  the  Class  AV-II  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit A, senior to the Class M-1,
Class M-2,  Class  M-3,  Class B-1,  Class B-2 and Class B-3  Certificates  with
respect to distributions and the allocation of Realized Losses in respect of the
Mortgage  Loans  as set  forth in  Section  4.05,  and  evidencing  an  interest
designated  as a  "regular  interest"  in REMIC  IV for  purposes  of the  REMIC
Provisions.

        Class  AP-II  Certificate:  Any  one of  the  Class  AP-II  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form annexed hereto as Exhibit A, senior to the Class M-1,
Class M-2,  Class  M-3,  Class B-1,  Class B-2 and Class B-3  Certificates  with
respect to distributions and the allocation of Realized Losses in respect of the
Mortgage  Loans  as set  forth in  Section  4.05,  and  evidencing  an  interest
designated  as a  "regular  interest"  in REMIC  IV for  purposes  of the  REMIC
Provisions.

        Class  A-III  Certificate:  Any  one of  the  Class  A-III  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class M-III
and Class B-III Certificates with respect to distributions and the allocation of
Realized  Losses in respect of the Mortgage  Loans as set forth in Section 4.05,
and  evidencing an interest  designated as a "regular  interest" in REMIC IV for
purposes of the REMIC Provisions.

        Class  AP-III  Certificate:  Any one of the  Class  AP-III  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class M-III
and Class B-III Certificates with respect to distributions and the allocation of
Realized  Losses in respect of the Mortgage  Loans as set forth in Section 4.05,
and  evidencing an interest  designated as a "regular  interest" in REMIC IV for
purposes of the REMIC Provisions.

                                              12

<PAGE>

        Class  AV-III  Certificate:  Any one of the  Class  AV-III  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially in the form annexed hereto as Exhibit A, senior to the Class M-III
and Class B-III Certificates with respect to distributions and the allocation of
Realized  Losses in respect of the Mortgage  Loans as set forth in Section 4.05,
and  evidencing an interest  designated as a "regular  interest" in REMIC IV for
purposes of the REMIC Provisions.

        Class B Certificates:  Any one of the Class B-1, Class B-2, Class B-3 or
Class B-III Certificates.

        Class B-1 Certificates:  Any one of the Class B-1 Certificates  executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form  annexed  hereto as  Exhibit  C,  senior to the Class B-2 and Class B-3
Certificates with respect to distributions and the allocation of Realized Losses
in respect of the Mortgage Loans as set forth in Section 4.05, and evidencing an
interest  designated  as a "regular  interest"  in REMIC IV for  purposes of the
REMIC Provisions.

        Class B-2 Certificates:  Any one of the Class B-2 Certificates  executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit C, senior to the Class B-3 Certificates  with
respect to distributions and the allocation of Realized Losses in respect of the
Mortgage  Loans  as set  forth in  Section  4.05,  and  evidencing  an  interest
designated  as a  "regular  interest"  in REMIC  IV for  purposes  of the  REMIC
Provisions.

        Class B-3 Certificates:  Any one of the Class B-3 Certificates  executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit C, and evidencing an interest designated as a
"regular interest" in REMIC IV for purposes of the REMIC Provisions.

        Class B-III Certificates: Any one of the Class B-III-1, Class B-III-2 or
Class B-III-3 Certificates.

        Class B-III-1  Certificate:  Any one of the Class  B-III-1  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form  annexed  hereto as  Exhibit  C,  senior to the Class
B-III-2 and Class B-III-3  Certificates  with respect to  distributions  and the
allocation of Realized  Losses in respect of the Mortgage  Loans as set forth in
Section 4.05, and evidencing an interest  designated as a "regular  interest" in
REMIC IV for purposes of the REMIC Provisions.

        Class B-III-2  Certificate:  Any one of the Class  B-III-2  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form  annexed  hereto as  Exhibit  C,  senior to the Class
B-III-3  Certificates  with  respect  to  distributions  and the  allocation  of
Realized  Losses in respect of the Mortgage  Loans as set forth in Section 4.05,
and  evidencing an interest  designated as a "regular  interest" in REMIC IV for
purposes of the REMIC Provisions.

     Class  B-III-3  Certificate:  Any  one of the  Class  B-III-3  Certificates
executed by the Trustee

                                              13

<PAGE>

and authenticated by the Certificate Registrar substantially in the form annexed
hereto as  Exhibit  C, and  evidencing  an  interest  designated  as a  "regular
interest" in REMIC IV for purposes of the REMIC Provisions.

     Class M  Certificates:  Any one of the Class M-1,  Class M-2,  Class M-3 or
Class M-III Certificates.

        Class M-1 Certificates:  Any one of the Class M-1 Certificates  executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form  annexed  hereto as  Exhibit  B,  senior to the Class M-2 and Class M-3
Certificates with respect to distributions and the allocation of Realized Losses
in respect of the Mortgage Loans as set forth in Section 4.05, and evidencing an
interest  designated  as a "regular  interest"  in REMIC IV for  purposes of the
REMIC Provisions.

        Class M-2 Certificates:  Any one of the Class M-2 Certificates  executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit B, senior to the Class M-3 Certificates  with
respect to distributions and the allocation of Realized Losses in respect of the
Mortgage  Loans  as set  forth in  Section  4.05,  and  evidencing  an  interest
designated  as a  "regular  interest"  in REMIC  IV for  purposes  of the  REMIC
Provisions.

        Class M-3 Certificates:  Any one of the Class M-3 Certificates  executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit B, and evidencing an interest designated as a
"regular interest" in REMIC IV for purposes of the REMIC Provisions.

        Class M-III Certificates: Any one of the Class M-III-1, Class M-III-2 or
Class M-III-3 Certificates.

        Class M-III-1  Certificate:  Any one of the Class  M-III-1  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form  annexed  hereto as  Exhibit  B,  senior to the Class
M-III-2 and Class M-III-3  Certificates  with respect to  distributions  and the
allocation of Realized  Losses in respect of the Mortgage  Loans as set forth in
Section 4.05, and evidencing an interest  designated as a "regular  interest" in
REMIC IV for purposes of the REMIC Provisions.

        Class M-III-2  Certificate:  Any one of the Class  M-III-2  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form  annexed  hereto as  Exhibit  B,  senior to the Class
M-III-3  Certificates  with  respect  to  distributions  and the  allocation  of
Realized  Losses in respect of the Mortgage  Loans as set forth in Section 4.05,
and  evidencing an interest  designated as a "regular  interest" in REMIC IV for
purposes of the REMIC Provisions.

        Class M-III-3  Certificate:  Any one of the Class  M-III-3  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially  in the form  annexed  hereto  as  Exhibit  B, and  evidencing  an
interest designated as a "regular interest" in REMIC IV for purposes of the

                                              14

<PAGE>

REMIC Provisions.

     Class R Certificate:  Any one of the Class R-I, Class R-II,  Class R-III or
Class R-IV Certificates.

        Class R-I Certificate: Any one of the Class R-I Certificates executed by
the Trustee and authenticated by the Certificate Registrar  substantially in the
form annexed  hereto as Exhibit D and  evidencing  an interest  designated  as a
"residual interest" in REMIC I for purposes of the REMIC Provisions.

        Class R-II Certificate:  Any one of the Class R-II Certificates executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit D and evidencing an interest  designated as a
"residual interest" in REMIC II for purposes of the REMIC Provisions.

        Class  R-III  Certificate:  Any  one of  the  Class  R-III  Certificates
executed  by  the  Trustee  and  authenticated  by  the  Certificate   Registrar
substantially in the form annexed hereto as Exhibit D and evidencing an interest
designated  as a  "residual  interest"  in REMIC III for  purposes  of the REMIC
Provisions.

        Class R-IV Certificate:  Any one of the Class R-IV Certificates executed
by the Trustee and authenticated by the Certificate  Registrar  substantially in
the form annexed hereto as Exhibit D and evidencing an interest  designated as a
"residual interest" in REMIC IV for purposes of the REMIC Provisions.

        Clearstream: Clearstream Banking, societe anonyme.

        Closing Date: May 29, 2003.

        Code: The Internal Revenue Code of 1986.

        Commission: The Securities and Exchange Commission.

        Compensating Interest:  With respect to any Distribution Date, an amount
equal to Prepayment Interest Shortfalls resulting from Principal  Prepayments in
Full  during the related  Prepayment  Period and  Curtailments  during the prior
calendar  month,  but not more than the sum of the Servicing Fee, all income and
gain on amounts held in the Custodial  Account and the  Certificate  Account and
payable to the  Certificateholders  with respect to such  Distribution  Date and
servicing  compensation to which the Master Servicer may be entitled pursuant to
Section  3.10(a)(v) and (vi), in each case with respect to the Mortgage Loans in
the related Loan Group; provided that for purposes of this definition the amount
of the Servicing Fee will not be reduced  pursuant to Section 7.02 except as may
be required pursuant to the last sentence of such Section.

                                              15

<PAGE>

        Corporate Trust Office:  The principal office of the Trustee at which at
any particular  time its corporate trust business with respect to this Agreement
shall  be  administered,  which  office  at the  date of the  execution  of this
instrument  is  located at 1761 East St.  Andrew  Place,  Santa Ana,  California
92705-4934, Attention: RAMPI, Series 2003-RM2.

        Corresponding  Certificate:  With  respect  to  (i)  REMIC  III  Regular
Interest  LT3-AI1,  (ii) REMIC III  Regular  Interest  LT3-AI3,  (iii) REMIC III
Regular Interest LT3-AI4, (iv) REMIC III Regular Interest LT3-AI5, (v) REMIC III
Regular Interest LT3-AI6,  (vi) REMIC III Regular Interest LT3-AI7,  (vii) REMIC
III Regular Interest LT3-AI8,  (viii) REMIC III Regular Interest  LT3-AI9,  (ix)
REMIC III Regular Interest  LT3-AI10,  (x) REMIC III Regular  Interest  LT3-API,
(xi) REMIC III  Regular  Interest  LT3-AVI,  (xii)  REMIC III  Regular  Interest
LT3-AII,  (xiii) REMIC III Regular  Interest  LT3-APII,  (xiv) REMIC III Regular
Interest  LT3-AVII,  (xv) REMIC III Regular Interest  LT3-AIII,  (xvi) REMIC III
Regular  Interest  LT3-APIII,  (xvii)  REMIC III  Regular  Interest  LT3- AVIII,
(xviii)  REMIC III Regular  Interest  LT3-R,  (xix)  REMIC III Regular  Interest
LT3-M1, (xx) REMIC III Regular Interest LT3-M2, (xxi) REMIC III Regular Interest
LT3-M3,  (xxii) REMIC III Regular Interest LT3-MIII1,  (xxiii) REMIC III Regular
Interest LT3-MIII2, (xxiv) REMIC III Regular Interest LT3-MIII3, (xxv) REMIC III
Regular Interest LT3-B1, (xxvi) REMIC III Regular Interest LT3-B2, (xxvii) REMIC
III Regular  Interest  LT3-B3,  (xxviii) REMIC III Regular  Interest  LT3-BIII1,
(xxix) REMIC III Regular Interest LT3-BIII2 and (xxx) REMIC III Regular Interest
LT3-BIII3; (i) the Class A-I-1 Certificates,  (ii) the Class A-I-3 Certificates,
(iii) the Class A-I-4 Certificates,  (iv) the Class A-I-5 Certificates,  (v) the
Class A-I-6  Certificates,  (vi) the Class A-I-7  Certificates,  (vii) the Class
A-I-8 Certificates,  (viii) the Class A-I-9 Certificates,  (ix) the Class A-I-10
Certificates, (x) the Class AP-I Certificates, (xi) the Class AV-I Certificates,
(xii) the Class A-II Certificates,  (xiii) the Class AP-II  Certificates,  (xiv)
the Class  AV-II  Certificates,  (xv) the Class A- III  Certificates,  (xvi) the
Class AP-III  Certificates,  (xvii) the Class AV-III  Certificates,  (xviii) the
Class R-IV  Certificates,  (xix) the Class M-1 Certificates,  (xx) the Class M-2
Certificates,  (xxi) the  Class  M-3  Certificates,  (xxii)  the  Class  M-III-1
Certificates,  (xxiii) the Class M-III-2  Certificates,  (xiv) the Class M-III-3
Certificates,   (xxv)  the  Class  B-1   Certificates,   (xxvi)  the  Class  B-2
Certificates,  (xxvii) the Class B-3  Certificates,  (xxviii) the Class  B-III-1
Certificates,  (xxix) the Class B-III-2 Certificates and (xxx) the Class B-III-3
Certificates, respectively.

        Corresponding  Interest:  With respect to (x) REMIC I Regular  Interests
LT-I-AP  and LT-II- AP and REMIC II Regular  Interest  LT-III-AP,  (y) REMIC III
Regular Interests LT3-API, LT3-APII and LT3-APIII.

        Credit  Support  Depletion  Date:  With respect to each Loan Group,  the
first Distribution Date on which the related Senior Percentage equals 100%.

     Curtailment:  Any Principal  Prepayment  made by a Mortgagor which is not a
Principal Prepayment in Full.

     Custodial Account: The custodial account or accounts created and maintained
pursuant to Section 3.07 in the name of a depository  institution,  as custodian
for the holders of the Certificates,

                                              16

<PAGE>

for the holders of certain other interests in mortgage loans serviced or sold by
the Master  Servicer  and for the Master  Servicer,  into which the  amounts set
forth in Section 3.07 shall be deposited directly.  Any such account or accounts
shall be an Eligible Account.

        Custodial  Agreement:  An  agreement  that may be entered into among the
Depositor, the Master Servicer, the Trustee and a Custodian in substantially the
form of Exhibit E hereto.

        Custodian: A custodian appointed pursuant to a Custodial Agreement.
        ---------

        Cut-off Date: May 1, 2003.

     Cut-off  Date  Balance:  The Group I  Cut-off  Date  Balance,  the Group II
Cut-off Date Balance or the Group III Cut-off Date Balance.

        Cut-off Date  Principal  Balance:  As to any Mortgage  Loan,  the unpaid
principal  balance  thereof  at the  Cut-off  Date  after  giving  effect to all
installments  of principal  due on or prior  thereto (or due during the month of
the Cut-off Date), whether or not received.

        Debt Service  Reduction:  With respect to any Mortgage Loan, a reduction
in the scheduled  Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code,  except such a reduction
constituting a Deficient  Valuation or any reduction that results in a permanent
forgiveness of principal.

        Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding  indebtedness  under the Mortgage Loan, or any reduction in
the amount of  principal to be paid in  connection  with any  scheduled  Monthly
Payment that constitutes a permanent  forgiveness of principal,  which valuation
or reduction results from a proceeding under the Bankruptcy Code.

        Definitive Certificate: Any definitive, fully registered Certificate.
        ----------------------

     Deleted  Mortgage  Loan: A Mortgage  Loan replaced or to be replaced with a
Qualified Substitute Mortgage Loan.

        Delinquent:  As used herein, a Mortgage Loan is considered to be: "30 to
59 days" or "30 or more days" delinquent when a payment due on any scheduled due
date  remains  unpaid  as of the  close of  business  on the last  business  day
immediately  prior to the next following  monthly  scheduled due date; "60 to 89
days" or "60 or more days"  delinquent  when a payment due on any  scheduled due
date  remains  unpaid  as of the  close of  business  on the last  business  day
immediately prior to the second following monthly scheduled due date; and so on.
The  determination  as to whether a Mortgage Loan falls into these categories is
made as of the close of business  on the last  business  day of each month.  For
example, a Mortgage Loan with a payment due on July 1 that remained unpaid as of
the close of  business on July 31 would then be  considered  to be 30 to 59 days
delinquent.

                                              17

<PAGE>

Delinquency  information as of the Cut-off Date is determined and prepared as of
the close of business on the last business day immediately  prior to the Cut-off
Date.

        Depository:  The Depository Trust Company,  or any successor  Depository
hereafter  named.  The  nominee  of  the  initial  Depository  for  purposes  of
registering those Certificates that are to be Book-Entry  Certificates is Cede &
Co. The Depository shall at all times be a "clearing  corporation" as defined in
Section  8-102(3) of the Uniform  Commercial Code of the State of New York and a
"clearing  agency"  registered  pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.

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

        Destroyed  Mortgage  Note:  A Mortgage  Note the  original  of which was
permanently lost or destroyed and has not been replaced.

        Determination  Date: With respect to any Distribution Date, the 20th day
(or if such  20th  day is not a  Business  Day,  the  Business  Day  immediately
following such 20th day) of the month of the related Distribution Date.

     Discount  Fraction:  The  Group I  Discount  Fraction,  Group  II  Discount
Fraction or Group III Discount Fraction, as applicable.

     Discount Mortgage Loan: A Group I Discount Mortgage Loan, Group II Discount
Mortgage Loan or Group III Discount Mortgage Loan, as applicable.

     Discount Net Mortgage Rate:  The Group I Discount Net Mortgage Rate,  Group
II Discount Net  Mortgage  Rate or Group III  Discount  Net  Mortgage  Rate,  as
applicable.

        Disqualified  Organization:  Any organization defined as a "disqualified
organization"  under Section  860E(e)(5) of the Code,  which includes any of the
following:  (i) the United States, any State or political  subdivision  thereof,
any possession of the United States, or any agency or  instrumentality of any of
the foregoing  (other than an  instrumentality  which is a corporation if all of
its activities are subject to tax and, except for Freddie Mac, a majority of its
board of directors is not selected by such  governmental  unit),  (ii) a foreign
government, any international organization,  or any agency or instrumentality of
any of the  foregoing,  (iii) any  organization  (other  than  certain  farmers'
cooperatives  described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code  (including  the tax  imposed by Section 511 of
the Code on  unrelated  business  taxable  income) and (iv) rural  electric  and
telephone  cooperatives  described  in  Section  1381(a)(2)(C)  of the  Code.  A
Disqualified  Organization  also includes any "electing large  partnership,"  as
defined in Section  775(a) of the Code and any other Person so designated by the
Trustee  based  upon an  Opinion of  Counsel  that the  holding of an  Ownership
Interest in a Class R Certificate by such Person

                                              18

<PAGE>

may cause any REMIC or any Person  having an Ownership  Interest in any Class of
Certificates  (other than such Person) to incur a liability  for any federal tax
imposed  under the Code that would not otherwise be imposed but for the Transfer
of an Ownership  Interest in a Class R  Certificate  to such  Person.  The terms
"United  States",  "State"  and  "international  organization"  shall  have  the
meanings set forth in Section 7701 of the Code or successor provisions.

        Distribution  Date:  The 25th day of any  month  beginning  in the month
immediately  following the month of the initial issuance of the Certificates or,
if such 25th day is not a Business Day, the Business Day  immediately  following
such 25th day.

        Due Date: With respect to any  Distribution  Date and any Mortgage Loan,
the day during the related Due Period on which the Monthly Payment is due.

        Due Period: With respect to any Distribution Date, the calendar month of
such Distribution Date.

        Eligible  Account:  An  account  that  is  any  of  the  following:  (i)
maintained with a depository institution the debt obligations of which have been
rated by each Rating Agency in its highest rating available,  or (ii) an account
or accounts in a depository institution in which such accounts are fully insured
to the limits established by the FDIC, provided that any deposits not so insured
shall, to the extent  acceptable to each Rating Agency, as evidenced in writing,
be maintained such that (as evidenced by an Opinion of Counsel  delivered to the
Trustee and each Rating Agency) the registered  Holders of  Certificates  have a
claim with  respect to the funds in such account or a perfected  first  security
interest   against  any   collateral   (which  shall  be  limited  to  Permitted
Investments)  securing  such  funds  that is  superior  to  claims  of any other
depositors or creditors of the depository institution with which such account is
maintained,  or (iii) in the case of the Custodial  Account,  either (A) a trust
account or accounts  maintained in the corporate  trust  department of Bank One,
National Association,  or (B) an account or accounts maintained in the corporate
asset services department of Bank One, National Association as long as its short
term debt obligations are rated P-1 (or the equivalent) or better by each Rating
Agency,  and its long term debt  obligations are rated A2 (or the equivalent) or
better, by each Rating Agency, or (iv) in the case of the Certificate Account, a
trust account or accounts maintained in the corporate trust division of Deutsche
Bank Trust  Company  Americas,  or (v) an account or  accounts  of a  depository
institution  acceptable  to each Rating  Agency (as evidenced in writing by each
Rating  Agency  that use of any such  account  as the  Custodial  Account or the
Certificate  Account  will  not  reduce  the  rating  assigned  to any  Class of
Certificates by such Rating Agency below the lower of the then-current rating or
the rating  assigned to such  Certificates as of the Closing Date by such Rating
Agency).

        Eligible Funds: On any  Distribution  Date, the portion,  if any, of the
Group I Available Distribution Amount, Group II Available Distribution Amount or
Group III Available  Distribution Amount remaining after reduction by the sum of
(i) the aggregate amount of Accrued  Certificate  Interest on the related Senior
Certificates,  (ii) the related Senior Principal Distribution Amount (determined
without  regard  to  Section  4.02(a)(ii)(Y)(D)  of this  Agreement),  (iii) the
related Class

                                              19

<PAGE>

AP  Principal   Distribution   Amount  (determined  without  regard  to  Section
4.02(b)(i)(5)  of this  Agreement)  and (iv) the  aggregate  amount  of  Accrued
Certificate  Interest  on  the  related  Class  M  Certificates  and  Class  B-1
Certificates and Class B-2 Certificates or Class B-III-1  Certificates and Class
B-III-2 Certificates, as applicable.

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

        Euroclear: Euroclear Bank, S.A./NA, as operator of The Euroclear System.
        ---------

        Event of Default: As defined in Section 7.01.
        ----------------

        Excess  Bankruptcy  Loss: With respect to the Group I Loans and Group II
Loans,  any Bankruptcy Loss on such Mortgage Loans,  or portion  thereof,  which
exceeds the then-applicable related Bankruptcy Amount. With respect to the Group
III Loans, any Bankruptcy Loss on such Mortgage Loans, or portion thereof, which
exceeds the then-applicable related Bankruptcy Amount.

        Excess Fraud Loss: With respect to the Group I Loans and Group II Loans,
any Fraud Loss on such Mortgage  Loans,  or portion  thereof,  which exceeds the
then-applicable  related Fraud Loss Amount. With respect to the Group III Loans,
any Fraud Loss on such Mortgage  Loans,  or portion  thereof,  which exceeds the
then-applicable related Fraud Loss Amount.

        Excess Loss:  With  respect to the Group I Loans and Group II Loans,  or
Group III Loans,  any Excess Fraud Loss,  Excess  Special  Hazard  Loss,  Excess
Bankruptcy Loss or Extraordinary Loss.

        Excess Special Hazard Loss:  With respect to the Group I Loans and Group
II Loans,  any Special Hazard Loss on such Mortgage Loans,  or portion  thereof,
which exceeds the then-applicable related Special Hazard Amount. With respect to
the Group III Loans,  any Special Hazard Loss on such Mortgage Loans, or portion
thereof, which exceeds the then-applicable related Special Hazard Amount.

        Excess  Subordinate  Principal Amount:  With respect to any Distribution
Date on which  the  aggregate  Certificate  Principal  Balance  of the  Class of
Subordinate  Certificates  related  to a Loan Group  then  outstanding  with the
Lowest  Priority is to be reduced to zero and on which Realized Losses are to be
allocated to such class or classes,  the excess,  if any, of (i) the amount that
would  otherwise  be  distributable  in  respect of  principal  on such class or
classes of Certificates on such  Distribution Date over (ii) the excess, if any,
of the  aggregate  Certificate  Principal  Balance  of such  class or classes of
Certificates  immediately  prior to such  Distribution  Date over the  aggregate
amount of Realized  Losses to be allocated to such  classes of  Certificates  on
such Distribution  Date as reduced by any amount calculated  pursuant to Section
4.02(b)(i)(5). The Excess Subordinate Principal Amount for Loan Group I and Loan
Group II will be allocated between the Group I Senior  Certificates and Group II
Senior  Certificates  on a pro rata  basis in  accordance  with  the  amount  of
Realized  Losses  attributable  to each Loan Group and  allocated to the related
Certificates on such Distribution Date. The Excess Subordinate  Principal Amount
for Loan Group III will be allocated

                                              20

<PAGE>

first to the Group III Senior  Certificates,  then to the Class  M-III-1,  Class
M-III-2 and Class M-III-3 Certificates, in that order, and finally, to the Class
B-III-1,  Class  B-III-2  and Class  B-III-3  Certificates,  in that  order,  in
accordance with the amount of Realized Losses attributable to Loan Group III and
allocated to those Certificates on such Distribution Date.

        Exchange Act: The Securities Exchange Act of 1934, as amended.
        ------------

        Extraordinary  Events: Any of the following conditions with respect to a
Mortgaged  Property or Mortgage Loan causing or resulting in a loss which causes
the liquidation of such Mortgage Loan:

        (a) losses  that are of the type that  would be covered by the  fidelity
bond and the errors and  omissions  insurance  policy  required to be maintained
pursuant  to  Section  3.12(b)  but are in  excess  of the  coverage  maintained
thereunder;

        (b) nuclear reaction or nuclear radiation or radioactive  contamination,
all whether  controlled  or  uncontrolled,  and  whether  such loss be direct or
indirect,  proximate or remote or be in whole or in part caused by,  contributed
to or  aggravated  by a peril  covered by the  definition  of the term  "Special
Hazard Loss";

        (c) hostile or warlike action in time of peace or war,  including action
in hindering,  combatting or defending against an actual,  impending or expected
attack;

                             (1) by any government or sovereign  power,  de jure
                      or de  facto,  or by any  authority  maintaining  or using
                      military, naval or air forces; or

                             (2) by military, naval or air forces; or

                             (3) by an  agent  of any  such  government,  power,
                      authority or forces; or

                             (4) any weapon of war employing  atomic  fission or
                      radioactive force whether in time of peace or war; or

                             (5) insurrection, rebellion, revolution, civil war,
                      usurped power or action taken by governmental authority in
                      hindering,   combatting  or  defending   against  such  an
                      occurrence,  seizure or  destruction  under  quarantine or
                      customs   regulations,   confiscation   by  order  of  any
                      government or public authority;  or risks of contraband or
                      illegal transportation or trade.

     Extraordinary  Losses:  Any loss  incurred on a Mortgage  Loan caused by or
resulting from an Extraordinary Event.

     Fannie  Mae:  Fannie  Mae,  a  federally   chartered  and  privately  owned
corporation organized

                                              21

<PAGE>

and existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.

     FASIT:  A "financial  asset  securitization  investment  trust"  within the
meaning of Section 860L of the Code.

        FDIC: Federal Deposit Insurance Corporation or any successor thereto.

        FHA: The Federal Housing Administration, or its successor.

        Final  Distribution  Date:  The  Distribution  Date on which  the  final
distribution  in respect of the  Certificates  will be made  pursuant to Section
9.01, which Final  Distribution  Date shall in no event be later than the end of
the 90-day liquidation period described in Section 9.02.

        Final  Scheduled  Distribution  Date: With respect to the Group I Senior
Certificates,  Group III Senior  Certificates,  Class M Certificates and Class B
Certificates,  May 25, 2033.  With respect to the Group II Senior  Certificates,
May 25,  2018.  No event of default  under this  Agreement  will arise or become
applicable  solely by reason of the  failure to retire  the  entire  Certificate
Principal  Balance  of any  Class  of  Class  A,  Class  R,  Class M or  Class B
Certificates on or before its Final Scheduled Distribution Date.

        Fitch: Fitch, Inc., or its successor in interest.

        Foreclosure   Profits:   As  to  any   Distribution   Date  or   related
Determination  Date and any Mortgage  Loan,  the excess,  if any, of Liquidation
Proceeds,  Insurance Proceeds and REO Proceeds (net of all amounts  reimbursable
therefrom  pursuant to Section  3.10(a)(ii)) in respect of each Mortgage Loan or
REO Property for which a Cash  Liquidation  or REO  Disposition  occurred in the
related  Prepayment  Period over the sum of the unpaid principal balance of such
Mortgage Loan or REO Property (determined, in the case of an REO Disposition, in
accordance  with Section 3.14) plus accrued and unpaid  interest at the Mortgage
Rate on such unpaid  principal  balance from the Due Date to which  interest was
last paid by the Mortgagor to the first day of the month  following the month in
which such Cash Liquidation or REO Disposition occurred.

     Fraud Loss  Amount:  The Group  I/Group  II Fraud Loss  Amount or Group III
Fraud Loss Amount.

     Fraud Losses:  Losses on Mortgage  Loans as to which there was fraud in the
origination of such Mortgage Loan.

        Freddie  Mac: The Federal Home Loan  Mortgage  Corporation,  a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

     Group I Available  Distribution  Amount:  As to any  Distribution  Date, an
amount equal to (a)

                                              22

<PAGE>

the sum of (i) the  amount  relating  to the  Group I Loans  on  deposit  in the
Custodial  Account  as of the close of  business  on the  immediately  preceding
Determination  Date and amounts deposited in the Custodial Account in connection
with the  substitution of Qualified  Substitute  Mortgage Loans that are Group I
Loans,  (ii)  the  amount  of any  Advance  made  on the  immediately  preceding
Certificate  Account  Deposit Date with respect to the Group I Loans,  (iii) any
amount deposited in the Certificate  Account on the related  Certificate Account
Deposit Date pursuant to the second  paragraph of Section  3.12(a) in respect of
the Group I Loans,  (iv) any amount that the Master Servicer is not permitted to
withdraw from the Custodial  Account  pursuant to Section  3.16(e) in respect of
the  Group I Loans  and (v) any  amount  deposited  in the  Certificate  Account
pursuant to Section 4.07 or 9.01 in respect of the Group I Loans, reduced by (b)
the sum as of the close of business on the immediately  preceding  Determination
Date of (x) the Amount Held for Future  Distribution with respect to the Group I
Loans, and (y) amounts permitted to be withdrawn by the Master Servicer from the
Custodial Account in respect of the Group I Loans pursuant to clauses (ii)- (x),
inclusive, of Section 3.10(a).

        Group II Available  Distribution Amount: As to any Distribution Date, an
amount equal to (a) the sum of (i) the amount  relating to the Group II Loans on
deposit in the Custodial  Account as of the close of business on the immediately
preceding  Determination  Date and amounts deposited in the Custodial Account in
connection with the substitution of Qualified Substitute Mortgage Loans that are
Group II Loans, (ii) the amount of any Advance made on the immediately preceding
Certificate  Account Deposit Date with respect to the Group II Loans,  (iii) any
amount deposited in the Certificate  Account on the related  Certificate Account
Deposit Date pursuant to the second  paragraph of Section  3.12(a) in respect of
the Group II Loans, (iv) any amount that the Master Servicer is not permitted to
withdraw from the Custodial  Account  pursuant to Section  3.16(e) in respect of
the Group II Loans  and (v) any  amount  deposited  in the  Certificate  Account
pursuant  to Section  4.07 or 9.01 in respect of the Group II Loans,  reduced by
(b)  the  sum  as  of  the  close  of  business  on  the  immediately  preceding
Determination  Date of (x) the Amount Held for Future  Distribution with respect
to the Group II Loans,  and (y) amounts  permitted to be withdrawn by the Master
Servicer from the Custodial Account in respect of the Group II Loans pursuant to
clauses (ii)- (x), inclusive, of Section 3.10(a).

        Group III Available Distribution Amount: As to any Distribution Date, an
amount equal to (a) the sum of (i) the amount relating to the Group III Loans on
deposit in the Custodial  Account as of the close of business on the immediately
preceding  Determination  Date and amounts deposited in the Custodial Account in
connection with the substitution of Qualified Substitute Mortgage Loans that are
Group  III  Loans,  (ii)  the  amount  of any  Advance  made on the  immediately
preceding  Certificate Account Deposit Date with respect to the Group III Loans,
(iii) any amount deposited in the Certificate Account on the related Certificate
Account  Deposit Date  pursuant to the second  paragraph  of Section  3.12(a) in
respect of the Group III Loans,  (iv) any amount that the Master Servicer is not
permitted to withdraw from the Custodial  Account pursuant to Section 3.16(e) in
respect of the Group III  Loans,  (v) any amount  deposited  in the  Certificate
Account  pursuant to Section  4.07 or 9.01 in respect of the Group III Loans and
(vi) any amount  received by the Trustee  pursuant to the Surety Bond in respect
of such Distribution Date, reduced by (b) the sum as of the

                                              23

<PAGE>

close of business on the  immediately  preceding  Determination  Date of (x) the
Amount Held for Future Distribution with respect to the Group III Loans, and (y)
amounts  permitted  to be withdrawn by the Master  Servicer  from the  Custodial
Account  in  respect  of the Group  III  Loans  pursuant  to  clauses  (ii)-(x),
inclusive, of Section 3.10(a).

        Group I Cut-off Date Balance: $255,332,470.60.

        Group II Cut-off Date Balance: $77,700,011.52.

        Group III Cut-off Date Balance: $157,102,977.37.
        ------------------------------

        Group  I  Discount  Fraction:  With  respect  to each  Group I  Discount
Mortgage Loan, the fraction expressed as a percentage, the numerator of which is
the Group I  Discount  Net  Mortgage  Rate minus the Net  Mortgage  Rate (or the
initial Net Mortgage Rate with respect to any Group I Discount Mortgage Loans as
to which the Mortgage  Rate is modified  pursuant to 3.07(a)) for such  Mortgage
Loan and the denominator of which is the Group I Discount Net Mortgage Rate. The
Group I Discount Fraction with respect to each Group I Discount Mortgage Loan is
as set forth in Exhibit P-1 attached hereto.

        Group II  Discount  Fraction:  With  respect to each  Group II  Discount
Mortgage Loan, the fraction expressed as a percentage, the numerator of which is
the Group II Discount  Net  Mortgage  Rate minus the Net  Mortgage  Rate (or the
initial Net Mortgage Rate with respect to any Group II Discount  Mortgage  Loans
as to which the Mortgage Rate is modified pursuant to 3.07(a)) for such Mortgage
Loan and the  denominator  of which is the Group II Discount Net Mortgage  Rate.
The Group II Discount  Fraction with respect to each Group II Discount  Mortgage
Loan is as set forth in Exhibit P-2 attached hereto.

        Group III  Discount  Fraction:  With  respect to each Group III Discount
Mortgage Loan, the fraction expressed as a percentage, the numerator of which is
the Group III  Discount Net  Mortgage  Rate minus the Net Mortgage  Rate (or the
initial Net Mortgage Rate with respect to any Group III Discount  Mortgage Loans
as to which the Mortgage Rate is modified pursuant to 3.07(a)) for such Mortgage
Loan and the  denominator  of which is the Group III Discount Net Mortgage Rate.
The Group III Discount Fraction with respect to each Group III Discount Mortgage
Loan is as set forth in Exhibit P-3 attached hereto.

        Group I Discount  Mortgage  Loan: Any Group I Loan having a Net Mortgage
Rate (or the initial Net  Mortgage  Rate) of less than the Group I Discount  Net
Mortgage  Rate per annum and any  Mortgage  Loan deemed to be a Group I Discount
Mortgage Loan pursuant to the definition of Qualified Substitute Mortgage Loan.

        Group II Discount Mortgage Loan: Any Group II Loan having a Net Mortgage
Rate (or the initial Net  Mortgage  Rate) of less than the Group II Discount Net
Mortgage  Rate per annum and any Mortgage  Loan deemed to be a Group II Discount
Mortgage Loan pursuant to the definition of

                                              24

<PAGE>

Qualified Substitute Mortgage Loan.

        Group III  Discount  Mortgage  Loan:  Any  Group  III Loan  having a Net
Mortgage  Rate (or the  initial  Net  Mortgage  Rate) of less than the Group III
Discount Net Mortgage  Rate per annum and any Mortgage Loan deemed to be a Group
III Discount  Mortgage Loan pursuant to the  definition of Qualified  Substitute
Mortgage Loan.

        Group I Discount  Net Mortgage  Rate:  With respect to any Group I Loan,
5.50% per annum.

        Group II Discount Net Mortgage Rate:  With respect to any Group II Loan,
5.00% per annum.

        Group III  Discount  Net  Mortgage  Rate:  With respect to any Group III
Loan, 6.00% per annum.

        Group  I/Group II Fraud  Loss  Amount:  As of any date of  determination
after the Cut-off Date,  an amount equal to: (X) prior to the third  anniversary
of the  Cut-off  Date,  an amount  equal to 1.00% of the  aggregate  outstanding
principal  balance  of all of the  Group I Loans  and  Group  II Loans as of the
Cut-off Date minus the aggregate  amount of Fraud Losses with respect to Group I
Loans and Group II Loans  allocated  through  Subordination  in accordance  with
Section  4.05 since the Cut-off  Date up to such date of  determination  and (Y)
from the third to the fifth  anniversary of the Cut-off Date, an amount equal to
(1) the  lesser of (a) the Group  I/Group  II Fraud  Loss  Amount as of the most
recent  anniversary  of  the  Cut-off  Date  and  (b)  0.50%  of  the  aggregate
outstanding  principal balance of all of the Group I Loans and Group II Loans as
of the most  recent  anniversary  of the  Cut-off  Date minus (2) the  aggregate
amount  of  Fraud  Losses  with  respect  to  Group I Loans  and  Group II Loans
allocated  through  Subordination in accordance with Section 4.05 since the most
recent anniversary of the Cut-off Date up to such date of determination.  On and
after the fifth anniversary of the Cut-off Date, the Group I/Group II Fraud Loss
Amount shall be zero.

        Group III Fraud Loss Amount:  As of any date of determination  after the
Cut-off  Date,  an amount  equal to: (X) prior to the first  anniversary  of the
Cut-off Date, an amount equal to 2.00% of the  aggregate  outstanding  principal
balance of all of the Group III Loans as of the Cut-off Date minus the aggregate
amount of Fraud  Losses  allocated  through  Subordination  in  accordance  with
Section  4.05 since the Cut-off  Date up to such date of  determination  and (Y)
from the first to the fifth  anniversary of the Cut-off Date, an amount equal to
(1) the  lesser of (a) the Group III  Fraud  Loss  Amount as of the most  recent
anniversary  of the  Cut-off  Date and (b)  1.00% of the  aggregate  outstanding
principal  balance  of  all  of the  Group  III  Loans  as of  the  most  recent
anniversary  of the Cut-off Date minus (2) the aggregate  amount of Fraud Losses
with respect to Group III Loans allocated  through  Subordination  in accordance
with  Section 4.05 since the most recent  anniversary  of the Cut-off Date up to
such date of  determination.  On and after the fifth  anniversary of the Cut-off
Date, the Group III Fraud Loss Amount shall be zero.

     Group I Loans:  The Mortgage Loans designated on the Mortgage Loan Schedule
in Exhibit

                                              25

<PAGE>

F-1.

     Group II Loans: The Mortgage Loans designated on the Mortgage Loan Schedule
in Exhibit F-2.

     Group III  Loans:  The  Mortgage  Loans  designated  on the  Mortgage  Loan
Schedule in Exhibit F-3.

        Group I/Group II Optional  Termination Date: Any Distribution Date on or
after which the Stated Principal  Balance (before giving effect to distributions
to be made on such Distribution Date) of the Group I Loans and Group II Loans is
less than  10.00% of the  aggregate  Group I Cut-off  Date  Balance and Group II
Cut-off Date Balance.

        Group III Optional  Termination  Date: Any Distribution Date on or after
which the Stated Principal  Balance (before giving effect to distributions to be
made on such  Distribution  Date) of the Group III Loans is less than  10.00% of
the Group III Cut-off Date Balance.

        Group I Senior  Accelerated  Distribution  Percentage,  Group II  Senior
Accelerated Distribution Percentage or Group III Senior Accelerated Distribution
Percentage:  With respect to any Distribution  Date occurring on or prior to the
60th Distribution  Date, 100%. With respect to any Distribution Date thereafter,
as follows:

               (i) for any Distribution  Date after the 60th  Distribution  Date
        but on or  prior to the  72nd  Distribution  Date,  the  related  Senior
        Percentage  for  such   Distribution   Date  plus  70%  of  the  related
        Subordinate Percentage for such Distribution Date;

               (ii) for any Distribution  Date after the 72nd  Distribution Date
        but on or  prior to the  84th  Distribution  Date,  the  related  Senior
        Percentage  for  such   Distribution   Date  plus  60%  of  the  related
        Subordinate Percentage for such Distribution Date;

               (iii) for any Distribution  Date after the 84th Distribution Date
        but on or  prior to the  96th  Distribution  Date,  the  related  Senior
        Percentage  for  such   Distribution   Date  plus  40%  of  the  related
        Subordinate Percentage for such Distribution Date;

               (iv) for any Distribution  Date after the 96th  Distribution Date
        but on or prior to the  108th  Distribution  Date,  the  related  Senior
        Percentage  for  such   Distribution   Date  plus  20%  of  the  related
        Subordinate Percentage for such Distribution Date; and

               (v) for any  Distribution  Date  thereafter,  the related  Senior
        Percentage for such Distribution Date;

        Any  reduction  to  the  Senior  Accelerated   Distribution   Percentage
described above shall not occur as of any Distribution Date unless either:

                                              26

<PAGE>

        (a)(1)(X)  the  outstanding  principal  balance of the Group I Loans and
Group II Loans  with  respect  to the  Group I Senior  Accelerated  Distribution
Percentage or Group II Senior Accelerated Distribution Percentage,  or the Group
III  Loans  with  respect  to the  Group  III  Senior  Accelerated  Distribution
Percentage,  delinquent 60 days or more averaged over the last six months,  as a
percentage of the aggregate  outstanding  Certificate  Principal  Balance of the
related  Subordinate  Certificates,  is less  than  50% or (Y)  the  outstanding
principal  balance of Group I Loans and Group II Loans with respect to the Group
I Senior  Accelerated  Distribution  Percentage  or Group II Senior  Accelerated
Distribution  Percentage,  or the Group III Loans with  respect to the Group III
Senior Accelerated Distribution Percentage,  delinquent 60 days or more averaged
over the last six months, as a percentage of the aggregate outstanding principal
balance  of all  Group I Loans and Group II Loans  with  respect  to the Group I
Senior  Accelerated  Distribution  Percentage  or  Group II  Senior  Accelerated
Distribution  Percentage,  or the Group III Loans with  respect to the Group III
Senior Accelerated Distribution  Percentage,  averaged over the last six months,
does not  exceed  2% and (2)  Realized  Losses on the Group I Loans and Group II
Loans with respect to the Group I Senior Accelerated  Distribution Percentage or
Group II Senior Accelerated Distribution Percentage, or the Group III Loans with
respect to the Group III Senior Accelerated Distribution Percentage, to date for
such Distribution Date if occurring during the sixth, seventh,  eighth, ninth or
tenth year (or any year  thereafter)  after the Closing  Date are less than 30%,
35%,  40%,  45% or  50%,  respectively,  of the sum of the  Initial  Certificate
Principal Balances of the related Subordinate Certificates or

        (b)(1) the outstanding  principal  balance of Group I Loans and Group II
Loans with respect to the Group I Senior Accelerated  Distribution Percentage or
Group II Senior Accelerated Distribution Percentage, or the Group III Loans with
respect to the Group III Senior Accelerated Distribution Percentage,  delinquent
60 days or more  averaged  over the  last six  months,  as a  percentage  of the
aggregate  outstanding principal balance of all Group I Loans and Group II Loans
with respect to the Group I Senior Accelerated  Distribution Percentage or Group
II Senior  Accelerated  Distribution  Percentage,  or the  Group III Loans  with
respect to the Group III Senior Accelerated  Distribution  Percentage,  averaged
over the last six  months,  does not  exceed 4% and (2)  Realized  Losses on the
Group I Loans and Group II Loans with respect to the Group I Senior  Accelerated
Distribution Percentage or Group II Senior Accelerated  Distribution Percentage,
or the  Group III  Loans  with  respect  to the  Group  III  Senior  Accelerated
Distribution Percentage, to date for such Distribution Date, if occurring during
the sixth,  seventh,  eighth, ninth or tenth year (or any year thereafter) after
the Closing Date are less than 10%, 15%, 20%, 25% or 30%,  respectively,  of the
sum of the Initial  Certificate  Principal  Balances of the related  Subordinate
Certificates.

        For any  Distribution  Date on which the weighted  average of the Senior
Percentages  for Loan  Group I and Loan Group II,  weighted  on the basis of the
Stated Principal Balances of the mortgage loans in the related Loan Groups, less
the Discount  Fraction of the related  Discount  Mortgage Loans, is greater than
the weighted  average of the Senior  Percentages for Loan Group I and Loan Group
II as of the Closing Date,  calculated on such basis, each of the Group I Senior
Accelerated Distribution Percentage and Group II Senior Accelerated Distribution
Percentage for such  Distribution  Date shall be 100%. For any Distribution Date
on which the Group III Senior  Percentage  is greater  than the Group III Senior
Percentage as of the Closing Date, the Group III

                                              27

<PAGE>

          Senior Accelerated  Distribution Percentage for such Distribution Date
          shall be 100%.

        Notwithstanding  the  foregoing,  upon the reduction of the  Certificate
Principal Balances of the applicable Senior Certificates (other than the related
Class AP  Certificates)  to zero,  the related Senior  Accelerated  Distribution
Percentage shall thereafter be 0%.

        Group I Senior Certificates: Any one of the Class A-I, Class AP-I, Class
AV-I, Class R-I , Class R-III and Class R-IV Certificates.

        Group II Senior Certificates: Any one of the Class A-II, Class AP-II and
Class AV-II Certificates.

        Group III Senior Certificates: Any one of the Class A-III, Class AP-III,
Class AV-III and Class R-II Certificates.

        Group I Senior  Interest  Distribution  Amount:  As  defined  in Section
4.02(a)(i)(X).

        Group II Senior  Interest  Distribution  Amount:  As  defined in Section
4.02(a)(i)(Y).

        Group III Senior  Interest  Distribution  Amount:  As defined in Section
4.02(a)(i)(Z).

        Group I Senior  Percentage:  As of any Distribution  Date, the lesser of
100% and a fraction,  expressed as a  percentage,  the numerator of which is the
aggregate  Certificate  Principal  Balance  of the  Group I Senior  Certificates
(other than the Class AP-I Certificates)  immediately prior to such Distribution
Date and the denominator of which is the aggregate Stated  Principal  Balance of
all of the Group I Loans (or  related  REO  Properties)  (other than the related
Group I Discount  Fraction of each Group I Discount  Mortgage Loan)  immediately
prior to such Distribution Date.

        Group II Senior  Percentage:  As of any Distribution Date, the lesser of
100% and a fraction,  expressed as a  percentage,  the numerator of which is the
aggregate  Certificate  Principal  Balance  of the Group II Senior  Certificates
(other than the Class AP-II Certificates) immediately prior to such Distribution
Date and the denominator of which is the aggregate Stated  Principal  Balance of
all of the Group II Loans (or  related REO  Properties)  (other than the related
Group II Discount  Fraction of each Group II Discount Mortgage Loan) immediately
prior to such Distribution Date.

        Group III Senior Percentage:  As of any Distribution Date, the lesser of
100% and a fraction,  expressed as a  percentage,  the numerator of which is the
aggregate  Certificate  Principal  Balance of the Group III Senior  Certificates
(other  than  the  Class  AP-III   Certificates)   immediately   prior  to  such
Distribution Date and the denominator of which is the aggregate Stated Principal
Balance of all of the Group III Loans (or  related REO  Properties)  (other than
the related  Group III  Discount  Fraction of each Group III  Discount  Mortgage
Loan) immediately prior to such Distribution Date.

     Group I Senior Principal  Distribution Amount: As to any Distribution Date,
the lesser of

                                              28

<PAGE>

(a) the balance of the  Available  Distribution  Amount  related to Loan Group I
remaining  after  the  distribution  therefrom  of all  amounts  required  to be
distributed   therefrom   pursuant   to  Section   4.02(a)(i)(X)   and   Section
4.02(a)(ii)(X)  and  (b)  the  sum of the  amounts  required  to be  distributed
therefrom to the Group I  Certificateholders  on such Distribution Date pursuant
to Section 4.02(a)(ii)(Y) and Section 4.02(a)(xv) and (xvi).

        Group II Senior Principal  Distribution  Amount:  As to any Distribution
Date, the lesser of (a) the balance of the Available Distribution Amount related
to Loan Group II  remaining  after the  distribution  therefrom  of all  amounts
required  to be  distributed  therefrom  pursuant to Section  4.02(a)(i)(Y)  and
Section  4.02(a)(ii)(X),  and  (b)  the  sum  of  the  amounts  required  to  be
distributed  therefrom to the Group II  Certificateholders  on such Distribution
Date pursuant to Section 4.02(a)(ii)(Y) and Section 4.02(a)(xv) and (xvi).

        Group III Senior Principal  Distribution  Amount: As to any Distribution
Date, the lesser of (a) the balance of the Available Distribution Amount related
to Loan Group III  remaining  after the  distribution  therefrom  of all amounts
required  to be  distributed  therefrom  pursuant to Section  4.02(a)(i)(Z)  and
4.02(a)(ii)(X),  and (b)  the  sum of the  amounts  required  to be  distributed
therefrom to the Group II  Certificateholders on such Distribution Date pursuant
to Section 4.02(a)(ii)(Y) and Section 4.02(a)(xv) and (xvi).

        Group I/Group II Special Hazard Amount: As of any Distribution  Date, an
amount equal to $3,330,325  minus the sum of (i) the aggregate amount of Special
Hazard  Losses  on the  Group I Loans  and  Group  II  Loans  allocated  through
Subordination in accordance with Section 4.05 and (ii) the Adjustment Amount (as
defined below) as most recently calculated.  For each anniversary of the Cut-off
Date, the "Adjustment Amount" shall be equal to the amount, if any, by which the
amount  calculated in accordance  with the preceding  sentence  (without  giving
effect to the deduction of the Adjustment Amount for such  anniversary)  exceeds
the greatest of (i) twice the outstanding  principal balance of the Group I Loan
or Group II Loan  that has the  largest  outstanding  principal  balance  on the
Distribution Date immediately  preceding such  anniversary,  (ii) the product of
1.00% multiplied by the outstanding  principal  balance of all Group I Loans and
Group II Loans on the Distribution  Date immediately  preceding such anniversary
and (iii) the aggregate  outstanding  principal  balance (as of the  immediately
preceding  Distribution  Date) of the  Group I Loans  and  Group II Loans in any
single  five-digit  California  zip code area with the largest amount of Group I
Loans and Group II Loans by aggregate principal balance as of such anniversary.

        The Group I/Group II Special Hazard Amount may be further reduced by the
Master Servicer (including accelerating the manner in which coverage is reduced)
provided  that prior to any such  reduction,  the Master  Servicer  shall obtain
written  confirmation  from each  Rating  Agency that such  reduction  shall not
reduce the rating assigned to the Group I Certificates and Group II Certificates
by such Rating Agency below the lower of the  then-current  rating or the rating
assigned to such Certificates as of the Closing Date by such Rating Agency.

     Group III Special Hazard  Amount:  As of any  Distribution  Date, an amount
equal to

                                              29

<PAGE>

$1,780,014  minus the sum of (i) the aggregate  amount of Special  Hazard Losses
allocated  to the Group III  Loans  through  Subordination  in  accordance  with
Section 4.05 and (ii) the Adjustment  Amount (as defined below) as most recently
calculated.  For each  anniversary of the Cut-off Date, the "Adjustment  Amount"
shall  be  equal to the  amount,  if any,  by which  the  amount  calculated  in
accordance with the preceding  sentence  (without giving effect to the deduction
of the Adjustment Amount for such anniversary) exceeds the greatest of (i) twice
the  outstanding  principal  balance of the Group III Loan that has the  largest
outstanding  principal  balance on the Distribution  Date immediately  preceding
such  anniversary,  (ii) the  product  of 1.00%  multiplied  by the  outstanding
principal  balance of all Group III Loans on the  Distribution  Date immediately
preceding such anniversary and (iii) the aggregate outstanding principal balance
(as of the immediately  preceding  Distribution  Date) of the Group III Loans in
any single five-digit  California zip code area with the largest amount of Group
III Loans by aggregate principal balance as of such anniversary.

        The Group III Special Hazard Amount may be further reduced by the Master
Servicer  (including  accelerating  the  manner in which  coverage  is  reduced)
provided  that prior to any such  reduction,  the Master  Servicer  shall obtain
written  confirmation  from each  Rating  Agency that such  reduction  shall not
reduce the rating  assigned to the Group III  Certificates by such Rating Agency
below  the  lower of the  then-current  rating or the  rating  assigned  to such
Certificates as of the Closing Date by such Rating Agency.

        Group I Subordinate  Principal  Distribution Amount: With respect to any
Distribution  Date and each Class of Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and Class B-3 Certificates,  (a) the sum of (i) the product of (x) the
Class's pro rata share, based on the Certificate  Principal Balance of each such
Class then outstanding, and (y) the aggregate of the amounts calculated for such
Distribution Date under clauses (i), (ii) and (iii) of Section 4.02(a)(ii)(Y)(A)
(without  giving  effect to the  related  Senior  Percentage)  to the extent not
payable to the related  Senior  Certificates;  (ii) such Class's pro rata share,
based on the  Certificate  Principal  Balance of each Class of Class M- 1, Class
M-2,  Class  M-3,  Class  B-1,  Class  B-2  and  Class  B-3  Certificates   then
outstanding,    of   the    principal    collections    described   in   Section
4.02(a)(ii)(Y)(B)(b)  (without  giving effect to the related Senior  Accelerated
Distribution  Percentage)  to the  extent  such  collections  are not  otherwise
distributed  to the related  Senior  Certificates;  (iii) the product of (x) the
related  Prepayment  Distribution  Percentage  and  (y)  the  aggregate  of  all
Principal  Prepayments  in Full  received in the related  Prepayment  Period and
Curtailments  received in the preceding  calendar  month (other than the related
Discount  Fraction of such Principal  Prepayments in Full and Curtailments  with
respect to a Group I Discount  Mortgage  Loan) to the extent not  payable to the
related Senior Certificates; (iv) if such Class is the Class of Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates with the Highest
Priority,  any related Excess Subordinate Principal Amount for such Distribution
Date to the extent of Eligible  Funds for such  Distribution  Date;  and (v) any
amounts  described in clauses (i), (ii) and (iii) as determined for any previous
Distribution Date, that remain undistributed to the extent that such amounts are
not  attributable  to Realized  Losses  which have been  allocated to a Class of
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates
minus (b) with respect to the Class of Class M-1,  Class M-2,  Class M-3,  Class
B-1, Class B-2 and Class B-3 Certificates with the Lowest Priority,  any related
Excess Subordinate

                                              30

<PAGE>

Principal Amount for such Distribution Date; provided, however, that the Group I
Subordinate Principal Distribution Amount for any Class of Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2 and Class B-3  Certificates on any  Distribution
Date shall in no event exceed the outstanding  Certificate  Principal Balance of
such Class of Certificates immediately prior to such date.

        Group II Subordinate Principal  Distribution Amount: With respect to any
Distribution  Date and each Class of Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and Class B-3 Certificates,  (a) the sum of (i) the product of (x) the
Class's pro rata share, based on the Certificate  Principal Balance of each such
Class then outstanding, and (y) the aggregate of the amounts calculated for such
Distribution Date under clauses (i), (ii) and (iii) of Section 4.02(a)(ii)(Y)(A)
(without  giving  effect to the  related  Senior  Percentage)  to the extent not
payable to the related  Senior  Certificates;  (ii) such Class's pro rata share,
based on the  Certificate  Principal  Balance of each Class of Class M- 1, Class
M-2,  Class  M-3,  Class  B-1,  Class  B-2  and  Class  B-3  Certificates   then
outstanding,    of   the    principal    collections    described   in   Section
4.02(a)(ii)(Y)(B)(b)  (without  giving effect to the related Senior  Accelerated
Distribution  Percentage)  to the  extent  such  collections  are not  otherwise
distributed  to the related  Senior  Certificates;  (iii) the product of (x) the
related  Prepayment  Distribution  Percentage  and  (y)  the  aggregate  of  all
Principal  Prepayments  in Full  received in the related  Prepayment  Period and
Curtailments  received in the preceding  calendar  month (other than the related
Discount  Fraction of such Principal  Prepayments in Full and Curtailments  with
respect to a Group II Discount  Mortgage  Loan) to the extent not payable to the
related Senior Certificates; (iv) if such Class is the Class of Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates with the Highest
Priority,  any related Excess Subordinate Principal Amount for such Distribution
Date to the extent of Eligible  Funds for such  Distribution  Date;  and (v) any
amounts  described in clauses (i), (ii) and (iii) as determined for any previous
Distribution Date, that remain undistributed to the extent that such amounts are
not  attributable  to Realized  Losses  which have been  allocated to a Class of
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates
minus (b) with respect to the Class of Class M-1,  Class M-2,  Class M-3,  Class
B-1, Class B-2 and Class B-3 Certificates with the Lowest Priority,  any related
Excess  Subordinate  Principal  Amount  for such  Distribution  Date;  provided,
however,  that the Group I  Subordinate  Principal  Distribution  Amount for any
Class of Class M-1,  Class M-2,  Class M-3,  Class B-1,  Class B-2 and Class B-3
Certificates on any  Distribution  Date shall in no event exceed the outstanding
Certificate Principal Balance of such Class of Certificates immediately prior to
such date.

        Group III Subordinate Principal Distribution Amount: With respect to any
Distribution  Date and each Class of Class  M-III  Certificates  and Class B-III
Certificates,  (a) the sum of (i) the product of (x) the Class's pro rata share,
based on the Certificate  Principal Balance of each such Class then outstanding,
and (y) the aggregate of the amounts calculated for such Distribution Date under
clauses (i), (ii) and (iii) of Section 4.02(a)(ii)(Y)(A)  (without giving effect
to the  related  Senior  Percentage)  to the extent not  payable to the  related
Senior Certificates;  (ii) such Class's pro rata share, based on the Certificate
Principal  Balance  of each  Class of Group III  Subordinate  Certificates  then
outstanding,    of   the    principal    collections    described   in   Section
4.02(a)(ii)(Y)(B)(b)  (without  giving effect to the related Senior  Accelerated
Distribution  Percentage)  to the  extent  such  collections  are not  otherwise
distributed  to the related  Senior  Certificates;  (iii) the product of (x) the
related

                                              31

<PAGE>

Prepayment  Distribution  Percentage  and (y)  the  aggregate  of all  Principal
Prepayments in Full received in the related  Prepayment  Period and Curtailments
received in the  preceding  calendar  month  (other  than the  related  Discount
Fraction of such Principal  Prepayments in Full and Curtailments with respect to
a Group III  Discount  Mortgage  Loan) to the extent not  payable to the related
Senior Certificates; (iv) if such Class is the Class of Subordinate Certificates
with the Highest Priority,  any related Excess Subordinate  Principal Amount for
such  Distribution  Date to the extent of Eligible  Funds for such  Distribution
Date; and (v) any amounts described in clauses (i), (ii) and (iii) as determined
for any previous Distribution Date, that remain undistributed to the extent that
such amounts are not  attributable  to Realized Losses which have been allocated
to a Class of  Subordinate  Certificates  minus (b) with respect to the Class of
Class M-III Certificates and Class B- III Certificates with the Lowest Priority,
any related Excess  Subordinate  Principal  Amount for such  Distribution  Date;
provided,  however, that the Group III Subordinate Principal Distribution Amount
for any Class of Class M-III  Certificates  and Class B-III  Certificates on any
Distribution Date shall in no event exceed the outstanding Certificate Principal
Balance of such Class of Certificates immediately prior to such date.

        Highest Priority: As of any date of determination,  the related Class of
Subordinate  Certificates  then  outstanding  with  the  earliest  priority  for
payments  pursuant to Section 4.02(a),  in the following order: (a) with respect
to Loan Group I and Loan Group II, Class M-1,  Class M-2,  Class M-3, Class B-1,
Class B-2 and Class B-3  Certificates  and (b) with  respect  to Loan Group III,
Class M-III-1,  Class M-III-2,  Class M-III-3,  Class B-III-1, Class B-III-2 and
Class B-III-3 Certificates.

        Independent:  When used with respect to any specified Person, means such
a Person who (i) is in fact  independent of the Depositor,  the Master  Servicer
and the  Trustee,  or any  Affiliate  thereof,  (ii)  does not  have any  direct
financial interest or any material indirect financial interest in the Depositor,
the Master Servicer or the Trustee or in an Affiliate thereof,  and (iii) is not
connected with the Depositor,  the Master Servicer or the Trustee as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.

        Initial  Certificate  Principal  Balance:  With respect to each Class of
Certificates  (other  than the  Interest  Only  Certificates),  the  Certificate
Principal  Balance of such Class of  Certificates  as of the Cut-off Date as set
forth in the Preliminary Statement hereto.

        Initial  Subordinate Class Percentage:  With respect to any Distribution
Date and any Class of  Subordinate  Certificates,  a  fraction,  expressed  as a
percentage,  the  numerator  of which  is the  aggregate  Certificate  Principal
Balance of such Class of Subordinate Certificates as of the Closing Date and the
denominator of which is the related Cut-off Date Balance.

        Insurance  Proceeds:  Proceeds  paid in  respect of the  Mortgage  Loans
pursuant to any Primary  Insurance Policy or any other related  insurance policy
covering a  Mortgage  Loan,  to the  extent  such  proceeds  are  payable to the
mortgagee  under the  Mortgage,  any  Subservicer,  the Master  Servicer  or the
Trustee and are not applied to the restoration of the related Mortgaged Property
or released to

                                              32

<PAGE>

the Mortgagor in accordance  with the procedures  that the Master Servicer would
follow in servicing mortgage loans held for its own account.

        Interest  Accrual  Period:  With respect to any  Distribution  Date, the
prior calendar month.

     Interest Only  Certificates:  Any one of the Class A-I-2, Class AV-I, Class
AV-II or Class AV- III Certificates.

        Interim Certificates: As defined in Section 2.02.

        Late  Collections:  With  respect  to any  Mortgage  Loan,  all  amounts
received during any Due Period,  whether as late payments of Monthly Payments or
as Insurance Proceeds,  Liquidation Proceeds or otherwise,  which represent late
payments or  collections  of Monthly  Payments due but delinquent for a previous
Due Period and not previously recovered.

        LIBOR: With respect to any Distribution Date, the arithmetic mean of the
London  interbank  offered rate quotations for one-month U.S.  Dollar  deposits,
expressed on a per annum basis, determined in accordance with Section 1.02.

        LIBOR  Business Day: Any day other than (i) a Saturday or Sunday or (ii)
a day  on  which  banking  institutions  in  London,  England  are  required  or
authorized to by law to be closed.

        LIBOR Rate Adjustment Date: With respect to each  Distribution  Date and
the Adjustable  Rate  Certificates,  the second LIBOR  Business Day  immediately
preceding the commencement of the related Interest Accrual Period on which banks
are open for dealing in foreign currency and exchange in London, England.

        Liquidation  Proceeds:  Amounts (other than Insurance Proceeds) received
by the Master  Servicer  in  connection  with the taking of an entire  Mortgaged
Property  by  exercise  of the power of  eminent  domain or  condemnation  or in
connection with the liquidation of a defaulted  Mortgage Loan through  trustee's
sale, foreclosure sale or otherwise, other than REO Proceeds.

        Loan Group: Any of Loan Group I, Loan Group II or Loan Group III.
        ----------

        Loan  Group I: The group of  Mortgage  Loans  designated  as the Group I
Loans on the Mortgage Loan Schedule in Exhibit F-1.

        Loan Group II: The group of Mortgage  Loans  designated  as the Group II
Loans on the Mortgage Loan Schedule in Exhibit F-2.

        Loan Group III: The group of Mortgage Loans  designated as the Group III
Loans on the Mortgage Loan Schedule in Exhibit F-3.

                                              33

<PAGE>

        Loan-to-Value  Ratio:  As of any  date,  the  fraction,  expressed  as a
percentage,  the  numerator  of which is the  current  principal  balance of the
related Mortgage Loan at the date of determination  and the denominator of which
is the Appraised Value of the related Mortgaged Property.

        Lower  Priority:  As of any  date  of  determination  and any  Class  of
Subordinate  Certificates,  any other Class of related Subordinate  Certificates
then outstanding, with later priority for payments pursuant to Section 4.02(a).

        Lowest  Priority:  As  of  any  date  of  determination,  the  Class  of
Subordinate  Certificates then outstanding with the latest priority for payments
pursuant to Section  4.02(a),  in the following  order:  (a) with respect to the
Loan Group I and Loan  Group II,  Class B-3,  Class B-2,  Class B-1,  Class M-3,
Class M-2 and Class M-1  Certificates  and (b) with  respect  to Loan Group III,
Class B-III-3,  Class B-III-2,  Class B-III-1,  Class M-III-3, Class M-III-2 and
Class M-III-1 Certificates.

        Maturity  Date:  With respect to each Class of  Certificates  of regular
interest or Uncertificated Regular Interest issued by each of REMIC I, REMIC II,
REMIC III and REMIC IV, the latest possible  maturity date,  solely for purposes
of  Section  1.860G-1(a)(4)(iii)  of the  Treasury  Regulations,  by  which  the
Certificate Principal Balance of each such Class of Certificates  representing a
regular  interest in the Trust Fund would be reduced to zero, which is, for each
such regular interest other than the Group II Senior Certificates, May 25, 2033,
which is the  Distribution  Date  following the maturity of the latest  maturing
Group I Loan, and which is for the Group II Senior Certificates, May 25, 2018.

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

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

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

        Modified Mortgage Loan: Any Mortgage Loan that has been the subject of a
Servicing Modification.

        Modified Net Mortgage  Rate: As to any Mortgage Loan that is the subject
of a Servicing  Modification,  the Net Mortgage Rate minus the rate per annum by
which the Mortgage Rate on such Mortgage Loan was reduced.

        MOM  Loan:  With  respect  to any  Mortgage  Loan,  MERS  acting  as the
mortgagee of such Mortgage  Loan,  solely as nominee for the  originator of such
Mortgage Loan and its successors and assigns, at the origination thereof.

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<PAGE>

        Monthly  Payment:  With respect to any Mortgage Loan  (including any REO
Property)  and the Due Date in any Due  Period,  the  payment of  principal  and
interest due thereon in accordance  with the  amortization  schedule at the time
applicable thereto (after adjustment, if any, for Curtailments and for Deficient
Valuations  occurring  prior to such Due Date but before any  adjustment to such
amortization  schedule  by  reason of any  bankruptcy,  other  than a  Deficient
Valuation,  or similar  proceeding or any  moratorium or similar waiver or grace
period and before any Servicing Modification that constitutes a reduction of the
interest rate on such Mortgage Loan).

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

        Mortgage: With respect to each Mortgage Note related to a Mortgage Loan,
the mortgage,  deed of trust or other comparable  instrument creating a first or
junior  lien on an estate in fee simple  interest  in real  property  securing a
Mortgage Note.

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

        Mortgage Loans:  Such of the mortgage loans  transferred and assigned to
the Trustee  pursuant to Section 2.01 as from time to time are held or deemed to
be held as a part of the Trust Fund, the Mortgage Loans originally so held being
identified in the initial Mortgage Loan Schedule attached hereto as Exhibit F-1,
Exhibit F-2 and Exhibit F-3, and  Qualified  Substitute  Mortgage  Loans held or
deemed  held as part of the  Trust  Fund  including,  without  limitation,  each
related  Mortgage Note,  Mortgage and Mortgage File and all rights  appertaining
thereto.

        Mortgage Loan Schedule:  The lists of the Mortgage Loans attached hereto
as Exhibit  F-1,  Exhibit F-2 and  Exhibit F-3 (as amended  from time to time to
reflect the addition of Qualified  Substitute Mortgage Loans), which lists shall
set forth at a minimum the following information as to each Mortgage Loan:

               (i) the Mortgage Loan identifying number ("RFC LOAN #");

               (ii) [reserved];

               (iii) the  maturity of the Mortgage  Note  ("MATURITY  DATE",  or
        "MATURITY DT" for Mortgage Loans;

               (iv) the Mortgage Rate as of the Cut-off Date ("ORIG RATE");

               (v) [reserved];

               (vi) the Adjusted  Mortgage  Rate or Net Mortgage  Rate as of the
        Cut-off Date ("CURR NET");

                                              35

<PAGE>

               (vii) the scheduled  monthly  payment of  principal,  if any, and
        interest  as of the Cut- off Date  ("ORIGINAL  P & I" or "CURRENT P & I"
        for the adjustable rate Mortgage Loans);

               (viii) the Cut-off Date Principal Balance ("PRINCIPAL BAL");

               (ix) the Loan-to-Value Ratio at origination ("LTV");

               (x) a code "T",  "BT" or "CT"  under  the  column  "LN  FEATURE,"
        indicating  that the  Mortgage  Loan is secured by a second or  vacation
        residence  (the  absence  of any such code  means the  Mortgage  Loan is
        secured by a primary residence); and

               (xi) a code "N" under the column "OCCP CODE", indicating that the
        Mortgage Loan is secured by a non-owner  occupied residence (the absence
        of any such code means the Mortgage Loan is secured by an owner occupied
        residence).

        Such  schedules may consist of multiple  reports that  collectively  set
forth all of the information required.

        Mortgage  Note:  The  originally  executed  note or  other  evidence  of
indebtedness  evidencing the  indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.

        Mortgage  Rate: As to any Mortgage  Loan, the interest rate borne by the
related  Mortgage  Note,  or any  modification  thereto  other than a  Servicing
Modification.

     Mortgaged Property: The underlying real property securing a Mortgage Loan.

        Mortgagor: The obligor on a Mortgage Note.
        ---------

        Net Mortgage  Rate:  With respect to any Mortgage Loan as of any date of
determination,  a per annum rate equal to the  Adjusted  Mortgage  Rate for such
Mortgage  Loan as of such date minus the sum of the Servicing Fee Rate and minus
the rate at which any applicable lender-paid mortgage insurance accrues.

        Non-Discount  Mortgage  Loan:  A  Group  I Loan  that  is not a  Group I
Discount  Mortgage Loan, a Group II Loan that is not a Group II Discount Loan or
a Group III Loan that is not a Group III Discount Mortgage Loan.

        Non-Primary Residence Loans: The Mortgage Loans designated as secured by
second or vacation  residences,  or by  non-owner  occupied  residences,  on the
Mortgage Loan Schedule.

        Non-United States Person: Any Person other than a United States Person.
        ------------------------

                                              36

<PAGE>

        Nonrecoverable  Advance:  Any Advance  previously made or proposed to be
made by the Master  Servicer or Subservicer in respect of a Mortgage Loan (other
than a Deleted  Mortgage  Loan) which,  in the good faith judgment of the Master
Servicer,  will not,  or,  in the case of a  proposed  Advance,  would  not,  be
ultimately  recoverable  by the Master  Servicer from related Late  Collections,
Insurance Proceeds, Liquidation Proceeds or REO Proceeds. To the extent that any
Mortgagor  is not  obligated  under the  related  Mortgage  documents  to pay or
reimburse  any  portion of any  Servicing  Advances  that are  outstanding  with
respect  to the  related  Mortgage  Loan as a result of a  modification  of such
Mortgage Loan by the Master  Servicer,  which forgives  amounts which the Master
Servicer  or  Subservicer  had  previously  advanced,  and the  Master  Servicer
determines that no other source of payment or reimbursement for such advances is
available to it, such Servicing Advances shall be deemed to be nonrecoverable.

        Nonsubserviced  Mortgage  Loan:  Any Mortgage  Loan that, at the time of
reference thereto, is not subject to a Subservicing Agreement.

        Notice: As defined in Section 4.04.

        Notional  Amount:   With  respect  to  the  Class  A-I-2   Certificates,
immediately  prior to any  Distribution  Date, an amount equal to the product of
0.50 and the Certificate Principal Balance of the Class A-I-1 Certificates.  For
federal  income tax purposes,  however,  the Notional  Amount of the Class A-I-2
Certificates will be equal to the Uncertificated  Principal Balance of REMIC III
Regular  Interest  LT3-AI1 , and when such  Notional  Amount is  multiplied by a
Pass-Through Rate of 0.50%, the resulting Accrued  Certificate  Interest will be
the economic equivalent of the Accrued Certificate  Interest resulting under the
definition  thereof.  The Class AV-I, Class AV-II and Class AV-III  Certificates
will not accrue interest on a Notional  Amount,  but will be entitled to 100% of
amounts  distributed on REMIC III Regular  Interest  LT3-AVI,  REMIC III Regular
Interest LT3-AVII and REMIC III Regular Interest LT3-AVIII, respectively.

        Officers'  Certificate:  A  certificate  signed by the  Chairman  of the
Board,  the  President or a Vice  President or Assistant  Vice  President,  or a
Director or Managing Director,  and by the Treasurer,  the Secretary,  or one of
the Assistant Treasurers or Assistant Secretaries of the Depositor or the Master
Servicer,  as the case may be, and delivered to the Trustee, as required by this
Agreement.

        Opinion of  Counsel:  A written  opinion of  counsel  acceptable  to the
Trustee and the Master  Servicer,  who may be counsel for the  Depositor  or the
Master  Servicer,  provided  that any opinion of counsel (i)  referred to in the
definition of "Disqualified  Organization" or (ii) relating to the qualification
of REMIC I,  REMIC II,  REMIC III or REMIC IV as REMICs or  compliance  with the
REMIC Provisions must, unless otherwise specified,  be an opinion of Independent
counsel.

        Outstanding  Mortgage  Loan:  As to the Due  Date in any Due  Period,  a
Mortgage  Loan  (including  an REO  Property)  that  was  not the  subject  of a
Principal  Prepayment in Full, Cash  Liquidation or REO Disposition and that was
not  purchased,  deleted or  substituted  for prior to such Due Date pursuant to
Section 2.02, 2.03, 2.04 or 4.07.

                                              37

<PAGE>

        Ownership  Interest:  As to any  Certificate,  any ownership or security
interest in such Certificate,  including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.

        PAC I Aggregate  Planned  Principal  Balance:  With respect to the PAC I
Certificates and each  Distribution  Date, the amount set forth for such Classes
on such Distribution Date on Exhibit Q hereto.

        PAC I  Certificates:  Any one of the Class  A-I-1,  Class  A-I-3,  Class
A-I-4, Class A-I-5 and Class A-I-6 Certificates.

        PAC II Aggregate Planned Principal  Balance:  With respect to the PAC II
Certificates and each  Distribution  Date, the amount set forth for such Classes
on such Distribution Date on Exhibit Q hereto.

        PAC II Certificates:  Any one of the Class A-I-7  Certificates and Class
A-I-8 Certificates.

        Pass-Through  Rate:  With respect to the Class A-I  Certificates  (other
than the Adjustable Rate Certificates),  Class A-II, Class A-III, Class R, Class
M-III and  Class  B-III  Certificates,  the  Pass-Through  Rate set forth in the
Preliminary   Statement.   For  federal  income  tax  purposes,   however,   the
Pass-Through Rate with respect to the Class A-I-2 Certificates will be 0.50% per
annum, and when such  Pass-Through Rate is multiplied by a Notional Amount equal
to the  Uncertificated  Principal Balance of REMIC III Regular Interest LT3-AI1,
the resulting Accrued  Certificate  Interest will be the economic  equivalent of
the Accrued Certificate  Interest resulting under the definition  thereof.  With
respect to the Class A-I-9 Certificates and the initial Interest Accrual Period,
2.76875% per annum,  and as to any Interest  Accrual  Period  thereafter,  a per
annum  rate equal to LIBOR plus  1.45%,  subject to a maximum  rate of 7.50% per
annum and a minimum  rate of 1.45% per annum.  With  respect to the Class A-I-10
Certificates and the initial  Interest  Accrual Period,  13.01093710% per annum,
and as to any  Interest  Accrual  Period  thereafter,  a per annum rate equal to
16.63749942%  minus the  product of LIBOR and  2.74999986,  subject to a maximum
rate of 16.63749942% per annum and a minimum rate of 0.00% per annum.

        With respect to the Class AV-I Certificates and any Distribution Date, a
rate equal to the weighted average, expressed as a percentage, of the Pool Strip
Rates  of all  Group I Loans  as of the Due  Date  in the  related  Due  Period,
weighted on the basis of the respective Stated Principal  Balances of such Group
I Loans as of the day  immediately  preceding such  Distribution  Date (or, with
respect  to the  initial  Distribution  Date,  at the close of  business  on the
Cut-off  Date).  With  respect to the Class AV-I  Certificates  and the  initial
Distribution  Date, the Pass-Through Rate is equal to approximately  0.2302% per
annum.  For federal income tax purposes,  the Class AV-I  Certificates  will not
have a Pass-Through Rate, but will be entitled to 100% of amounts distributed on
REMIC III Regular Interest LT3-AVI.

        With respect to the Class AV-II  Certificates and any Distribution Date,
a rate equal to the

                                              38

<PAGE>

weighted  average,  expressed  as a  percentage,  of the Pool Strip Rates of all
Group II Loans as of the Due Date in the  related  Due  Period,  weighted on the
basis of the respective  Stated Principal  Balances of such Group II Loans as of
the day immediately  preceding such  Distribution  Date (or, with respect to the
initial  Distribution  Date, at the close of business on the Cut-off Date). With
respect to the Class AV-II  Certificates and the initial  Distribution Date, the
Pass-Through  Rate is equal to  approximately  0.3279%  per annum.  For  federal
income tax purposes,  the Class AV-II  Certificates will not have a Pass-Through
Rate,  but will be entitled to 100% of amounts  distributed on REMIC III Regular
Interest LT3-AVII.

        With respect to the Class AV-III Certificates and any Distribution Date,
a rate equal to the weighted  average,  expressed as a  percentage,  of the Pool
Strip Rates of all Group III Loans as of the Due Date in the related Due Period,
weighted on the basis of the respective Stated Principal  Balances of such Group
III Loans as of the day immediately  preceding such  Distribution Date (or, with
respect  to the  initial  Distribution  Date,  at the close of  business  on the
Cut-off  Date).  With respect to the Class AV-III  Certificates  and the initial
Distribution  Date, the Pass-Through Rate is equal to approximately  0.1570% per
annum. For federal income tax purposes,  the Class AV-III  Certificates will not
have a Pass-Through Rate, but will be entitled to 100% of amounts distributed on
REMIC III Regular Interest LT3-AVIII.

        With respect to the Class M-1,  Class M-2,  Class M-3,  Class B-1, Class
B-2  and  Class  B-3  Certificates,  the  weighted  average  of  the  Class  A-I
Certificates  weighted average Pass-Through Rate and the Class A-II Certificates
weighted  average  Pass-Through  Rate, based on the respective Group I Loans and
Group II Loans  subordination  amounts.  The  Group I Loans  and  Group II Loans
subordination  amounts  will be the  excess of the  aggregate  Stated  Principal
Balance of the related Mortgage Loans,  other than the related Discount Fraction
of each related Discount Mortgage Loan, over the aggregate  principal balance of
the Class A-I, Class R-I, Class R-III and Class R-IV Certificates, and the Class
A-II  Certificates,  respectively.  The Class A-I Certificates  weighted average
Pass-Through  Rate for this purpose is the weighted  average of the Pass-Through
Rates of the Class A-I, Class R-I, Class R-III and Class R-IV Certificates,  and
the Class A-II Certificates  weighted average Pass-Through Rate for this purpose
is the Pass-Through Rate on the Class A-II  Certificates,  in each case based on
their respective  principal balances.  This determination will be made as of the
related  Distribution  Date prior to giving effect to any  distributions  on the
Certificates  on that date. The  Pass-Through  Rate on the Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2 and Class B-3  Certificates  with respect to the
first Interest  Accrual Period is  approximately  5.3833% per annum. For federal
income tax purposes,  the  Pass-Through  Rate on the Class M-1, Class M-2, Class
M-3,  Class B-1, Class B-2 and Class B-3  Certificates  will be a per annum rate
equal to the weighted average of the Uncertificated REMIC III Pass-Through Rates
on REMIC III  Regular  Interests  LT3-M1,  LT3-M2,  LT3-M3,  LT3-B1,  LT3-B2 and
LT3-B3,  weighted  on the  basis  of each  such  REMIC  III  Regular  Interest's
Uncertificated Principal Balance.

     Paying Agent:  Deutsche Bank Trust Company Americas or any successor Paying
Agent appointed by the Trustee.

                                              39

<PAGE>

        Percentage  Interest:  With respect to any Class A Certificate,  Class M
Certificate or Class B Certificate,  the undivided percentage ownership interest
in the related Class evidenced by such Certificate,  which percentage  ownership
interest shall be equal to the Initial  Certificate  Principal  Balance  thereof
divided by the aggregate  Initial  Certificate  Principal  Balance of all of the
Certificates of the same Class. The Percentage  Interest with respect to a Class
R Certificate shall be stated on the face thereof.

        Permitted Investments: One or more of the following:

               (i)  obligations of or guaranteed as to principal and interest by
        the United  States or any agency or  instrumentality  thereof  when such
        obligations  are  backed  by the full  faith and  credit  of the  United
        States;

               (ii) repurchase agreements on obligations specified in clause (i)
        maturing not more than one month from the date of  acquisition  thereof,
        provided  that  the  unsecured  obligations  of the  party  agreeing  to
        repurchase such  obligations are at the time rated by each Rating Agency
        in its highest short-term rating available;

               (iii) federal funds,  certificates of deposit,  demand  deposits,
        time  deposits  and  bankers'  acceptances  (which  shall  each  have an
        original  maturity of not more than 90 days and, in the case of bankers'
        acceptances,  shall in no event have an  original  maturity of more than
        365 days or a remaining  maturity of more than 30 days)  denominated  in
        United  States  dollars  of any  U.S.  depository  institution  or trust
        company  incorporated  under the laws of the United  States or any state
        thereof or of any domestic branch of a foreign depository institution or
        trust company;  provided that the debt  obligations  of such  depository
        institution  or trust company (or, if the only Rating Agency is Standard
        &  Poor's,  in the case of the  principal  depository  institution  in a
        depository   institution  holding  company,   debt  obligations  of  the
        depository  institution  holding  company)  at the  date of  acquisition
        thereof have been rated by each Rating Agency in its highest  short-term
        rating  available;  and provided further that, if the only Rating Agency
        is  Standard  &  Poor's  and if the  depository  or trust  company  is a
        principal  subsidiary of a bank holding company and the debt obligations
        of such subsidiary are not separately rated, the applicable rating shall
        be that of the bank holding company;  and, provided further that, if the
        original maturity of such short-term obligations of a domestic branch of
        a foreign depository  institution or trust company shall exceed 30 days,
        the short-term  rating of such institution  shall be A-1+ in the case of
        Standard & Poor's if Standard & Poor's is a Rating Agency;

               (iv)   commercial   paper  and  demand  notes  (having   original
        maturities  of not more than 365 days) of any  corporation  incorporated
        under the laws of the United  States or any state  thereof  which on the
        date of acquisition  has been rated by each Rating Agency in its highest
        short-term  rating  available;  provided that such commercial  paper and
        demand notes shall have a remaining maturity of not more than 30 days;

                                              40

<PAGE>

               (v) a money market fund or a qualified  investment  fund rated by
        each Rating Agency in its highest long-term rating available; and

               (vi) other  obligations or securities that are acceptable to each
        Rating  Agency as a Permitted  Investment  hereunder and will not reduce
        the rating  assigned to any Class of  Certificates by such Rating Agency
        below the lower of the  then-current  rating or the rating  assigned  to
        such  Certificates  as of the  Closing  Date by such Rating  Agency,  as
        evidenced in writing;

provided,  however,  that no  instrument  shall be a Permitted  Investment if it
represents,  either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest  payments derived from  obligations  underlying such instrument and the
principal and interest payments with respect to such instrument  provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations.  References  herein to the highest  rating  available  on unsecured
long-term debt shall mean AAA in the case of Standard & Poor's and Fitch and Aaa
in the case of Moody's, and references herein to the highest rating available on
unsecured  commercial  paper and  short-term  debt  obligations  shall  mean the
following:  A-1 in the case of Standard & Poor's, P-1 in the case of Moody's and
either A-1 by  Standard & Poor's,  P-1 by Moody's or F-1 by Fitch in the case of
Fitch.

        Permitted  Transferee:  Any Transferee of a Class R  Certificate,  other
than a Disqualified Organization or Non-United States Person.

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

        Pool Strip  Rate:  With  respect to each Group I Loan,  a per annum rate
equal to the excess of (a) the Net  Mortgage  Rate of such Group I Loan over (b)
the Group I Discount Net Mortgage Rate (but not less than 0.00%) per annum. With
respect to each  Group II Loan,  a per annum rate equal to the excess of (a) the
Net  Mortgage  Rate of such  Group II Loan  over (b) the Group II  Discount  Net
Mortgage  Rate (but not less than 0.00%) per annum.  With  respect to each Group
III Loan, a per annum rate equal to the excess of (a) the Net  Mortgage  Rate of
such Group III Loan over (b) the Group III Discount  Net Mortgage  Rate (but not
less than 0.00%) per annum.

        Prepayment Assumption: 300% of the prepayment speed assumption, used for
determining  the accrual of original  issue  discount  and market  discount  and
premium on the  Certificates  for federal  income tax purposes.  The  prepayment
speed assumption assumes a constant rate of prepayment of mortgage loans of 0.2%
per annum of the then  outstanding  principal  balance of such mortgage loans in
the first month of the life of the mortgage  loans,  increasing by an additional
0.2% per  annum in each  succeeding  month  until  the  thirtieth  month,  and a
constant 6% per annum rate of prepayment thereafter for the life of the mortgage
loans.

                                              41

<PAGE>

        Prepayment  Distribution  Percentage:  With respect to any  Distribution
Date  and  each  Class  of  Subordinate   Certificates,   under  the  applicable
circumstances set forth below, the respective percentages set forth below:

               (i) For any  Distribution  Date on which  any  Class  of  related
        Subordinate Certificates are outstanding:

                      (a) in  the  case  of the  Class  of  related  Subordinate
               Certificates  then outstanding with the Highest Priority and each
               other  Class of related  Subordinate  Certificates  for which the
               related   Principal   Payment   Distribution   Trigger  has  been
               satisfied, a fraction,  expressed as a percentage,  the numerator
               of which  is the  Certificate  Principal  Balance  of such  Class
               immediately  prior to such date and the  denominator  of which is
               the sum of the Certificate  Principal Balances  immediately prior
               to such date of (1) the Class of related Subordinate Certificates
               then  outstanding  with the  Highest  Priority  and (2) all other
               Classes  of  related  Subordinate   Certificates  for  which  the
               respective  Principal  Payment  Distribution  Triggers  have been
               satisfied; and

                      (b) in the case of each other Class of related Subordinate
               Certificates  for  which  the  Principal   Payment   Distribution
               Triggers have not been satisfied, 0%; and

               (ii)  Notwithstanding  the foregoing,  if the  application of the
        foregoing  percentages on any  Distribution  Date as provided in Section
        4.02 (determined without regard to the proviso to the related definition
        of  "Subordinate  Principal  Distribution  Amount")  would  result  in a
        distribution  in respect of principal of any Class or Classes of related
        Subordinate  Certificates  in  an  amount  greater  than  the  remaining
        Certificate  Principal  Balance  thereof  (any such  class,  a "Maturing
        Class"),  then:  (a)  the  Prepayment  Distribution  Percentage  of each
        Maturing  Class  shall be  reduced  to a level  that,  when  applied  as
        described above, would exactly reduce the Certificate  Principal Balance
        of such Class to zero;  (b) the  Prepayment  Distribution  Percentage of
        each other Class of related Subordinate  Certificates (any such Class, a
        "Non-Maturing  Class")  shall be  recalculated  in  accordance  with the
        provisions  in paragraph  (ii) above,  as if the  Certificate  Principal
        Balance of each Maturing Class had been reduced to zero (such percentage
        as recalculated, the "Recalculated Percentage"); (c) the total amount of
        the  reductions  in  the  Prepayment  Distribution  Percentages  of  the
        Maturing  Class or  Classes  pursuant  to clause  (a) of this  sentence,
        expressed  as an  aggregate  percentage,  shall be  allocated  among the
        Non-Maturing  Classes in  proportion  to their  respective  Recalculated
        Percentages (the portion of such aggregate reduction so allocated to any
        Non-Maturing Class, the "Adjustment  Percentage");  and (d) for purposes
        of such  Distribution  Date, the Prepayment  Distribution  Percentage of
        each Non-Maturing  Class shall be equal to the sum of (1) the Prepayment
        Distribution  Percentage  thereof,  calculated  in  accordance  with the
        provisions  in  paragraph  (ii)  above as if the  Certificate  Principal
        Balance of each  Maturing  Class had not been reduced to zero,  plus (2)
        the related Adjustment Percentage.

                                              42

<PAGE>

        Prepayment  Interest  Shortfall:  As to any  Distribution  Date  and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property)  that was
the subject of (a) a Principal  Prepayment in Full during the related Prepayment
Period, an amount equal to the excess of one month's interest at the related Net
Mortgage Rate (or Modified Net Mortgage Rate in the case of a Modified  Mortgage
Loan) on the Stated  Principal  Balance of such Mortgage Loan over the amount of
interest  (adjusted to the related Net  Mortgage  Rate (or Modified Net Mortgage
Rate in the case of a Modified  Mortgage  Loan)) paid by the  Mortgagor for such
Prepayment  Period  to the date of such  Principal  Prepayment  in Full or (b) a
Curtailment  during the prior  calendar  month,  an amount  equal to one month's
interest at the related Net Mortgage  Rate (or Modified Net Mortgage Rate in the
case of a Modified Mortgage Loan) on the amount of such Curtailment.

        Prepayment Period: As to any Distribution Date and Principal  Prepayment
in Full,  the period  commencing on the 16th day of the month prior to the month
prior to the month in which that Distribution Date occurs and ending on the 15th
day of the month in which such Distribution Date occurs.

        Primary  Insurance  Policy:  Each  primary  policy of mortgage  guaranty
insurance as  indicated  on Exhibit F with the  exception of either code "23" or
"96" under the column "MI CO CODE."

        Principal Payment Distribution Trigger: With respect to any Distribution
Date and any  Class of  Subordinate  Certificates  (other  than  the  Class  M-1
Certificates or Class M-III-1  Certificates),  a test that shall be satisfied if
the fraction  (expressed  as a percentage)  equal to the sum of the  Certificate
Principal  Balances  of  such  Class  and  each  Class  of  related  Subordinate
Certificates  with a Lower  Priority than such Class  immediately  prior to such
Distribution  Date divided by the aggregate Stated  Principal  Balance of all of
the  Mortgage  Loans in the  related  Loan  Groups or Loan Group (or related REO
Properties) immediately prior to such Distribution Date is greater than or equal
to the sum of the related Initial  Subordinate Class Percentages of such Classes
of related Subordinate Certificates.

        Principal  Prepayment:  Any payment of principal or other  recovery on a
Mortgage Loan,  including a recovery that takes the form of Liquidation Proceeds
or Insurance  Proceeds,  which is received in advance of its  scheduled Due Date
and is not  accompanied  by an  amount  as to  interest  representing  scheduled
interest  on such  payment  due on any  date or dates  in any  month  or  months
subsequent to the month of prepayment.

        Principal  Prepayment  in  Full:  Any  Principal  Prepayment  made  by a
Mortgagor of the entire principal balance of a Mortgage Loan.

        Program  Guide:  The  Residential  Funding  Seller  Guide  for  mortgage
collateral  sellers that participate in Residential  Funding's standard mortgage
programs,  and Residential  Funding's Servicing Guide and any other subservicing
arrangements which Residential Funding has arranged to accommodate the servicing
of the Mortgage Loans.

                                              43

<PAGE>

        Purchase  Price:  With  respect to any Mortgage  Loan (or REO  Property)
required to be or  otherwise  purchased  on any date  pursuant to Section  2.02,
2.03,  2.04 or  4.07,  an  amount  equal  to the sum of (i)  100% of the  Stated
Principal Balance thereof plus the principal portion of any related unreimbursed
Advances  and (ii) unpaid  accrued  interest at the Adjusted  Mortgage  Rate (or
Modified Net Mortgage Rate plus the rate per annum at which the Servicing Fee is
calculated in the case of a Modified Mortgage Loan) (or at the Net Mortgage Rate
(or Modified Net Mortgage Rate in the case of a Modified  Mortgage  Loan) in the
case of a purchase made by the Master Servicer) on the Stated Principal  Balance
thereof to the first day of the month  following  the month of purchase from the
Due Date to which interest was last paid by the Mortgagor.

        Qualified  Substitute  Mortgage  Loan: A Mortgage  Loan  substituted  by
Residential  Funding or the Depositor for a Deleted Mortgage Loan which must, on
the  date  of  such  substitution,  as  confirmed  in an  Officers'  Certificate
delivered to the  Trustee,  (i) have an  outstanding  principal  balance,  after
deduction of the  principal  portion of the monthly  payment due in the month of
substitution  (or in the case of a  substitution  of more than one Mortgage Loan
for a Deleted Mortgage Loan, an aggregate outstanding  principal balance,  after
such deduction),  not in excess of the Stated  Principal  Balance of the Deleted
Mortgage  Loan (the  amount of any  shortfall  to be  deposited  by  Residential
Funding,  in the Custodial  Account in the month of  substitution);  (ii) have a
Mortgage  Rate and a Net  Mortgage  Rate no lower  than and not more than 1% per
annum higher than the Mortgage Rate and Net Mortgage Rate, respectively,  of the
Deleted Mortgage Loan as of the date of substitution; (iii) have a Loan-to-Value
Ratio at the time of  substitution  no higher than that of the Deleted  Mortgage
Loan at the time of substitution;  (iv) have a remaining term to stated maturity
not  greater  than (and not more than one year less  than)  that of the  Deleted
Mortgage  Loan;  (v) comply with each  representation  and warranty set forth in
Sections 2.03 and 2.04 hereof and Section 4 of the Assignment Agreement and (vi)
have a Pool Strip Rate equal to or  greater  than that of the  Deleted  Mortgage
Loan.

Notwithstanding  any other provisions  herein, (x) with respect to any Qualified
Substitute  Mortgage Loan  substituted  for a Deleted  Mortgage Loan which was a
Group I Discount  Mortgage  Loan,  Group II Discount  Mortgage Loan or Group III
Discount Mortgage Loan, such Qualified  Substitute Mortgage Loan shall be deemed
to be a Group I Discount Mortgage Loan, Group II Discount Mortgage Loan or Group
III  Discount  Mortgage  Loan,  respectively,  and to have a  Group  I  Discount
Fraction,   Group  II  Discount   Fraction  or  Group  III  Discount   Fraction,
respectively,  equal to the related  Discount  Fraction of the Deleted  Mortgage
Loan and (y) in the event that the "Pool Strip Rate" of any Qualified Substitute
Mortgage Loan as calculated  pursuant to the  definition of "Pool Strip Rate" is
greater than the Pool Strip Rate of the related Deleted Mortgage Loan:

        (i)    the Pool Strip Rate of such  Qualified  Substitute  Mortgage Loan
               shall  be equal to the Pool  Strip  Rate of the  related  Deleted
               Mortgage Loan for purposes of calculating the  Pass-Through  Rate
               on the Class AV-I, Class AV-II or Class AV-III  Certificates,  as
               applicable, and

        (ii)   the excess of the Pool Strip  Rate on such  Qualified  Substitute
               Mortgage Loan as

                                              44

<PAGE>

               calculated  pursuant to the  definition of "Pool Strip Rate" over
               the Pool Strip Rate on the related Deleted Mortgage Loan shall be
               payable to the Class R-IV  Certificates  pursuant to Section 4.02
               hereof.

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

        Realized  Loss:  With respect to each Mortgage Loan (or REO Property) as
to which a Cash Liquidation or REO Disposition has occurred, an amount (not less
than zero) equal to (i) the Stated  Principal  Balance of the Mortgage  Loan (or
REO Property) as of the date of Cash Liquidation or REO  Disposition,  plus (ii)
interest  (and REO Imputed  Interest,  if any) at the Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced to Certificateholders up
to the last day of the month in which the Cash  Liquidation (or REO Disposition)
occurred on the Stated Principal Balance of such Mortgage Loan (or REO Property)
outstanding  during each Due Period that such interest was not paid or advanced,
minus (iii) the proceeds,  if any,  received during the month in which such Cash
Liquidation (or REO Disposition)  occurred,  to the extent applied as recoveries
of interest at the Net Mortgage Rate and to principal of the Mortgage  Loan, net
of the portion  thereof  reimbursable  to the Master Servicer or any Subservicer
with respect to related  Advances or expenses as to which the Master Servicer or
Subservicer  is entitled  to  reimbursement  thereunder  but which have not been
previously  reimbursed.  With respect to each Mortgage Loan which is the subject
of a Servicing Modification, (a) (1) the amount by which the interest portion of
a Monthly Payment or the principal  balance of such Mortgage Loan was reduced or
(2) the sum of any  other  amounts  owing  under  the  Mortgage  Loan  that were
forgiven and that  constitute  Servicing  Advances that are  reimbursable to the
Master  Servicer or a  Subservicer,  and (b) any such  amount with  respect to a
Monthly  Payment  that  was or would  have  been  due in the  month  immediately
following  the month in which a Principal  Prepayment  or the Purchase  Price of
such Mortgage Loan is received or is deemed to have been received.  With respect
to each Mortgage Loan which has become the subject of a Deficient Valuation, the
difference  between  the  principal  balance of the  Mortgage  Loan  outstanding
immediately  prior to such Deficient  Valuation and the principal balance of the
Mortgage  Loan as  reduced  by the  Deficient  Valuation.  With  respect to each
Mortgage  Loan  which has become the  object of a Debt  Service  Reduction,  the
amount of such Debt  Service  Reduction.  Notwithstanding  the above,  neither a
Deficient Valuation nor a Debt Service Reduction shall be deemed a Realized Loss
hereunder  so long as the Master  Servicer  has  notified the Trustee in writing
that the Master  Servicer is diligently  pursuing any remedies that may exist in
connection  with the  representations  and warranties made regarding the related
Mortgage  Loan and either (A) the related  Mortgage  Loan is not in default with
regard to payments due  thereunder or (B)  delinquent  payments of principal and
interest  under the related  Mortgage  Loan and any  premiums on any  applicable
primary hazard  insurance  policy and any related escrow  payments in respect of
such Mortgage Loan are being advanced on a current basis by the Master  Servicer
or a  Subservicer,  in either case  without  giving  effect to any Debt  Service
Reduction.

                                              45

<PAGE>

        Record  Date:  With  respect  to each  Distribution  Date,  the close of
business on the last Business Day of the month next preceding the month in which
the related Distribution Date occurs.

     Regular Interest: Any one of the REMIC regular interests in the Trust Fund.

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

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

        REMIC  Administrator:  Residential Funding  Corporation.  If Residential
Funding  Corporation is found by a court of competent  jurisdiction to no longer
be able to fulfill its obligations as REMIC  Administrator  under this Agreement
the  Master  Servicer  or  Trustee  acting as Master  Servicer  shall  appoint a
successor REMIC Administrator,  subject to assumption of the REMIC Administrator
obligations under this Agreement.

        REMIC I: The segregated  pool of assets subject  hereto,  constituting a
portion of the primary trust created  hereby and to be  administered  hereunder,
with respect to which a separate  REMIC  election is to be made (other than with
respect to the items in clause (v) and the proceeds thereof), consisting of:

               (i) the Group I Loans and Group II Loans and the related Mortgage
        Files;

               (ii) all  payments on and  collections  in respect of the Group I
        Loans and Group II Loans due after the Cut-off  Date (other than Monthly
        Payments due in the month of the Cut-off Date) as shall be on deposit in
        the Custodial  Account or in the  Certificate  Account and identified as
        belonging to the Trust Fund;

               (iii)  property which secured a Group I Loan or Group II Loan and
        which has been  acquired  for the benefit of the  Certificateholders  by
        foreclosure or deed in lieu of foreclosure;

               (iv) the hazard insurance  policies and Primary  Insurance Policy
        pertaining to the Group I Loans, if any; and

               (v) all proceeds of clauses (i) through (iv) above.

        REMIC I Regular Interests:  REMIC I Regular Interest  LT-I-SUB,  REMIC I
Regular  Interest  LT-I-AP,  REMIC I Regular Interest  LT-I-AV,  REMIC I Regular
Interest LT-I-ZZZ, REMIC I Regular Interest LT-II-SUB,  REMIC I Regular Interest
LT-II-AP,  REMIC I Regular  Interest  LT-II-  AV and  REMIC I  Regular  Interest
LT-II-ZZZ.

        REMIC I Regular Interest LT-I-SUB: A regular interest in REMIC I that is
held as an asset of REMIC III,  that has an initial  principal  balance equal to
the related Uncertificated Principal

                                              46

<PAGE>

Balance, that bears interest at the related  Uncertificated REMIC I Pass-Through
Rate, and that has such other terms as are described herein.

        REMIC I Regular Interest LT-I-AP:  A regular interest in REMIC I that is
held as an asset of REMIC III,  that has an initial  principal  balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated  REMIC I Pass-Through  Rate, and that has such other terms as are
described herein.

        REMIC I Regular Interest LT-I-AV:  A regular interest in REMIC I that is
held as an asset of REMIC III,  that has an  initial  notional  amount  equal to
$255,332,470.60,  that bears  interest  at the  related  Uncertificated  REMIC I
Pass-Through Rate, and that has such other terms as are described herein.
        REMIC I Regular Interest LT-I-ZZZ: A regular interest in REMIC I that is
held as an asset of REMIC III,  that has an initial  principal  balance equal to
the related  Uncertificated  Principal Balance, and that has such other terms as
are described herein.

        REMIC I Regular Interest  LT-II-SUB:  A regular interest in REMIC I that
is held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated  REMIC I Pass-Through  Rate, and that has such other terms as are
described herein.

        REMIC I Regular Interest LT-II-AP: A regular interest in REMIC I that is
held as an asset of REMIC III,  that has an initial  principal  balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated  REMIC I Pass-Through  Rate, and that has such other terms as are
described herein.

        REMIC I Regular Interest LT-II-AV: A regular interest in REMIC I that is
held as an asset of REMIC III,  that has an  initial  notional  amount  equal to
$77,700,011.52,  that  bears  interest  at the  related  Uncertificated  REMIC I
Pass-Through Rate, and that has such other terms as are described herein.

        REMIC I Regular Interest  LT-II-ZZZ:  A regular interest in REMIC I that
is held as an asset of REMIC III, that has an initial principal balance equal to
the related  Uncertificated  Principal Balance, and that has such other terms as
are described herein.

        REMIC I Subordinated  Balance Ratio: The ratio among the  Uncertificated
Principal  Balances of each REMIC I Regular Interest ending with the designation
"SUB,"  equal to the ratio  among,  with  respect  to each such  REMIC I Regular
Interest,  the  excess of (x) the  aggregate  Stated  Principal  Balance  of the
Mortgage  Loans  in the  related  Loan  Group  over  (y) the  aggregate  current
Certificate  Principal Balance of the Senior  Certificates  related to such Loan
Group.

        REMIC II: The segregated pool of assets subject  hereto,  constituting a
portion of the primary trust created  hereby and to be  administered  hereunder,
with respect to which a separate REMIC

                                              47

<PAGE>

election is to be made  (other than with  respect to the items in clause (v) and
the proceeds thereof), consisting of:

               (i) the Group III Loans and the related Mortgage Files;

               (ii) all payments on and  collections in respect of the Group III
        Loans due after the Cut-off Date (other than Monthly Payments due in the
        month of the  Cut-off  Date) as shall  be on  deposit  in the  Custodial
        Account or in the Certificate Account and identified as belonging to the
        Trust Fund;

               (iii)  property which secured a Group III Loan and which has been
        acquired for the benefit of the  Certificateholders  by  foreclosure  or
        deed in lieu of foreclosure;

               (iv) the hazard insurance  policies and Primary  Insurance Policy
        pertaining to the Group III Loans, if any; and

               (v) all proceeds of clauses (i) through (iv) above.

        REMIC II Regular Interests:  REMIC II Regular Interest LT-IIIA, REMIC II
Regular Interest LT-III-AV and REMIC II Regular Interest LT-III-AP.

        REMIC II Regular Interest  LT-IIIA:  A regular interest in REMIC II that
is held as an asset of REMIC III, that has an initial principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated  REMIC II Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC II Regular Interest LT-III-AV: A regular interest in REMIC II that
is held as an asset of REMIC III, that has an initial  notional  amount equal to
$157,102,977.37,  that bears  interest  at the related  Uncertificated  REMIC II
Pass-Through Rate, and that has such other terms as are described herein.

        REMIC II Regular Interest LT-III-AP: A regular interest in REMIC II that
is held as an asset of REMIC III, that has an initial principal balance equal to
the related  Uncertificated  Principal Balance, and that has such other terms as
are described herein.

        REMIC III: The segregated pool of assets subject hereto,  constituting a
portion of the primary trust created  hereby and to be  administered  hereunder,
with respect to which a separate REMIC election is to be made, consisting of the
REMIC I Regular Interests and the REMIC II Regular Interests.

        REMIC III Regular Interests:  REMIC III Regular Interest LT3-AI1,  REMIC
III Regular  Interest  LT3-AI3,  REMIC III Regular Interest  LT3-AI4,  REMIC III
Regular Interest LT3-AI5,  REMIC III Regular Interest LT3-AI6, REMIC III Regular
Interest LT3-AI7, REMIC III Regular

                                              48

<PAGE>

Interest LT3-AI8, REMIC III Regular Interest LT3-AI9, REMIC III Regular Interest
LT3-AI10,  REMIC  III  Regular  Interest  LT3-API,  REMIC III  Regular  Interest
LT3-AVI,  REMIC  III  Regular  Interest  LT3-AII,  REMIC  III  Regular  Interest
LT3-APII,  REMIC III  Regular  Interest  LT3-AVII,  REMIC III  Regular  Interest
LT3-AIII,  REMIC III Regular  Interest  LT3-APIII,  REMIC III  Regular  Interest
LT3-AVIII,  REMIC III Regular Interest LT3-R, REMIC III Regular Interest LT3-M1,
REMIC III Regular Interest LT3-M2,  REMIC III Regular Interest LT3-M3, REMIC III
Regular  Interest  LT3-MIII1,  REMIC III Regular Interest  LT3-MIII2,  REMIC III
Regular Interest LT3-MIII3, REMIC III Regular Interest LT3-B1, REMIC III Regular
Interest LT3-B2,  REMIC III Regular Interest LT3-B3,  REMIC III Regular Interest
LT3-BIII1,  REMIC III Regular Interest  LT3-BIII2 and REMIC III Regular Interest
LT3-BIII3.

        REMIC III Regular Interest LT3-AI1: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular Interest LT3-AI3: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular Interest LT3-AI4: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular Interest LT3-AI5: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular Interest LT3-AI6: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular Interest LT3-AI7: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular Interest LT3-AI8: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal

                                              49

<PAGE>

Balance,   that  bears  interest  at  the  related   Uncertificated   REMIC  III
Pass-Through Rate, and that has such other terms as are described herein.

        REMIC III Regular Interest LT3-AI9: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest  LT3-AI10:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated REMIC III Pass-Through Rate, and that has such other
terms as are described herein.

        REMIC III Regular Interest LT3-API: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the  related   Uncertificated   Principal  Balance,  that  is  not  entitled  to
distributions  of  interest,  and  that has such  other  terms as are  described
herein.

        REMIC III Regular Interest LT3-AVI: A regular interest in REMIC III that
is  held  as  an  asset  of  REMIC  IV  that  bears   interest  at  the  related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular Interest LT3-AII: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest  LT3-APII:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance, that is not entitled to
distributions  of  interest,  and  that has such  other  terms as are  described
herein.

        REMIC III Regular  Interest  LT3-AVII:  A regular  interest in REMIC III
that is  held as an  asset  of  REMIC  IV that  bears  interest  at the  related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest  LT3-AIII:  A regular  interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated REMIC III Pass-Through Rate, and that has such other
terms as are described herein.

        REMIC III Regular  Interest  LT3-APIII:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related Uncertificated Principal

                                              50

<PAGE>

Balance,  that is not entitled to distributions  of interest,  and that has such
other terms as are described herein.

        REMIC III Regular  Interest  LT3-AVIII:  A regular interest in REMIC III
that is  held as an  asset  of  REMIC  IV that  bears  interest  at the  related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest LT3-R: A regular  interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest LT3-M1: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest LT3-M2: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest LT3-M3: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest  LT3-MIII1:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated REMIC III Pass-Through Rate, and that has such other
terms as are described herein.

        REMIC III Regular  Interest  LT3-MIII2:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated REMIC III Pass-Through Rate, and that has such other
terms as are described herein.

        REMIC III Regular  Interest  LT3-MIII3:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated REMIC III Pass-Through Rate, and that has such other
terms as are described herein.

     REMIC III Regular  Interest LT3-B1: A regular interest in REMIC III that is
held as an asset

                                              51

<PAGE>

of REMIC  IV,  that  has an  initial  principal  balance  equal  to the  related
Uncertificated   Principal   Balance,   that  bears   interest  at  the  related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest LT3-B2: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest LT3-B3: A regular interest in REMIC III that
is held as an asset of REMIC IV, that has an initial  principal balance equal to
the related Uncertificated Principal Balance, that bears interest at the related
Uncertificated REMIC III Pass-Through Rate, and that has such other terms as are
described herein.

        REMIC III Regular  Interest  LT3-BIII1:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated REMIC III Pass-Through Rate, and that has such other
terms as are described herein.

        REMIC III Regular  Interest  LT3-BIII2:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated REMIC III Pass-Through Rate, and that has such other
terms as are described herein.

        REMIC III Regular  Interest  LT3-BIII3:  A regular interest in REMIC III
that is held as an asset of REMIC  IV,  that has an  initial  principal  balance
equal to the related  Uncertificated  Principal Balance,  that bears interest at
the related  Uncertificated REMIC III Pass-Through Rate, and that has such other
terms as are described herein.

        REMIC IV: The segregated pool of assets subject  hereto,  constituting a
portion of the primary trust created  hereby and to be  administered  hereunder,
with respect to which a separate REMIC election is to be made, consisting of the
REMIC III Regular Interests.

        REMIC  Provisions:  Provisions of the federal income tax law relating to
real estate mortgage investment conduits,  which appear at Sections 860A through
860G of  Subchapter  M of Chapter 1 of the Code,  and  related  provisions,  and
temporary and final  regulations (or, to the extent not  inconsistent  with such
temporary or final  regulations,  proposed  regulations) and published  rulings,
notices and  announcements  promulgated  thereunder,  as the foregoing may be in
effect from time to time.

        REO Acquisition: The acquisition by the Master Servicer on behalf of the
Trustee for the benefit of the  Certificateholders  of any REO Property pursuant
to Section 3.14.

                                              52

<PAGE>

        REO Disposition:  As to any REO Property,  a determination by the Master
Servicer that it has received substantially all Insurance Proceeds,  Liquidation
Proceeds,  REO Proceeds and other payments and recoveries (including proceeds of
a final sale) which the Master Servicer  expects to be finally  recoverable from
the sale or other disposition of the REO Property.

        REO Imputed Interest: As to any REO Property,  for any period, an amount
equivalent to interest (at a rate equal to the sum of the Net Mortgage Rate that
would have been applicable to the related Mortgage Loan had it been outstanding)
on the  unpaid  principal  balance  of the  Mortgage  Loan  as of  the  date  of
acquisition thereof for such period.

        REO Proceeds:  Proceeds, net of expenses, received in respect of any REO
Property (including, without limitation, proceeds from the rental of the related
Mortgaged  Property)  which  proceeds  are  required  to be  deposited  into the
Custodial Account only upon the related REO Disposition.

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

        Repurchase Event: As defined in the Assignment Agreement.
        ----------------

        Request  for  Release:  A request  for  release,  the forms of which are
attached as Exhibit G hereto,  or an electronic  request in a form acceptable to
the Custodian.

        Required  Insurance  Policy:  With  respect to any  Mortgage  Loan,  any
insurance policy which is required to be maintained from time to time under this
Agreement, the Program Guide or the related Subservicing Agreement in respect of
such Mortgage Loan.

        Residential  Funding:   Residential  Funding  Corporation,   a  Delaware
corporation,  in its capacity as seller of the Mortgage  Loans to the  Depositor
and any successor thereto.

        Responsible Officer:  When used with respect to the Trustee, any officer
of the  Corporate  Trust  Department  of the Trustee,  including any Senior Vice
President,  any Vice  President,  any Assistant  Vice  President,  any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any other officer of
the Trustee customarily  performing  functions similar to those performed by any
of the above designated  officers to whom, with respect to a particular  matter,
such matter is referred.

        Seller's  Agreement:  An  agreement  for  the  origination  and  sale of
Mortgage  Loans  generally  in the form of the Seller  Contract  referred  to or
contained in the Program  Guide,  or in such other form as has been  approved by
the Master  Servicer and the  Depositor,  each  containing  representations  and
warranties in respect of one or more Mortgage  Loans  consistent in all material
respects with those set forth in the Program Guide.

     Senior Accelerated Distribution Percentage:  The Group I Senior Accelerated
Distribution

                                              53

<PAGE>

Percentage,  Group II Senior  Accelerated  Distribution  Percentage or Group III
Senior Accelerated Distribution Percentage.

        Senior Certificates: Any one of the Class A or Class R Certificates.

     Senior  Interest   Distribution   Amount:   The  Group  I  Senior  Interest
Distribution Amount,  Group II Senior Interest  Distribution Amount or Group III
Senior Interest Distribution Amount.

     Senior  Percentage:  The  Group  I  Senior  Percentage,   Group  II  Senior
Percentage or Group III Senior Percentage.

     Senior  Principal   Distribution  Amount:  The  Group  I  Senior  Principal
Distribution Amount, Group II Senior Principal  Distribution Amount or Group III
Senior Principal Distribution Amount.

     Servicing Accounts: The account or accounts created and maintained pursuant
to Section 3.08.

        Servicing  Advances:  All  customary,  reasonable  and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency or
other  unanticipated  event  by the  Master  Servicer  or a  Subservicer  in the
performance  of its servicing  obligations,  including,  but not limited to, the
cost  of  (i)  the  preservation,  restoration  and  protection  of a  Mortgaged
Property, (ii) any enforcement or judicial proceedings,  including foreclosures,
including any expenses  incurred in relation to any such proceedings that result
from the  Mortgage  Loan  being  registered  on the  MERS(R)  System,  (iii) the
management and liquidation of any REO Property,  (iv) any mitigation  procedures
implemented  in  accordance  with  Section  3.07  and (v)  compliance  with  the
obligations  under  Sections 3.01,  3.08,  3.12(a) and 3.14,  including,  if the
Master Servicer or any Affiliate of the Master Servicer  provides  services such
as appraisals and brokerage  services that are  customarily  provided by Persons
other  than  servicers  of  mortgage  loans,  reasonable  compensation  for such
services.

        Servicing Fee: With respect to any Mortgage Loan and Distribution  Date,
the fee payable  monthly to the Master  Servicer in respect of master  servicing
compensation  that  accrues at an annual  rate equal to the  Servicing  Fee Rate
multiplied  by the  Stated  Principal  Balance of such  Mortgage  Loan as of the
related  Due Date in the related  Due  Period,  as may be  adjusted  pursuant to
Section 3.16(e).

        Servicing Fee Rate:  The per annum rate  designated on the Mortgage Loan
Schedule as the "MSTR SERV FEE," as may be adjusted  with  respect to  successor
Master Servicers as provided in Section 7.02.

        Servicing  Modification:  Any  reduction of the interest  rate on or the
outstanding  principal  balance of a Mortgage Loan or any extension of the final
maturity date of a Mortgage Loan, in each case pursuant to a  modification  of a
Mortgage Loan that is in default or, in the judgment of the

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Master Servicer, default is reasonably foreseeable pursuant to a modification of
such Mortgage Loan in accordance with Section 3.07(a).

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

     Special Hazard Amount:  The Group I/Group II Special Hazard Amount or Group
III Special Hazard Amount.

        Special  Hazard Loss: Any Realized Loss not in excess of the cost of the
lesser  of  repair or  replacement  of a  Mortgaged  Property  suffered  by such
Mortgaged Property on account of direct physical loss, exclusive of (i) any loss
of a type covered by a hazard policy or a flood insurance  policy required to be
maintained in respect of such Mortgaged  Property  pursuant to Section  3.12(a),
except to the extent of the  portion of such loss not covered as a result of any
coinsurance provision and (ii) any Extraordinary Loss.

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

        Startup Date: The day designated as such pursuant to Article X hereof.
        ------------

        Stated Principal  Balance:  With respect to any Mortgage Loan or related
REO Property,  at any given time, (i) the Cut-off Date Principal  Balance of the
Mortgage Loan, minus (ii) the sum of (a) the aggregate of the principal  portion
of the Monthly  Payments due with respect to such  Mortgage Loan or REO Property
during each Due Period commencing on the first Due Period after the Cut-off Date
and ending  with the Due Period  related to the most  recent  Distribution  Date
which were  received or with  respect to which an Advance was made,  and (b) all
Principal  Prepayments  with respect to such Mortgage Loan or REO Property,  and
all Insurance  Proceeds,  Liquidation  Proceeds and REO Proceeds,  to the extent
applied by the Master  Servicer as recoveries  of principal in  accordance  with
Section 3.14 with respect to such Mortgage  Loan or REO  Property,  in each case
which were  distributed  pursuant to Section 4.02 on any  previous  Distribution
Date,  and (c) any Realized Loss  allocated to  Certificateholders  with respect
thereto for any previous Distribution Date.

        Subordinate Certificate:  Any one of the Class M Certificates or Class B
Certificates,  executed  by the  Trustee and  authenticated  by the  Certificate
Registrar  substantially  in the form annexed hereto as Exhibit B and Exhibit C,
respectively.  With  respect  to Loan  Group I and Loan Group II, the Class M-1,
Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3  Certificates  shall be
referred to as the related Subordinate Certificates.  With respect to Loan Group
III, the Class M-III Certificates and Class B-III Certificates shall be referred
to the related Subordinate Certificates.

     Subordinate  Percentage:   As  of  any  Distribution  Date,  as  determined
separately for each Loan

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<PAGE>

Group, 100% minus the related Senior Percentage as of such Distribution Date.

     Subordinate   Principal   Distribution  Amount:  The  Group  I  Subordinate
Principal  Distribution  Amount,  Group II  Subordinate  Principal  Distribution
Amount or Group III Subordinate Principal Distribution Amount.

        Subordination:  The provisions described in Section 4.05 relating to the
allocation of Realized Losses.

     Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of reference
thereto, is subject to a Subservicing Agreement.

        Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement and who generally satisfied the requirements set forth in
the Program Guide in respect of the  qualification  of a  Subservicer  as of the
date of its approval as a Subservicer by the Master Servicer.

        Subservicer  Advance:  Any  delinquent   installment  of  principal  and
interest on a Mortgage Loan which is advanced by the related Subservicer (net of
its Subservicing Fee) pursuant to the Subservicing Agreement.

        Subservicing  Account:  An  account  established  by  a  Subservicer  in
accordance with Section 3.08.

        Subservicing Agreement: The written contract between the Master Servicer
and any Subservicer relating to servicing and administration of certain Mortgage
Loans as  provided  in  Section  3.02,  generally  in the  form of the  servicer
contract  referred to or contained in the Program Guide or in such other form as
has been approved by the Master Servicer and the Depositor.

        Subservicing  Fee: As to any Mortgage Loan,  the fee payable  monthly to
the related  Subservicer (or, in the case of a Nonsubserviced  Mortgage Loan, to
the Master  Servicer) in respect of  subservicing  and other  compensation  that
accrues  with respect to each  Distribution  Date at an annual rate equal to the
Subservicing  Fee  Rate  multiplied  by the  Stated  Principal  Balance  of such
Mortgage Loan as of the related Due Date in the related Due Period.

        Subservicing Fee Rate: The per annum rate designated as "SUBSERV FEE" on
the Mortgage Loan Schedule as the "SUBSERV FEE".

        Tax Returns:  The federal income tax return on Internal  Revenue Service
Form 1066,  U.S.  Real Estate  Mortgage  Investment  Conduit  Income Tax Return,
including  Schedule Q thereto,  Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on  behalf  of  REMIC  I,  REMIC  II,  REMIC  III  and  REMIC  IV due  to  their
classification as REMICs under the REMIC  Provisions,  together with any and all
other

                                              56

<PAGE>

information,  reports or returns  that may be  required to be  furnished  to the
Certificateholders  or filed  with the  Internal  Revenue  Service  or any other
governmental taxing authority under any applicable provisions of federal,  state
or local tax laws.

        Transfer: Any direct or indirect transfer,  sale, pledge,  hypothecation
or other form of assignment of any Ownership Interest in a Certificate.

     Transferee:  Any Person who is acquiring by Transfer any Ownership Interest
in a Certificate.

     Transferor:  Any Person  who is  disposing  by  Transfer  of any  Ownership
Interest in a Certificate.

     Trust Fund:  Collectively,  the assets of REMIC I, REMIC II,  REMIC III and
REMIC IV.

        Uniform Single  Attestation  Program for Mortgage  Bankers:  The Uniform
Single  Attestation  Program for Mortgage Bankers,  as published by the Mortgage
Bankers  Association  of America and  effective  with respect to fiscal  periods
ending on or after December 15, 1995.

        Uncertificated  Accrued  Interest:  With  respect to any REMIC I Regular
Interest,  REMIC II  Regular  Interest  or REMIC III  Regular  Interest  for any
Distribution Date, except for REMIC I Regular Interest LT-I-AP,  REMIC I Regular
Interest  LT-II-AP,  REMIC II Regular  Interest  LT-III-  AP,  REMIC III Regular
Interest  LT3-API,  REMIC III Regular  Interest  LT3-APII  and REMIC III Regular
Interest  LT3-APIII,   one  month's  interest  at  the  related   Uncertificated
Pass-Through  Rate for such  Distribution  Date,  accrued on the  Uncertificated
Principal Balance or Uncertificated Notional Amount, as applicable,  immediately
prior  to  such  Distribution  Date.  Uncertificated  Accrued  Interest  for the
Uncertificated  Regular  Interests  shall  accrue on the basis of a 360-day year
consisting of twelve 30-day months.  For purposes of  calculating  the amount of
Uncertificated  Accrued  Interest  for the  REMIC I  Regular  Interests  for any
Distribution Date, any Prepayment Interest Shortfalls (to the extent not covered
by  Compensating  Interest)  relating to the Group I Loans for any  Distribution
Date shall be allocated  first to REMIC I Regular  Interests  LT-I-SUB and LT-I-
ZZZ, and then to REMIC I Regular Interest LT-I-AV, in each case to the extent of
one month's interest at the then applicable  respective  Uncertificated  REMIC I
Pass-Through  Rate on the respective  Uncertificated  Principal  Balance of each
such  Uncertificated  REMIC I Regular Interest.  For purposes of calculating the
amount of Uncertificated  Accrued Interest for the REMIC I Regular Interests for
any  Distribution  Date, any Prepayment  Interest  Shortfalls (to the extent not
covered  by  Compensating  Interest)  relating  to the  Group II  Loans  for any
Distribution  Date  shall  be  allocated  first  to  REMIC I  Regular  Interests
LT-II-SUB and LT-II-ZZZ,  and then to REMIC I Regular Interest LT-II-AV, in each
case to the extent of one  month's  interest at the then  applicable  respective
Uncertificated  REMIC  I  Pass-Through  Rate  on the  respective  Uncertificated
Principal  Balance of each such  Uncertificated  REMIC I Regular  Interest.  For
purposes of calculating the amount of  Uncertificated  Accrued  Interest for the
REMIC II Regular  Interests for any Distribution  Date, any Prepayment  Interest
Shortfalls (to the extent not covered by Compensating  Interest) relating to the
Group III Loans for any  Distribution  Date shall be allocated first to REMIC II
Regular Interest LT- IIIA, and then to REMIC II Regular Interest  LT-III-AV,  in
each  case  to the  extent  of one  month's  interest  at  the  then  applicable
respective   Uncertificated   REMIC  II  Pass-Through  Rate  on  the  respective
Uncertificated  Principal Balance of each such  Uncertificated  REMIC II Regular
Interest.

        For  purposes  of  calculating  the  amount  of  Uncertificated  Accrued
Interest for the REMIC III Regular  Interests  for any  Distribution  Date,  any
Prepayment  Interest  Shortfalls  (to the  extent not  covered  by  Compensating
Interest)  allocated to the  Certificates  (other than the Class R Certificates)
shall  be  allocated  to  the  REMIC  III  Regular   Interests  for  which  such
Certificates are the Corresponding Certificates.

        Uncertificated Notional Amount: With respect to REMIC I Regular Interest
LT-I-AV,  REMIC I  Regular  Interest  LT-II-AV  and  REMIC II  Regular  Interest
LT-III-AV, the aggregate Stated Principal Balance of the Group I Loans, Group II
Loans and the Group III Loans, respectively, as of the day immediately preceding
such  Distribution Date (or, with respect to the initial  Distribution  Date, at
the close of business on the Cut-off Date).  REMIC III Regular Interest LT3-AVI,
REMIC III Regular Interest  LT3-AVII and REMIC III Regular  Interest  LT3-AVIII,
will not have Uncertificated  Notional Amounts,  but will be entitled to 100% of
the amounts  distributed on REMIC I Regular  Interest  LT-I-AV,  REMIC I Regular
Interest LT-II-AV and REMIC II Regular Interest LT- III-AV, respectively.

        Uncertificated   Pass-Through   Rate:   The   Uncertificated   REMIC   I
Pass-Through Rate,  Uncertificated  REMIC II Pass-Through Rate or Uncertificated
REMIC III Pass-Through Rate.

        Uncertificated  Principal  Balance:  The principal amount of any REMIC I
Regular  Interest,  REMIC II  Regular  Interest  or REMIC III  Regular  Interest
outstanding  as of any  date  of  determination.  The  Uncertificated  Principal
Balance of each REMIC I Regular Interest, REMIC II Regular Interest or REMIC III
Regular Interest shall never be less than zero.

        Uncertificated   REMIC  I  Pass-Through   Rate:   With  respect  to  any
Distribution  Date and REMIC I  Regular  Interest  LT-I-SUB  and REMIC I Regular
Interest  LT-I-ZZZ  a per annum  rate  equal to 5.50%.  With  respect to REMIC I
Regular Interest LT-II-SUB and REMIC I Regular Interest  LT-II-ZZZ,  a per annum
rate equal to 5.00%.  With respect to REMIC I Regular Interest LT-I-AP and REMIC
I Regular Interest  LT-II-AP,  a per annum rate equal to 0.00%.  With respect to
REMIC I Regular Interest LT-I-AV, a per annum rate equal to the weighted average
of the Pool Strip Rates for each Group I Loan.  With  respect to REMIC I Regular
Interest  LT-II-AV,  a per annum rate equal to the weighted  average of the Pool
Strip Rates for each Group II Loan.

        Uncertificated   REMIC  II  Pass-Through   Rate:  With  respect  to  any
Distribution Date and REMIC II Regular Interest LT-II-A,  a per annum rate equal
to 6.00%. With respect to REMIC II Regular Interest LT-III-AP,  a per annum rate
equal to 0.00%. With respect to REMIC II Regular Interest LT-III-AV, a per annum
rate equal to the  weighted  average of the Pool Strip  Rates for each Group III
Loan.

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<PAGE>

        Uncertificated  REMIC III Pass-Through  Rate: With respect to each REMIC
III Regular Interest (other than REMIC III Regular Interest  LT3-AI9,  REMIC III
Regular Interest LT3-AI10, REMIC III Regular Interest LT3-AVI, REMIC III Regular
Interest  LT3-AVII,  REMIC III  Regular  Interest  LT3-AVIII,  REMIC III Regular
Interest LT3-M1,  REMIC III Regular Interest LT3-M2,  REMIC III Regular Interest
LT3-M3, REMIC III Regular Interest LT3-B1, REMIC III Regular Interest LT3-B2 and
REMIC III Regular Interest LT3-B3) and any Distribution Date, the per annum rate
specified  in the  Preliminary  Statement.  With  respect  to REMIC III  Regular
Interest  LT3-AI9,  a per annum  rate equal to LIBOR  plus  1.45%,  subject to a
maximum  rate of 7.50% per annum and a  minimum  rate of 1.45% per  annum.  With
respect  to REMIC III  Regular  Interest  LT3-AI10,  a per annum  rate  equal to
16.63749942%  minus the  product of LIBOR and  2.74999986,  subject to a maximum
rate of  16.63749942%  per  annum and a minimum  rate of 0.00% per  annum.  With
respect to REMIC III Regular Interest LT3-M1, REMIC III Regular Interest LT3-M2,
REMIC III Regular Interest LT3-M3,  REMIC III Regular Interest LT3-B1, REMIC III
Regular  Interest LT3-B2 and REMIC III Regular Interest LT3-B3, a per annum rate
equal to the weighted average of the  Uncertificated  REMIC I Pass-Through Rates
on REMIC I Regular  Interests  LT-I-SUB and REMIC I Regular Interest  LT-II-SUB,
weighted on the basis of the Uncertificated Principal Balance of each such REMIC
I Regular  Interest.  REMIC III  Regular  Interest  LT3-AVI,  REMIC III  Regular
Interest  LT3-AVII  and  REMIC  III  Regular  Interest  LT3-AVIII  will not have
Uncertificated  Pass-Through  Rates,  but will be  entitled  to 100% of  amounts
distributed  on REMIC I  Regular  Interest  LT-I-AV,  REMIC I  Regular  Interest
LT-II-AV and REMIC II Regular Interest LT-III-AV, respectively.

        Uncertificated Regular Interests:  The REMIC I Regular Interests,  REMIC
II Regular Interests and REMIC III Regular Interests.

        Uninsured  Cause:  Any cause of damage to property subject to a Mortgage
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies.

        United  States  Person:  A citizen or resident of the United  States,  a
corporation,   partnership  or  other  entity   (treated  as  a  corporation  or
partnership for United States federal income tax purposes)  created or organized
in, or under the laws of, the United States, any state thereof,  or the District
of  Columbia  (except in the case of a  partnership,  to the extent  provided in
Treasury  regulations) provided that, for purposes solely of the restrictions on
the transfer of Class R Certificates,  no partnership or other entity treated as
a partnership  for United States federal income tax purposes shall be treated as
a  United  States  Person  unless  all  persons  that  own an  interest  in such
partnership  either directly or through any entity that is not a corporation for
United  States  federal  income tax  purposes  are  required  by the  applicable
operative  agreement to be United States Persons, or an estate that is described
in Section  7701(a)(30)(D)  of the Code, or a trust that is described in Section
7701(a)(30)(E) of the Code.

        VA: The Veterans Administration, or its successor.

     Voting Rights:  The portion of the voting rights of all of the Certificates
which is allocated to any Certificate.  95.00% of all of the Voting Rights shall
be allocated among Holders of the Class

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<PAGE>

A Certificates (other than the Interest Only Certificates), Class M Certificates
and Class B Certificates, in proportion to the outstanding Certificate Principal
Balances of their respective Certificates;  1% of all of the Voting Rights shall
be allocated among the Holders of the Class A-I-2 Certificates; 1% of all of the
Voting  Rights  shall  be  allocated   among  the  Holders  of  the  Class  AV-I
Certificates;  1% of all of the  Voting  Rights  shall be  allocated  among  the
Holders of the Class AV-II Certificates; 1% of all of the Voting Rights shall be
allocated  among the Holders of the Class  AV-III  Certificates;  0.25%,  0.25%,
0.25% and 0.25% of all of the Voting Rights shall be allocated among the Holders
of the  Class  R-I,  Class  R-II,  Class  R-III  and  Class  R-IV  Certificates,
respectively;  in each case to be allocated among the Certificates of such Class
in accordance with their respective Percentage Interest.

                                              59

<PAGE>

        Section  1.02 Determination of LIBOR.

        LIBOR  applicable to the  calculation of the  Pass-Through  Rates on the
Adjustable  Rate  Certificates,  if any, for any Interest  Accrual Period (other
than the initial  Interest Accrual Period) will be determined on each LIBOR Rate
Adjustment Date.

        On each LIBOR Rate Adjustment Date (other than for the initial  Interest
Accrual  Period),  LIBOR  shall be  established  by the  Trustee  and, as to any
Interest Accrual Period,  will equal the rate for one month United States dollar
deposits that appears on the Telerate Screen Page 3750 as of 11:00 a.m.,  London
time, on such LIBOR Rate Adjustment Date.  "Telerate Screen Page 3750" means the
display  designated as page 3750 on the Telerate  Service (or such other page as
may  replace  page 3750 on that  service for the  purpose of  displaying  London
interbank  offered rates of major  banks).  If such rate does not appear on such
page (or such other page as may replace  that page on that  service,  or if such
service is no longer offered, LIBOR shall be so established by use of such other
service  for  displaying  LIBOR or  comparable  rates as may be  selected by the
Trustee  after  consultation  with the  Master  Servicer),  the rate will be the
Reference Bank Rate.  The "Reference  Bank Rate" will be determined on the basis
of the rates at which  deposits in U.S.  Dollars  are  offered by the  reference
banks (which shall be any three major banks that are engaged in  transactions in
the London interbank market, selected by the Trustee after consultation with the
Master  Servicer) as of 11:00 a.m.,  London time,  on the LIBOR Rate  Adjustment
Date to prime banks in the London  interbank market for a period of one month in
amounts  approximately equal to the aggregate  Certificate  Principal Balance of
the Adjustable Rate Certificates then outstanding.  The Trustee will request the
principal London office of each of the reference banks to provide a quotation of
its rate. If at least two such  quotations  are  provided,  the rate will be the
arithmetic  mean of the quotations  rounded up to the next multiple of 1/16%. If
on such date fewer than two quotations are provided as requested,  the rate will
be the  arithmetic  mean of the rates  quoted by one or more major  banks in New
York City,  selected by the Trustee after consultation with the Master Servicer,
as of 11:00 a.m., New York City time, on such date for loans in U.S.  Dollars to
leading European banks for a period of one month in amounts  approximately equal
to  the  aggregate   Certificate   Principal  Balance  of  the  Adjustable  Rate
Certificates then outstanding.  If no such quotations can be obtained,  the rate
will be LIBOR for the prior Distribution Date, or in the case of the first LIBOR
Rate  Adjustment  Date,  1.31875%;  provided  however,  if, under the priorities
listed  previously in this  paragraph,  LIBOR for a  Distribution  Date would be
based on LIBOR for the  previous  Distribution  Date for the  third  consecutive
Distribution  Date, the Trustee,  after  consultation  with the Master Servicer,
shall  select an  alternative  comparable  index over which the  Trustee  has no
control,  used for  determining  one-  month  Eurodollar  lending  rates that is
calculated and published or otherwise made available by an independent party.

        The  establishment  of LIBOR by the Trustee on any LIBOR Rate Adjustment
Date and the Master Servicer's subsequent  calculation of the Pass-Through Rates
applicable to each of the Adjustable Rate Certificates for the relevant Interest
Accrual Period, in the absence of manifest error, will be final and binding.

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<PAGE>

        Promptly  following  each LIBOR Rate  Adjustment  Date the Trustee shall
supply the Master  Servicer  with the results of its  determination  of LIBOR on
such date.  Furthermore,  the Trustee  will supply to any  Certificateholder  so
requesting by telephone the  Pass-Through  Rates on each of the Adjustable  Rate
Certificates  for the current and the  immediately  preceding  Interest  Accrual
Period.

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<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

        Section  2.01 Conveyance of Mortgage Loans.

        (a) The Depositor,  concurrently with the execution and delivery hereof,
does hereby assign to the Trustee  without  recourse,  all the right,  title and
interest  of the  Depositor  in and to (i) the  Mortgage  Loans,  including  all
interest and principal  received on or with respect to the Mortgage  Loans after
the Cut-off  Date (other than  payments of  principal  and  interest  due on the
Mortgage  Loans  in the  month  of May  2003);  and  (ii)  all  proceeds  of the
foregoing.

        (b) In connection with such assignment,  and contemporaneously  with the
delivery of this Agreement,  except as set forth in Section  2.01(c) below,  the
Depositor does hereby deliver to, and deposit with, the Trustee,  or to and with
one or more Custodians, as the duly appointed agent or agents of the Trustee for
such  purpose,  the following  documents or  instruments  (or copies  thereof as
permitted by this Section) with respect to each Mortgage Loan so assigned:

               (i) The original Mortgage Note,  endorsed without recourse to the
        order of the Trustee and showing an unbroken chain of endorsements  from
        the  originator  thereof to the Person  endorsing it to the Trustee,  or
        with  respect to any  Destroyed  Mortgage  Note,  an original  lost note
        affidavit from the related Seller or  Residential  Funding  stating that
        the original  Mortgage Note was lost,  misplaced or destroyed,  together
        with a copy of the related Mortgage Note;

               (ii) The original Mortgage, noting the presence of the MIN of the
        Mortgage  Loan and language  indicating  that the Mortgage Loan is a MOM
        Loan if the  Mortgage  Loan is a MOM Loan,  with  evidence of  recording
        thereon or, if the original  Mortgage has not yet been returned from the
        public recording  office, a copy of the original  Mortgage with evidence
        of recording indicated thereon;

               (iii)  Unless the  Mortgage  Loan is  registered  on the  MERS(R)
        System,  the  assignment  (which may be included in one or more  blanket
        assignments  if  permitted  by  applicable  law) of the  Mortgage to the
        Trustee with evidence of recording  indicated  thereon or a copy of such
        assignment with evidence of recording indicated thereon;

               (iv) The  original  recorded  assignment  or  assignments  of the
        Mortgage  showing an unbroken  chain of title from the originator to the
        Person  assigning it to the Trustee (or to MERS, if the Mortgage Loan is
        registered on the MERS(R)  System and noting the presence of a MIN) with
        evidence of recordation noted thereon or attached thereto,  or a copy of
        such  assignment  or  assignments  of  the  Mortgage  with  evidence  of
        recording indicated thereon; and

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<PAGE>

               (v) The original of each  modification,  assumption  agreement or
        preferred loan agreement,  if any,  relating to such Mortgage Loan, or a
        copy  of each  modification,  assumption  agreement  or  preferred  loan
        agreement.

        (c) The Depositor may, in lieu of delivering  originals of the documents
set forth in Section  2.01(b)(ii),  (iii),  (iv) and (v) (or  copies  thereof as
permitted by Section  2.01(b)) to the Trustee or the  Custodian  or  Custodians,
deliver such  documents to the Master  Servicer,  and the Master  Servicer shall
hold such  documents  in trust for the use and benefit of all present and future
Certificateholders until such time as is set forth below. Within thirty Business
Days  following  the  earlier of (i) the  receipt of the  original of all of the
documents or instruments set forth in Section  2.01(b)(ii),  (iii), (iv) and (v)
(or copies  thereof as permitted by such Section) for any Mortgage Loan and (ii)
a written  request by the Trustee to deliver those documents with respect to any
or all of the Mortgage Loans then being held by the Master Servicer,  the Master
Servicer  shall  deliver a complete set of such  documents to the Trustee or the
Custodian  or  Custodians  that are the duly  appointed  agent or  agents of the
Trustee.  On the Closing Date, the Master  Servicer shall certify that it has in
its  possession  an  original  or copy of each of the  documents  referred to in
Section  2.01(b)(ii),  (iii), (iv) and (v) which has been delivered to it by the
Depositor.

        (d) In  connection  with any  Mortgage  Loan,  if the  Depositor  cannot
deliver the Mortgage,  any  assignment,  modification,  assumption  agreement or
preferred loan agreement (or copy thereof as permitted by Section  2.01(b)) with
evidence of recording  thereon  concurrently  with the execution and delivery of
this  Agreement  because of (i) a delay  caused by the public  recording  office
where such Mortgage, assignment, modification, assumption agreement or preferred
loan agreement as the case may be, has been delivered for recordation, or (ii) a
delay in the  receipt of certain  information  necessary  to prepare the related
assignments, the Depositor shall deliver or cause to be delivered to the Trustee
or the respective Custodian a copy of such Mortgage,  assignment,  modification,
assumption agreement or preferred loan agreement.

        The Depositor  shall  promptly  cause to be recorded in the  appropriate
public office for real  property  records the  Assignment  referred to in clause
(iii) of Section 2.01(b),  except (a) in states where, in the opinion of counsel
acceptable  to the  Trustee  and the  Master  Servicer,  such  recording  is not
required to protect the Trustee's  interests in the Mortgage Loan or (b) if MERS
is  identified  on the  Mortgage  or on a properly  recorded  assignment  of the
Mortgage as the  mortgagee of record solely as nominee for  Residential  Funding
and its successors and assigns. If any Assignment is lost or returned unrecorded
to the Depositor  because of any defect  therein,  the Depositor shall prepare a
substitute  Assignment  or cure such defect,  as the case may be, and cause such
Assignment to be recorded in accordance with this paragraph. The Depositor shall
promptly  deliver or cause to be  delivered  to the  Trustee  or the  respective
Custodian  such Mortgage or Assignment  (or copy thereof as permitted by Section
2.01(b)) with evidence of recording  indicated thereon upon receipt thereof from
the public recording office or from the related Subservicer.

        If the Depositor  delivers to the Trustee or Custodian any Mortgage Note
or Assignment of

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Mortgage  in blank,  the  Depositor  shall,  or shall  cause the  Custodian  to,
complete the  endorsement of the Mortgage Note and the Assignment of Mortgage in
the name of the Trustee in conjunction with the Interim  Certification issued by
the Custodian, as contemplated by Section 2.02.

        Any of the items set forth in Sections 2.01(b)(ii),  (iii), (iv) and (v)
that may be delivered as a copy rather than the original may be delivered to the
Trustee or the Custodian.

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

        (e) It is intended that the  conveyances by the Depositor to the Trustee
of the  Mortgage  Loans as provided  for in this  Section 2.01 be construed as a
sale by the  Depositor to the Trustee of the  Mortgage  Loans for the benefit of
the Certificateholders.  Further, it is not intended that any such conveyance be
deemed to be a pledge of the Mortgage  Loans by the  Depositor to the Trustee to
secure a debt or other obligation of the Depositor.  However,  in the event that
the Mortgage  Loans are held to be property of the  Depositor or of  Residential
Funding,  or if for any  reason  this  Agreement  is held or  deemed to create a
security  interest in the  Mortgage  Loans,  then it is  intended  that (a) this
Agreement shall also be deemed to be a security  agreement within the meaning of
Articles  8 and 9 of the New  York  Uniform  Commercial  Code  and  the  Uniform
Commercial  Code of any  other  applicable  jurisdiction;  (b)  the  conveyances
provided  for in this  Section  2.01  shall be  deemed  to be (1) a grant by the
Depositor to the Trustee of a security  interest in all of the Depositor's right
(including the power to convey title thereto),  title and interest,  whether now
owned or hereafter  acquired,  in and to (A) the Mortgage  Loans,  including the
related  Mortgage Note and  Mortgage,  (B) all amounts  payable  pursuant to the
Mortgage Loans in accordance  with the terms thereof and (C) any and all general
intangibles consisting of, arising from or relating to any of the foregoing, and
all proceeds of the conversion,  voluntary or involuntary, of the foregoing into
cash,  instruments,  securities or other property,  including without limitation
all amounts from time to time held or invested in the Certificate Account or the
Custodial Account, whether in the form of cash, instruments, securities or other
property and (2) an  assignment  by the Depositor to the Trustee of any security
interest in any and all of Residential  Funding's right  (including the power to
convey  title  thereto),  title and  interest,  whether  now owned or  hereafter
acquired,  in and to the property described in the foregoing clauses (1)(A), (B)
and  (C)  granted  by  Residential  Funding  to the  Depositor  pursuant  to the
Assignment  Agreement;  (c) the possession by the Trustee,  the Custodian or any
other

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<PAGE>

agent of the  Trustee of  Mortgage  Notes or such  other  items of  property  as
constitute  instruments,  money,  negotiable documents or chattel paper shall be
deemed to be "possession by the secured  party," or possession by a purchaser or
a person  designated  by such  secured  party,  for purposes of  perfecting  the
security  interest  pursuant to the Uniform  Commercial Code as in effect in the
States of New York and Minnesota and any other applicable jurisdiction;  and (d)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property,  shall be deemed notifications
to,   or   acknowledgments,    receipts   or   confirmations   from,   financial
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting such security interest under applicable law.

        The Depositor and, at the Depositor's direction, Residential Funding and
the Trustee  shall,  to the extent  consistent  with this  Agreement,  take such
reasonable  actions as may be necessary to ensure that, if this  Agreement  were
deemed  to  create a  security  interest  in the  Mortgage  Loans  and the other
property  described  above,  such  security  interest  would be  deemed  to be a
perfected  security  interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.  Without  limiting the
generality  of the  foregoing,  the  Depositor  shall prepare and deliver to the
Trustee  not less than 15 days prior to any filing date and,  the Trustee  shall
forward for filing, or shall cause to be forwarded for filing, at the expense of
the  Depositor,  all filings  necessary  to maintain  the  effectiveness  of any
original filings necessary under the Uniform Commercial Code as in effect in any
jurisdiction  to  perfect  the  Trustee's  security  interest  in or lien on the
Mortgage  Loans as  evidenced  by an  Officers'  Certificate  of the  Depositor,
including  without  limitation (x) continuation  statements,  and (y) such other
statements  as may be  occasioned  by (1) any  change  of  name  of  Residential
Funding,  the Depositor or the Trustee (such  preparation and filing shall be at
the expense of the Trustee,  if occasioned  by a change in the Trustee's  name),
(2) any  change of  location  of the place of  business  or the chief  executive
office of  Residential  Funding  or the  Depositor  or (3) any  transfer  of any
interest of Residential Funding or the Depositor in any Mortgage Loan.

        Section  2.02 Acceptance by Trustee.

        The Trustee  acknowledges  receipt (or,  with respect to Mortgage  Loans
subject  to  a  Custodial  Agreement,   and  based  solely  upon  a  receipt  or
certification executed by the Custodian,  receipt by the respective Custodian as
the duly appointed agent of the Trustee) of the documents referred to in Section
2.01(b)(i) through (iii) above (except that for purposes of such  acknowledgment
only, a Mortgage Note may be endorsed in blank and an Assignment of Mortgage may
be in blank) and declares  that it, or a Custodian as its agent,  holds and will
hold such documents and the other documents  constituting a part of the Mortgage
Files  delivered  to it, or a Custodian  as its agent,  in trust for the use and
benefit of all present and future  Certificateholders.  The Trustee or Custodian
(such Custodian being so obligated under a Custodial  Agreement) agrees, for the
benefit of  Certificateholders,  to review each  Mortgage  File  delivered to it
pursuant to Section  2.01(b)  within 45 days after the Closing Date to ascertain
that all required documents (specifically as set forth in Section 2.01(b)), have
been executed and received, and that such documents relate to the Mortgage Loans
identified  on the  Mortgage  Loan  Schedule,  as  supplemented,  that have been
conveyed  to it, and to  deliver  to the  Trustee a  certificate  (the  "Interim
Certificate") to the effect that all documents

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<PAGE>

required to be delivered  pursuant to Section  2.01(b)  above have been executed
and received and that such documents  relate to the Mortgage Loans identified on
the  Mortgage  Loan  Schedule,  except for any  exceptions  listed on Schedule A
attached to such Interim  Certification.  Upon delivery of the Mortgage Files by
the Depositor or the Master Servicer, the Trustee shall acknowledge receipt (or,
with  respect to  Mortgage  Loans  subject to a Custodial  Agreement,  and based
solely upon a receipt or certification executed by the Custodian, receipt by the
respective  Custodian  as  the  duly  appointed  agent  of the  Trustee)  of the
documents  referred to in Section 2.01(c) above.  The Trustee or Custodian (such
Custodian being so obligated under a Custodial  Agreement) agrees to review each
Mortgage File  delivered to it pursuant to Section  2.01(c) within 45 days after
receipt  thereof  to  ascertain  that all  documents  required  to be  delivered
pursuant to such Section have been received,  and that such documents  relate to
the Mortgage Loans  identified on the Mortgage Loan Schedule,  as  supplemented,
that have been conveyed to it.

        If  the  Custodian,  as the  Trustee's  agent,  finds  any  document  or
documents constituting a part of a Mortgage File to be missing or defective, the
Trustee, after receiving notice from the Custodian, shall promptly so notify the
Master Servicer and the Depositor;  provided,  that if the Mortgage Loan related
to such Mortgage File is listed on Schedule A of the  Assignment  Agreement,  no
notification  shall be  necessary.  Pursuant  to  Section  2.3 of the  Custodial
Agreement,  the Custodian will notify the Master Servicer, the Depositor and the
Trustee of any such  omission or defect  found by it in respect of any  Mortgage
File held by it. If such omission or defect materially and adversely affects the
interests in the related  Mortgage  Loan of the  Certificateholders,  the Master
Servicer  shall  promptly  notify the related  Subservicer  of such  omission or
defect and request that such Subservicer correct or cure such omission or defect
within 60 days from the date the Master  Servicer was notified of such  omission
or defect and,  if such  Subservicer  does not correct or cure such  omission or
defect  within such period,  that such  Subservicer  purchase such Mortgage Loan
from the Trust Fund at its  Purchase  Price,  in either case within 90 days from
the date the Master  Servicer was notified of such omission or defect;  provided
that if the omission or defect would cause the Mortgage  Loan to be other than a
"qualified mortgage" as defined in Section 860G(a)(3) of the Code, any such cure
or  repurchase  must  occur  within  90 days  from  the  date  such  breach  was
discovered; and provided further, that no cure, substitution or repurchase shall
be required if such  omission or defect is in respect of a Mortgage  Loan listed
on  Schedule A of the  Assignment  Agreement.  The  Purchase  Price for any such
Mortgage  Loan  shall be  deposited  or caused  to be  deposited  by the  Master
Servicer in the Custodial Account maintained by it pursuant to Section 3.07 and,
upon receipt by the Trustee of written  notification of such deposit signed by a
Servicing  Officer,  the  Trustee or any  Custodian,  as the case may be,  shall
release to the Master  Servicer the related  Mortgage File and the Trustee shall
execute and deliver such  instruments of transfer or assignment  prepared by the
Master Servicer, in each case without recourse, as shall be necessary to vest in
the Subservicer or its designee,  as the case may be, any Mortgage Loan released
pursuant hereto and thereafter such Mortgage Loan shall not be part of the Trust
Fund. In furtherance of the foregoing, if the Subservicer or Residential Funding
that  repurchases  the Mortgage Loan is not a member of MERS and the Mortgage is
registered on the MERS(R) System,  the Master  Servicer,  at its own expense and
without any right of  reimbursement,  shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from MERS
to such Subservicer or Residential Funding

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<PAGE>

and shall cause such  Mortgage to be removed  from  registration  on the MERS(R)
System in accordance  with MERS' rules and  regulations.  It is  understood  and
agreed  that the  obligation  of the  Subservicer,  to so cure or  purchase  any
Mortgage  Loan as to which a material  and  adverse  defect in or  omission of a
constituent  document  exists shall  constitute the sole remedy  respecting such
defect or omission available to  Certificateholders  or the Trustee on behalf of
Certificateholders.

Section 2.03  Representations,  Warranties and Covenants of the Master  Servicer
     and the Depositor.

        (a) The Master  Servicer  hereby  represents and warrants to the Trustee
for the benefit of the Certificateholders that:

               (i) The Master Servicer is a corporation duly organized,  validly
        existing and in good standing  under the laws governing its creation and
        existence and is or will be in compliance with the laws of each state in
        which any  Mortgaged  Property  is located to the  extent  necessary  to
        ensure the  enforceability  of each Mortgage Loan in accordance with the
        terms of this Agreement;

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

               (iii) This Agreement,  assuming due authorization,  execution and
        delivery by the Trustee and the  Depositor,  constitutes a valid,  legal
        and binding obligation of the Master Servicer, enforceable against it in
        accordance  with the terms  hereof  subject  to  applicable  bankruptcy,
        insolvency,  reorganization,  moratorium  and other laws  affecting  the
        enforcement of creditors' rights generally and to general  principles of
        equity,  regardless  of whether  such  enforcement  is  considered  in a
        proceeding in equity or at law;

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

               (v) No  litigation  is  pending  or,  to the  best of the  Master
        Servicer's knowledge, threatened against the Master Servicer which would
        prohibit its entering into this Agreement or performing its  obligations
        under this Agreement;

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<PAGE>

               (vi) The Master Servicer will comply in all material  respects in
        the  performance  of  this  Agreement  with  all  reasonable  rules  and
        requirements of each insurer under each Required Insurance Policy;

               (vii)  No  information,  certificate  of  an  officer,  statement
        furnished in writing or report delivered to the Depositor, any Affiliate
        of the  Depositor  or the Trustee by the Master  Servicer  will,  to the
        knowledge  of the Master  Servicer,  contain any untrue  statement  of a
        material fact or omit a material fact necessary to make the information,
        certificate, statement or report not misleading;

               (viii) The Master  Servicer has examined each existing,  and will
        examine each new, Subservicing Agreement and is or will be familiar with
        the terms thereof. The terms of each existing Subservicing Agreement and
        each  designated  Subservicer  are acceptable to the Master Servicer and
        any new  Subservicing  Agreements  will  comply with the  provisions  of
        Section 3.02; and

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

        It is understood and agreed that the  representations and warranties set
forth in this Section 2.03(a) shall survive delivery of the respective  Mortgage
Files to the Trustee or any Custodian.

        Upon discovery by either the Depositor, the Master Servicer, the Trustee
or any Custodian of a breach of any representation or warranty set forth in this
Section  2.03(a) which  materially  and  adversely  affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach shall
give  prompt  written  notice  to the  other  parties  (any  Custodian  being so
obligated under a Custodial  Agreement).  Within 90 days of its discovery or its
receipt of notice of such breach, the Master Servicer shall either (i) cure such
breach in all  material  respects or (ii) to the extent that such breach is with
respect to a Mortgage  Loan or a related  document,  purchase such Mortgage Loan
from the Trust Fund at the Purchase Price and in the manner set forth in Section
2.02;  provided  that if the omission or defect would cause the Mortgage Loan to
be other than a  "qualified  mortgage" as defined in Section  860G(a)(3)  of the
Code,  any such cure or repurchase  must occur within 90 days from the date such
breach was discovered. The obligation of the Master Servicer to cure such breach
or to so purchase such Mortgage Loan shall constitute the sole remedy in respect
of a breach of a  representation  and warranty set forth in this Section 2.03(a)
available   to  the   Certificateholders   or  the  Trustee  on  behalf  of  the
Certificateholders.

        (b) The Depositor hereby  represents and warrants to the Trustee for the
benefit of the Certificateholders  that as of the Closing Date (or, if otherwise
specified below, as of the date so specified):

               (i) The  information  set forth in Exhibit  F-1,  Exhibit F-2 and
Exhibit F-3 hereto

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<PAGE>

        with respect to each  Mortgage Loan or the Mortgage  Loans,  as the case
        may be, is true and correct in all material  respects at the  respective
        date or dates which such information is furnished;

               (ii) Immediately prior to the conveyance of the Mortgage Loans to
        the Trustee, the Depositor had good title to, and was the sole owner of,
        each Mortgage Loan free and clear of any pledge,  lien,  encumbrance  or
        security   interest   (other  than  rights  to  servicing   and  related
        compensation)  and such conveyance  validly  transfers  ownership of the
        Mortgage  Loans to the  Trustee  free and  clear  of any  pledge,  lien,
        encumbrance or security interest; and

               (iii) Each Mortgage Loan  constitutes a qualified  mortgage under
        Section  860G(a)(3)(A)  of the Code  and  Treasury  Regulations  Section
        1.860G-2(a)(1).

        It is understood and agreed that the  representations and warranties set
forth in this Section 2.03(b) shall survive delivery of the respective  Mortgage
Files to the Trustee or any Custodian.

        Upon discovery by any of the Depositor, the Master Servicer, the Trustee
or any Custodian of a breach of any of the  representations  and  warranties set
forth in this  Section  2.03(b)  which  materially  and  adversely  affects  the
interests of the  Certificateholders in any Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties (any Custodian
being so obligated under a Custodial Agreement);  provided, however, that in the
event of a breach  of the  representation  and  warranty  set  forth in  Section
2.03(b)(iii),  the party  discovering  such breach shall give such notice within
five days of discovery. Within 90 days of its discovery or its receipt of notice
of breach,  the  Depositor  shall  either (i) cure such  breach in all  material
respects or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase
Price and in the manner set forth in Section  2.02;  provided that the Depositor
shall have the option to  substitute  a Qualified  Substitute  Mortgage  Loan or
Loans  for such  Mortgage  Loan if such  substitution  occurs  within  two years
following the Closing Date;  provided that if the omission or defect would cause
the Mortgage Loan to be other than a "qualified  mortgage" as defined in Section
860G(a)(3) of the Code,  any such cure,  substitution  or repurchase  must occur
within 90 days from the date such breach was discovered.  Any such  substitution
shall be  effected  by the  Depositor  under the same  terms and  conditions  as
provided  in  Section  2.04 for  substitutions  by  Residential  Funding.  It is
understood  and agreed that the  obligation of the Depositor to cure such breach
or to so purchase or substitute  for any Mortgage Loan as to which such a breach
has occurred and is continuing shall constitute the sole remedy  respecting such
breach  available  to the  Certificateholders  or the  Trustee  on behalf of the
Certificateholders.  Notwithstanding  the foregoing,  the Depositor shall not be
required  to cure  breaches  or purchase or  substitute  for  Mortgage  Loans as
provided  in  this  Section  2.03(b)  if  the  substance  of  the  breach  of  a
representation  set forth above also constitutes fraud in the origination of the
Mortgage Loan.

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<PAGE>

        Section  2.04 Representations and Warranties of Residential Funding.

        The Depositor,  as assignee of Residential  Funding under the Assignment
Agreement,   hereby   assigns   to  the   Trustee   for  the   benefit   of  the
Certificateholders  all of its  right,  title and  interest  in  respect  of the
Assignment  Agreement  applicable to a Mortgage Loan.  Insofar as the Assignment
Agreement  relates to the  representations  and  warranties  made by Residential
Funding in respect of such  Mortgage Loan and any remedies  provided  thereunder
for any breach of such  representations  and warranties,  such right,  title and
interest may be enforced by the Master Servicer on behalf of the Trustee and the
Certificateholders.  Upon the discovery by the Depositor,  the Master  Servicer,
the  Trustee  or any  Custodian  of a breach of any of the  representations  and
warranties  made in the Assignment  Agreement in respect of any Mortgage Loan or
of any Repurchase Event which materially and adversely  affects the interests of
the  Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written  notice to the other parties (any  Custodian  being so
obligated  under a Custodial  Agreement).  The Master  Servicer  shall  promptly
notify  Residential  Funding of such breach or Repurchase Event and request that
Residential  Funding  either  (i) cure such  breach or  Repurchase  Event in all
material  respects within 90 days from the date the Master Servicer was notified
of such breach or Repurchase  Event or (ii) purchase such Mortgage Loan from the
Trust Fund at the  Purchase  Price and in the manner set forth in Section  2.02;
provided that, in the case of a breach or Repurchase  Event under the Assignment
Agreement,  Residential  Funding shall have the option to substitute a Qualified
Substitute  Mortgage Loan or Loans for such  Mortgage Loan if such  substitution
occurs within two years following the Closing Date;  provided that if the breach
would cause the Mortgage Loan to be other than a "qualified mortgage" as defined
in Section  860G(a)(3)  of the Code,  any such cure or  substitution  must occur
within  90 days  from the date the  breach  was  discovered.  If the  breach  of
representation  and warranty  that gave rise to the  obligation to repurchase or
substitute a Mortgage Loan pursuant to Section 4 of the Assignment Agreement was
the  representation  and  warranty set forth in clause (v) of Section 4 thereof,
then the Master Servicer shall request that Residential Funding pay to the Trust
Fund,  concurrently  with  and in  addition  to  the  remedies  provided  in the
preceding  sentence,  an amount equal to any liability,  penalty or expense that
was actually  incurred and paid out of or on behalf of the Trust Fund,  and that
directly  resulted  from such breach,  or if incurred and paid by the Trust Fund
thereafter,  concurrently  with  such  payment.  In the event  that  Residential
Funding elects to substitute a Qualified Substitute Mortgage Loan or Loans for a
Deleted Mortgage Loan pursuant to this Section 2.04,  Residential  Funding shall
deliver to the Trustee for the benefit of the Certificateholders with respect to
such Qualified  Substitute  Mortgage Loan or Loans, the original  Mortgage Note,
the Mortgage,  an Assignment of the Mortgage in recordable  form, and such other
documents and agreements as are required by Section 2.01, with the Mortgage Note
endorsed  as  required  by Section  2.01.  No  substitution  will be made in any
calendar month after the Determination Date for such month. Monthly Payments due
with respect to Qualified Substitute Mortgage Loans in the month of substitution
shall not be part of the Trust Fund and will be retained by the Master  Servicer
and  remitted  by the  Master  Servicer  to  Residential  Funding  on  the  next
succeeding  Distribution  Date. For the month of substitution,  distributions to
the  Certificateholders  will  include  the  Monthly  Payment  due on a  Deleted
Mortgage  Loan  for such  month  and  thereafter  Residential  Funding  shall be
entitled to retain all  amounts  received  in respect of such  Deleted  Mortgage
Loan. The Master

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Servicer shall amend or cause to be amended the Mortgage Loan Schedule,  and, if
the Deleted Mortgage Loan was a Discount Mortgage Loan, the Schedule of Discount
Fractions,  for the benefit of the  Certificateholders to reflect the removal of
such Deleted  Mortgage Loan and the  substitution  of the  Qualified  Substitute
Mortgage  Loan or Loans  and the  Master  Servicer  shall  deliver  the  amended
Mortgage Loan Schedule, and, if the Deleted Mortgage Loan was a Group I Discount
Mortgage Loan,  Group II Discount  Mortgage Loan or Group III Discount  Mortgage
Loan, the amended related Schedule of Discount Fractions,  to the Trustee.  Upon
such  substitution,  the  Qualified  Substitute  Mortgage Loan or Loans shall be
subject to the terms of this Agreement and the related Subservicing Agreement in
all  respects,  and  Residential  Funding  shall  be  deemed  to have  made  the
representations and warranties with respect to the Qualified Substitute Mortgage
Loan  contained  in  Section 4 of the  Assignment  Agreement,  as of the date of
substitution,  and the  covenants,  representations  and warranties set forth in
this Section 2.04, and in Section 2.03 hereof and in Section 4 of the Assignment
Agreement,  and  the  Master  Servicer  shall  be  obligated  to  repurchase  or
substitute for any Qualified  Substitute  Mortgage Loan as to which a Repurchase
Event (as defined in the Assignment  Agreement) has occurred pursuant to Section
4 of the Assignment  Agreement.  In connection  with the  substitution of one or
more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans,
the Master  Servicer  will  determine the amount (if any) by which the aggregate
principal balance of all such Qualified Substitute Mortgage Loans as of the date
of substitution is less than the aggregate Stated Principal  Balance of all such
Deleted Mortgage Loans (in each case after  application of the principal portion
of the  Monthly  Payments  due in  the  month  of  substitution  that  are to be
distributed to the Certificateholders in the month of substitution). Residential
Funding shall deposit the amount of such shortfall into the Custodial Account on
the day of substitution, without any reimbursement therefor. Residential Funding
shall give notice in writing to the Trustee of such event, which notice shall be
accompanied by an Officers'  Certificate as to the calculation of such shortfall
and by an Opinion of Counsel to the effect that such substitution will not cause
(a)  any  federal  tax  to be  imposed  on the  Trust  Fund,  including  without
limitation,  any federal tax imposed on "prohibited  transactions" under Section
860F(a)(1)  of the Code or on  "contributions  after  the  startup  date"  under
Section  860G(d)(1)  of the Code or (b) any portion of REMIC I, REMIC II,  REMIC
III or REMIC IV to fail to qualify  as a REMIC at any time that any  Certificate
is outstanding.

        It is understood and agreed that the  obligation of Residential  Funding
to cure such  breach  or  purchase  (or in the case of  Residential  Funding  to
substitute for) such Mortgage Loan as to which such a breach has occurred and is
continuing  and to make any  additional  payments  required under the Assignment
Agreement  in  connection  with a breach of the  representation  and warranty in
clause (v) of Section 4 thereof shall constitute the sole remedy respecting such
breach  available  to the  Certificateholders  or the  Trustee  on behalf of the
Certificateholders.  If the Master  Servicer is  Residential  Funding,  then the
Trustee  shall  also have the right to give the  notification  and  require  the
purchase or substitution  provided for in the second preceding  paragraph in the
event of such a breach  of a  representation  or  warranty  made by  Residential
Funding in the  Assignment  Agreement.  In  connection  with the  purchase of or
substitution  for any such Mortgage  Loan by  Residential  Funding,  the Trustee
shall  assign to  Residential  Funding all of the right,  title and  interest in
respect of the Assignment Agreement applicable to such Mortgage Loan.

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Section  2.05  Execution  and  Authentication  of  Certificates;  Conveyance  of
     Uncertificated Regular Interests.

        (a) The Trustee  acknowledges the assignment to it of the Mortgage Loans
and the  delivery of the Mortgage  Files to it, or any  Custodian on its behalf,
subject to any exceptions noted, together with the assignment to it of all other
assets  included  in the Trust  Fund,  receipt of which is hereby  acknowledged.
Concurrently with such delivery and in exchange therefor, the Trustee,  pursuant
to the written request of the Depositor executed by an officer of the Depositor,
has executed and caused to be  authenticated  and delivered to or upon the order
of the Depositor the  Certificates  in authorized  denominations  which evidence
ownership of the entire Trust Fund.

        (b) The Depositor,  concurrently with the execution and delivery hereof,
does hereby  transfer,  assign,  set over and  otherwise  convey in trust to the
Trustee without recourse,  all the right, title and interest of the Depositor in
and to the REMIC I Regular  Interests,  the REMIC II Regular  Interests  and the
REMIC III  Regular  Interests  for the  benefit  of the  Holders of the REMIC IV
Regular  Interests and the Holders of the Class R-IV  Certificates.  The Trustee
acknowledges  receipt  of the REMIC I Regular  Interests,  the REMIC II  Regular
Interests and the REMIC III Regular Interests (each of which are uncertificated)
and declares that it holds and will hold the same in trust for the exclusive use
and benefit of the Holders of the REMIC IV Regular  Interests and Holders of the
Class R-IV Certificates. The interests evidenced by the Class R-IV Certificates,
together with the REMIC IV Regular  Interests,  constitute the entire beneficial
ownership interest in REMIC IV.

        (c) In exchange for the REMIC I Regular Interests,  the REMIC II Regular
Interests  and the  REMIC  III  Regular  Interests  and,  concurrently  with the
assignment  to the  Trustee  thereof,  pursuant  to the  written  request of the
Depositor  executed by an officer of the  Depositor,  the Trustee has  executed,
authenticated  and delivered to or upon the order of the Depositor,  the Regular
Certificates  in authorized  denominations  evidencing  (together with the Class
R-IV Certificates) the entire beneficial ownership interest in REMIC IV.

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                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

        Section  3.01 Master Servicer to Act as Servicer.
                      ----------------------------------

        (a) The Master  Servicer shall service and administer the Mortgage Loans
in  accordance  with the terms of this  Agreement  and the  respective  Mortgage
Loans,  following such  procedures as it would employ in its good faith business
judgment  and  which are  normal  and usual in its  general  mortgage  servicing
activities,  and shall have full power and  authority,  acting  alone or through
Subservicers  as provided in Section 3.02, to do any and all things which it may
deem   necessary  or   desirable  in   connection   with  such   servicing   and
administration.  Without  limiting the generality of the  foregoing,  the Master
Servicer in its own name or in the name of a  Subservicer  is hereby  authorized
and empowered by the Trustee when the Master Servicer or the Subservicer, as the
case may be,  believes  it  appropriate  in its best  judgment,  to execute  and
deliver, on behalf of the Certificateholders and the Trustee or any of them, any
and all  instruments  of  satisfaction  or  cancellation,  or of partial or full
release or discharge,  or of consent to assumption or modification in connection
with a proposed  conveyance,  or of assignment of any Mortgage and Mortgage Note
in connection  with the  repurchase of a Mortgage Loan and all other  comparable
instruments,  or with respect to the  modification or re-recording of a Mortgage
for the purpose of correcting the Mortgage, the subordination of the lien of the
Mortgage in favor of a public utility company or government  agency or unit with
powers of  eminent  domain,  the  taking of a deed in lieu of  foreclosure,  the
completion  of  judicial  or  non-judicial  foreclosure,  the  conveyance  of  a
Mortgaged  Property to the related  insurer,  the  acquisition  of any  property
acquired  by  foreclosure  or deed in lieu of  foreclosure,  or the  management,
marketing and conveyance of any property acquired by foreclosure or deed in lieu
of  foreclosure  with  respect  to the  Mortgage  Loans and with  respect to the
Mortgaged Properties. The Master Servicer further is authorized and empowered by
the Trustee,  on behalf of the  Certificateholders  and the Trustee,  in its own
name  or in the  name  of the  Subservicer,  when  the  Master  Servicer  or the
Subservicer, as the case may be, believes it is appropriate in its best judgment
to register any Mortgage Loan on the MERS(R)  System,  or cause the removal from
the  registration  of any Mortgage  Loan on the MERS(R)  System,  to execute and
deliver, on behalf of the Trustee and the Certificateholders or any of them, any
and all instruments of assignment and other comparable  instruments with respect
to such assignment or re-recording of a Mortgage in the name of MERS,  solely as
nominee for the Trustee and its successors and assigns. Any expenses incurred in
connection with the actions  described in the preceding  sentence shall be borne
by the Master  Servicer in  accordance  with Section  3.16(c),  with no right of
reimbursement;  provided, that if, as a result of MERS discontinuing or becoming
unable to continue  operations  in connection  with the MERS System,  it becomes
necessary to remove any Mortgage Loan from  registration  on the MERS System and
to arrange for the assignment of the related Mortgages to the Trustee,  then any
related expenses shall be reimbursable to the Master  Servicer.  Notwithstanding
the foregoing,  subject to Section 3.07(a), the Master Servicer shall not permit
any modification  with respect to any Mortgage Loan that would both constitute a
sale or exchange of such Mortgage Loan within the meaning of

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Section  1001 of the  Code and any  proposed,  temporary  or  final  regulations
promulgated  thereunder (other than in connection with a proposed  conveyance or
assumption of such  Mortgage  Loan that is treated as a Principal  Prepayment in
Full  pursuant  to Section  3.13(d)  hereof) and cause any of REMIC I, REMIC II,
REMIC III or REMIC IV to fail to qualify as a REMIC under the Code.  The Trustee
shall  furnish  the  Master  Servicer  with any  powers  of  attorney  and other
documents  necessary or appropriate to enable the Master Servicer to service and
administer  the Mortgage  Loans.  The Trustee shall not be liable for any action
taken by the Master  Servicer  or any  Subservicer  pursuant  to such  powers of
attorney.  In servicing and administering any Nonsubserviced  Mortgage Loan, the
Master  Servicer  shall,  to the extent not  inconsistent  with this  Agreement,
comply with the Program Guide as if it were the originator of such Mortgage Loan
and had retained the servicing  rights and  obligations in respect  thereof.  In
connection  with  servicing and  administering  the Mortgage  Loans,  the Master
Servicer and any Affiliate of the Master Servicer (i) may perform  services such
as appraisals and brokerage  services that are  customarily  provided by Persons
other than  servicers  of mortgage  loans,  and shall be entitled to  reasonable
compensation  therefor in accordance  with Section 3.10 and (ii) may, at its own
discretion and on behalf of the Trustee,  obtain credit  information in the form
of a "credit score" from a credit repository.

        (b) All costs  incurred  by the Master  Servicer or by  Subservicers  in
effecting the timely payment of taxes and assessments on the properties  subject
to the  Mortgage  Loans  shall  not,  for the  purpose  of  calculating  monthly
distributions to the Certificateholders,  be added to the amount owing under the
related Mortgage Loans,  notwithstanding that the terms of such Mortgage Loan so
permit,  and such costs shall be recoverable to the extent  permitted by Section
3.10(a)(ii).

        (c) The  Master  Servicer  may  enter  into  one or more  agreements  in
connection with the offering of pass-through  certificates  evidencing interests
in one or more of the  Certificates  providing  for the  payment  by the  Master
Servicer of amounts  received by the Master  Servicer as servicing  compensation
hereunder and required to cover certain  Prepayment  Interest  Shortfalls on the
Mortgage Loans, which payment obligation will thereafter be an obligation of the
Master Servicer hereunder.

        Section       3.02 Subservicing  Agreements  Between Master Servicer and
                      Subservicers;  Enforcement of  Subservicers'  Obligations;
                      Special Servicing.

        (a) The Master Servicer may continue in effect  Subservicing  Agreements
entered into by Residential  Funding and Subservicers prior to the execution and
delivery of this Agreement,  and may enter into new Subservicing Agreements with
Subservicers,  for  the  servicing  and  administration  of all or  some  of the
Mortgage Loans. Each Subservicer shall be either (i) an institution the accounts
of which are  insured by the FDIC or (ii)  another  entity  that  engages in the
business of originating or servicing mortgage loans, and in either case shall be
authorized  to  transact  business  in the state or states in which the  related
Mortgaged  Properties  it is to  service  are  situated,  if and  to the  extent
required by applicable law to enable the  Subservicer to perform its obligations
hereunder and under the  Subservicing  Agreement,  and in either case shall be a
Freddie Mac,  Fannie Mae or HUD approved  mortgage  servicer.  In addition,  any
Subservicer of a Mortgage Loan insured by the FHA

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<PAGE>

must  be an  FHA-approved  servicer,  and any  Subservicer  of a  Mortgage  Loan
guaranteed  by the VA must be a  VA-approved  servicer.  Each  Subservicer  of a
Mortgage  Loan shall be  entitled  to receive  and  retain,  as  provided in the
related Subservicing Agreement and in Section 3.07, the related Subservicing Fee
from  payments of interest  received on such  Mortgage Loan after payment of all
amounts  required  to be  remitted  to the  Master  Servicer  in respect of such
Mortgage Loan. For any Mortgage Loan that is a Nonsubserviced Mortgage Loan, the
Master  Servicer  shall be entitled to receive and retain an amount equal to the
Subservicing  Fee from  payments  of  interest.  Unless  the  context  otherwise
requires,  references  in this  Agreement to actions taken or to be taken by the
Master  Servicer in servicing the Mortgage Loans include  actions taken or to be
taken by a  Subservicer  on behalf of the  Master  Servicer.  Each  Subservicing
Agreement will be upon such terms and  conditions as are generally  required by,
permitted by or consistent with the Program Guide and are not inconsistent  with
this Agreement and as the Master Servicer and the Subservicer have agreed.  With
the approval of the Master  Servicer,  a Subservicer  may delegate its servicing
obligations  to  third-  party  servicers,  but  such  Subservicer  will  remain
obligated under the related  Subservicing  Agreement.  The Master Servicer and a
Subservicer  may  enter  into   amendments   thereto  or  a  different  form  of
Subservicing  Agreement,  and the form  referred  to or  included in the Program
Guide is merely provided for information and shall not be deemed to limit in any
respect the discretion of the Master  Servicer to modify or enter into different
Subservicing  Agreements;   provided,  however,  that  any  such  amendments  or
different  forms shall be  consistent  with and not violate  the  provisions  of
either this  Agreement or the Program  Guide in a manner which would  materially
and adversely affect the interests of the Certificateholders.

        (b) As part of its servicing activities hereunder,  the Master Servicer,
for the benefit of the Trustee  and the  Certificateholders,  shall use its best
reasonable  efforts to enforce the  obligations  of each  Subservicer  under the
related  Subservicing  Agreement,  to the extent that the non-performance of any
such  obligation  would have a material and adverse  effect on a Mortgage  Loan,
including,  without  limitation,  the  obligation to purchase a Mortgage Loan on
account of defective documentation,  as described in Section 2.02, or on account
of a breach of a representation or warranty,  as described in Section 2.04. Such
enforcement,  including,  without  limitation,  the legal prosecution of claims,
termination of Subservicing Agreements, as appropriate, and the pursuit of other
appropriate  remedies,  shall be in such form and  carried out to such an extent
and at such time as the Master  Servicer would employ in its good faith business
judgment  and  which are  normal  and usual in its  general  mortgage  servicing
activities.  The Master Servicer shall pay the costs of such  enforcement at its
own expense,  and shall be reimbursed  therefor only (i) from a general recovery
resulting  from such  enforcement  to the  extent,  if any,  that such  recovery
exceeds all amounts due in respect of the related  Mortgage  Loan or (ii) from a
specific recovery of costs, expenses or attorneys fees against the party against
whom such enforcement is directed.

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<PAGE>

        Section  3.03 Successor Subservicers.

        The Master  Servicer  shall be entitled to  terminate  any  Subservicing
Agreement  that may exist in  accordance  with the terms and  conditions of such
Subservicing  Agreement and without any limitation by virtue of this  Agreement;
provided,  however,  that  in the  event  of  termination  of  any  Subservicing
Agreement by the Master Servicer or the  Subservicer,  the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Subservicing
Agreement with a successor  Subservicer  which will be bound by the terms of the
related  Subservicing  Agreement.  If the Master  Servicer or any  Affiliate  of
Residential  Funding  acts as  servicer,  it will not assume  liability  for the
representations  and  warranties of the  Subservicer  which it replaces.  If the
Master  Servicer   enters  into  a  Subservicing   Agreement  with  a  successor
Subservicer,  the  Master  Servicer  shall use  reasonable  efforts  to have the
successor  Subservicer assume liability for the  representations  and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the event of any such  assumption  by the successor  Subservicer,  the Master
Servicer may, in the exercise of its business  judgment,  release the terminated
Subservicer from liability for such representations and warranties.

        Section  3.04 Liability of the Master Servicer.

        Notwithstanding  any  Subservicing  Agreement,  any of the provisions of
this  Agreement  relating  to  agreements  or  arrangements  between  the Master
Servicer or a Subservicer or reference to actions taken through a Subservicer or
otherwise,  the Master Servicer shall remain obligated and liable to the Trustee
and Certificateholders for the servicing and administering of the Mortgage Loans
in accordance  with the  provisions  of Section 3.01 without  diminution of such
obligation   or  liability  by  virtue  of  such   Subservicing   Agreements  or
arrangements  or by  virtue  of  indemnification  from  the  Subservicer  or the
Depositor  and to the same extent and under the same terms and  conditions as if
the Master Servicer alone were servicing and  administering  the Mortgage Loans.
The  Master  Servicer  shall be  entitled  to enter  into any  agreement  with a
Subservicer for  indemnification of the Master Servicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.

Section 3.05 No  Contractual  Relationship  Between  Subservicer  and Trustee or
     Certificateholders.

        Any  Subservicing  Agreement  that may be  entered  into  and any  other
transactions or services  relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an  originator  shall be deemed to be between
the   Subservicer   and  the  Master   Servicer   alone  and  the   Trustee  and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights,  obligations,  duties or liabilities  with respect to the Subservicer in
its  capacity  as such  except  as set  forth in  Section  3.06.  The  foregoing
provision  shall  not in any way  limit a  Subservicer's  obligation  to cure an
omission or defect or to  repurchase  a Mortgage  Loan as referred to in Section
2.02 hereof.

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Section 3.06 Assumption or Termination of Subservicing Agreements by Trustee.

        (a) In the event the Master  Servicer  shall for any reason no longer be
the master servicer  (including by reason of an Event of Default),  the Trustee,
its  designee  or its  successor  shall  thereupon  assume all of the rights and
obligations of the Master  Servicer under each  Subservicing  Agreement that may
have been entered into. The Trustee,  its designee or the successor servicer for
the  Trustee  shall be  deemed  to have  assumed  all of the  Master  Servicer's
interest  therein  and to have  replaced  the Master  Servicer as a party to the
Subservicing  Agreement to the same extent as if the Subservicing  Agreement had
been assigned to the assuming  party except that the Master  Servicer  shall not
thereby be relieved  of any  liability  or  obligations  under the  Subservicing
Agreement.

        (b) The Master  Servicer  shall,  upon request of the Trustee but at the
expense of the Master Servicer,  deliver to the assuming party all documents and
records  relating to each  Subservicing  Agreement  and the Mortgage  Loans then
being  serviced  and an  accounting  of  amounts  collected  and  held by it and
otherwise use its best efforts to effect the orderly and  efficient  transfer of
each Subservicing Agreement to the assuming party.

Section 3.07 Collection of Certain Mortgage Loan Payments; Deposits to Custodial
     Account.

        (a) The Master  Servicer  shall make  reasonable  efforts to collect all
payments  called for under the terms and provisions of the Mortgage  Loans,  and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Primary  Insurance  Policy,  follow such
collection procedures as it would employ in its good faith business judgment and
which  are  normal  and  usual in its  general  mortgage  servicing  activities.
Consistent  with the  foregoing,  the Master  Servicer may in its discretion (i)
waive any late payment  charge or any prepayment  charge or penalty  interest in
connection  with the  prepayment of a Mortgage Loan and (ii) extend the Due Date
for  payments  due on a Mortgage  Loan in  accordance  with the  Program  Guide,
provided,  however, that the Master Servicer shall first determine that any such
waiver  or  extension  will not  impair  the  coverage  of any  related  Primary
Insurance  Policy  or  materially  adversely  affect  the  lien  of the  related
Mortgage.  In the event of any such arrangement,  the Master Servicer shall make
timely  advances on the related  Mortgage  Loan during the  scheduled  period in
accordance  with  the  amortization  schedule  of  such  Mortgage  Loan  without
modification  thereof by reason of such arrangements  unless otherwise agreed to
by the  Holders  of the  Classes of  Certificates  affected  thereby;  provided,
however,  that no  such  extension  shall  be made  if any  advance  would  be a
Nonrecoverable Advance.  Consistent with the terms of this Agreement, the Master
Servicer may also waive, modify or vary any term of any Mortgage Loan or consent
to the  postponement  of strict  compliance  with any such term or in any manner
grant indulgence to any Mortgagor if in the Master Servicer's determination such
waiver,  modification,  postponement or indulgence is not materially  adverse to
the  interests of the  Certificateholders  (taking  into  account any  estimated
Realized Loss that might result absent such action), provided, however, that the
Master  Servicer may not modify  materially or permit any  Subservicer to modify
any Mortgage Loan,  including  without  limitation any  modification  that would
change the Mortgage Rate, forgive the payment of any principal or interest

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(unless in  connection  with the  liquidation  of the related  Mortgage  Loan or
except in connection with prepayments to the extent that such  reamortization is
not  inconsistent  with the terms of the  Mortgage  Loan),  or extend  the final
maturity date of such Mortgage Loan, unless such Mortgage Loan is in default or,
in the judgment of the Master Servicer,  such default is reasonably foreseeable;
provided  further,  no such  reduction  of the  Mortgage  Rate shall  reduce the
Mortgage  Rate below  one-half of the Mortgage  Rate as in effect on the Cut-off
Date, but not less than the sum of the Servicing Fee and the  Subservicing  Fee,
and the final  maturity date for any Mortgage Loan shall not be extended  beyond
the Maturity  Date. In connection  with any  Curtailment of a Mortgage Loan, the
Master Servicer,  to the extent not inconsistent  with the terms of the Mortgage
Note and local law and practice, may permit the Mortgage Loan to be re-amortized
such that the  Monthly  Payment  is  recalculated  as an amount  that will fully
amortize the remaining Stated Principal Balance thereof by the original Maturity
Date based on the original  Mortgage Rate;  provided,  that such  reamortization
shall not be permitted if it would  constitute a reissuance of the Mortgage Loan
for federal income tax purposes.

               (i) The Master  Servicer shall establish and maintain a Custodial
        Account  in which  the  Master  Servicer  shall  deposit  or cause to be
        deposited on a daily basis,  except as otherwise  specifically  provided
        herein, the following payments and collections  remitted by Subservicers
        or received by it in respect of the  Mortgage  Loans  subsequent  to the
        Cut-off  Date (other than in respect of  principal  and  interest on the
        Mortgage Loans due on or before the Cut-off Date):

               (ii) All payments on account of  principal,  including  Principal
        Prepayments  made by Mortgagors on the Mortgage  Loans and the principal
        component of any Subservicer  Advance or of any REO Proceeds received in
        connection  with  an REO  Property  for  which  an REO  Disposition  has
        occurred;

               (iii)  All  payments  on  account  of  interest  at the  Adjusted
        Mortgage Rate on the Mortgage Loans, including the interest component of
        any  Subservicer  Advance or of any REO Proceeds  received in connection
        with an REO Property for which an REO Disposition has occurred;

               (iv)  Insurance  Proceeds and  Liquidation  Proceeds  (net of any
        related expenses of the Subservicer);

               (v) All  proceeds of any  Mortgage  Loans  purchased  pursuant to
        Section 2.02,  2.03 or 2.04 and all amounts  required to be deposited in
        connection with the substitution of a Qualified Substitute Mortgage Loan
        pursuant to Section 2.03 or 2.04; and

               (vi) Any  amounts  required to be  deposited  pursuant to Section
        3.07(c).

        The foregoing requirements for deposit in the Custodial Account shall be
exclusive,  it being understood and agreed that, without limiting the generality
of the foregoing, payments on the

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Mortgage  Loans which are not part of the Trust Fund  (consisting of payments in
respect of principal  and  interest on the  Mortgage  Loans due on or before the
Cut-off Date) and payments or collections in the nature of prepayment charges or
late  payment  charges or  assumption  fees may but need not be deposited by the
Master Servicer in the Custodial  Account.  In the event any amount not required
to be deposited in the Custodial  Account is so deposited,  the Master  Servicer
may at any time withdraw such amount from the Custodial  Account,  any provision
herein to the contrary notwithstanding.  The Custodial Account may contain funds
that  belong  to one or more  trust  funds  created  for  mortgage  pass-through
certificates of other series and may contain other funds respecting  payments on
mortgage loans  belonging to the Master  Servicer or serviced or master serviced
by it on behalf of others. Notwithstanding such commingling of funds, the Master
Servicer shall keep records that accurately  reflect the funds on deposit in the
Custodial  Account that have been identified by it as being  attributable to the
Mortgage Loans.

        (b) With  respect  to  Insurance  Proceeds,  Liquidation  Proceeds,  REO
Proceeds  and the  proceeds of the  purchase of any  Mortgage  Loan  pursuant to
Sections 2.02,  2.03, 2.04 and 4.07 received in any calendar  month,  the Master
Servicer  may elect to treat such  amounts as  included in the Group I, Group II
and Group III Available Distribution Amount, as applicable, for the Distribution
Date in the month of  receipt,  but is not  obligated  to do so.  If the  Master
Servicer so elects,  such amounts will be deemed to have been  received (and any
related  Realized Loss shall be deemed to have  occurred) on the last day of the
month prior to the receipt thereof.

        (c) The  Master  Servicer  shall  use its  best  efforts  to  cause  the
institution  maintaining  the  Custodial  Account  to  invest  the  funds in the
Custodial  Account  attributable to the Mortgage Loans in Permitted  Investments
which shall  mature not later than the  Certificate  Account  Deposit  Date next
following the date of such investment (with the exception of the Amount Held for
Future  Distribution)  and which shall not be sold or disposed of prior to their
maturities.  All income and gain realized from any such investment  shall be for
the benefit of the Master  Servicer as  additional  servicing  compensation  and
shall be subject to its withdrawal or order from time to time. The amount of any
losses  incurred  in  respect  of  any  such  investments  attributable  to  the
investment of amounts in respect of the Mortgage Loans shall be deposited in the
Custodial  Account by the Master  Servicer out of its own funds  immediately  as
realized.

        (d) The  Master  Servicer  shall  give  notice  to the  Trustee  and the
Depositor  of any  change  in the  location  of the  Custodial  Account  and the
location of the Certificate Account prior to the use thereof.

        Section  3.08 Subservicing Accounts; Servicing Accounts.
                      -----------------------------------------

        (a) In those  cases where a  Subservicer  is  servicing a Mortgage  Loan
pursuant  to a  Subservicing  Agreement,  the Master  Servicer  shall  cause the
Subservicer,  pursuant to the Subservicing  Agreement, to establish and maintain
one or more Subservicing Accounts which shall be an Eligible Account or, if such
account is not an Eligible Account,  shall generally satisfy the requirements of
the Program Guide and be otherwise acceptable to the Master Servicer and each

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Rating  Agency.  The  Subservicer  will be required  thereby to deposit into the
Subservicing Account on a daily basis all proceeds of Mortgage Loans received by
the  Subservicer,  less its  Subservicing  Fees and  unreimbursed  advances  and
expenses,  to  the  extent  permitted  by  the  Subservicing  Agreement.  If the
Subservicing  Account is not an Eligible  Account,  the Master Servicer shall be
deemed to have received such monies upon receipt thereof by the Subservicer. The
Subservicer  shall  not be  required  to  deposit  in the  Subservicing  Account
payments or collections  in the nature of prepayment  charges or late charges or
assumption fees. On or before the date specified in the Program Guide, but in no
event later than the  Determination  Date,  the Master  Servicer shall cause the
Subservicer,  pursuant  to the  Subservicing  Agreement,  to remit to the Master
Servicer for deposit in the Custodial Account all funds held in the Subservicing
Account with respect to each Mortgage Loan serviced by such Subservicer that are
required to be remitted to the Master  Servicer.  The  Subservicer  will also be
required,  pursuant to the Subservicing  Agreement, to advance on such scheduled
date of  remittance  amounts  equal to any  scheduled  monthly  installments  of
principal  and interest  less its  Subservicing  Fees on any Mortgage  Loans for
which payment was not received by the  Subservicer.  This  obligation to advance
with respect to each  Mortgage  Loan will continue up to and including the first
of the month following the date on which the related Mortgaged  Property is sold
at a  foreclosure  sale  or is  acquired  by the  Trust  Fund by deed in lieu of
foreclosure  or  otherwise.  All such advances  received by the Master  Servicer
shall be deposited promptly by it in the Custodial Account.

        (b) The Subservicer may also be required,  pursuant to the  Subservicing
Agreement,  to remit to the Master Servicer for deposit in the Custodial Account
interest at the Adjusted  Mortgage  Rate (or Modified Net Mortgage Rate plus the
rate per annum at which the  Servicing  Fee,  if any,  accrues  in the case of a
Modified  Mortgage  Loan) on any  Curtailment  received by such  Subservicer  in
respect of a Mortgage Loan from the related  Mortgagor  during any month that is
to be applied by the Subservicer to reduce the unpaid  principal  balance of the
related  Mortgage  Loan as of the  first  day of such  month,  from  the date of
application  of such  Curtailment to the first day of the following  month.  Any
amounts paid by a Subservicer  pursuant to the preceding  sentence  shall be for
the benefit of the Master  Servicer as  additional  servicing  compensation  and
shall be  subject  to its  withdrawal  or order  from time to time  pursuant  to
Sections 3.10(a)(iv) and (v).

        (c) In addition to the Custodial  Account and the  Certificate  Account,
the Master Servicer shall for any Nonsubserviced  Mortgage Loan, and shall cause
the Subservicers  for Subserviced  Mortgage Loans to, establish and maintain one
or more Servicing  Accounts and deposit and retain therein all collections  from
the  Mortgagors  (or  advances  from  Subservicers)  for the  payment  of taxes,
assessments,  hazard insurance premiums,  Primary Insurance Policy premiums,  if
applicable,  or  comparable  items  for  the  account  of the  Mortgagors.  Each
Servicing Account shall satisfy the requirements for a Subservicing Account and,
to the extent  permitted by the Program  Guide or as is otherwise  acceptable to
the Master Servicer, may also function as a Subservicing Account. Withdrawals of
amounts  related to the Mortgage  Loans from the Servicing  Accounts may be made
only to effect timely payment of taxes, assessments,  hazard insurance premiums,
Primary  Insurance  Policy  premiums,  if applicable,  or comparable  items,  to
reimburse the Master Servicer or Subservicer out of related  collections for any
payments made pursuant to Sections 3.11 (with respect

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to the Primary Insurance Policy) and 3.12(a) (with respect to hazard insurance),
to refund to any Mortgagors any sums as may be determined to be overages, to pay
interest,  if required, to Mortgagors on balances in the Servicing Account or to
clear and terminate the Servicing  Account at the  termination of this Agreement
in accordance with Section 9.01 or in accordance with the Program Guide. As part
of its servicing duties,  the Master Servicer shall, and the Subservicers  will,
pursuant to the  Subservicing  Agreements,  be required to pay to the Mortgagors
interest on funds in this account to the extent required by law.

        (d) The Master  Servicer  shall advance the payments  referred to in the
preceding  subsection  that are not timely paid by the Mortgagors or advanced by
the  Subservicers on the date when the tax, premium or other cost for which such
payment is  intended  is due,  but the Master  Servicer  shall be required so to
advance only to the extent that such advances, in the good faith judgment of the
Master  Servicer,  will be recoverable  by the Master  Servicer out of Insurance
Proceeds, Liquidation Proceeds or otherwise.

Section 3.09  Access to Certain  Documentation  and  Information  Regarding  the
     Mortgage Loans.

        In the event that compliance with this Section 3.09 shall make any Class
of  Certificates  legal for  investment  by federally  insured  savings and loan
associations,  the Master Servicer shall provide,  or cause the  Subservicers to
provide,  to the Trustee,  the Office of Thrift  Supervision or the FDIC and the
supervisory  agents and examiners thereof access to the documentation  regarding
the Mortgage  Loans  required by applicable  regulations of the Office of Thrift
Supervision,  such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices designated by the Master
Servicer. The Master Servicer shall permit such representatives to photocopy any
such  documentation  and shall  provide  equipment  for that purpose at a charge
reasonably approximating the cost of such photocopying to the Master Servicer.

        Section  3.10 Permitted Withdrawals from the Custodial Account.

        (a) The Master Servicer may, from time to time as provided herein,  make
withdrawals from the Custodial Account of amounts on deposit therein pursuant to
Section  3.07 that are  attributable  to the  Mortgage  Loans for the  following
purposes:

               (i) to make deposits into the Certificate  Account in the amounts
        and in the manner provided for in Section 4.01;

               (ii)  to  reimburse   itself  or  the  related   Subservicer  for
        previously  unreimbursed Advances,  Servicing Advances or other expenses
        made  pursuant  to  Sections  3.01,  3.08,  3.12(a),  3.14  and  4.04 or
        otherwise  reimbursable  pursuant to the terms of this  Agreement,  such
        withdrawal  right  being  limited to  amounts  received  on the  related
        Mortgage Loans  (including,  for this purpose,  REO Proceeds,  Insurance
        Proceeds,  Liquidation  Proceeds  and  proceeds  from the  purchase of a
        Mortgage Loan pursuant to Section 2.02, 2.03, 2.04 or 4.07)

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        which represent (A) Late  Collections of Monthly  Payments for which any
        such  advance was made in the case of  Subservicer  Advances or Advances
        pursuant to Section  4.04 and (B) late  recoveries  of the  payments for
        which such advances were made in the case of Servicing Advances;

               (iii)  to pay  to  itself  or the  related  Subservicer  (if  not
        previously retained by such Subservicer) out of each payment received by
        the  Master  Servicer  on  account of  interest  on a  Mortgage  Loan as
        contemplated  by  Sections  3.14  and  3.16,  an  amount  equal  to that
        remaining  portion of any such payment as to interest (but not in excess
        of the  Servicing  Fee  and  the  Subservicing  Fee,  if not  previously
        retained) which,  when deducted,  will result in the remaining amount of
        such  interest  being  interest  at a rate  per  annum  equal to the Net
        Mortgage  Rate (or Modified Net Mortgage  Rate in the case of a Modified
        Mortgage Loan) on the amount specified in the  amortization  schedule of
        the  related  Mortgage  Loan as the  principal  balance  thereof  at the
        beginning of the period  respecting  which such  interest was paid after
        giving effect to any previous Curtailments;

               (iv) to pay to itself as additional  servicing  compensation  any
        interest or investment income earned on funds deposited in the Custodial
        Account that it is entitled to withdraw pursuant to Section 3.07(c);

               (v) to pay to itself as  additional  servicing  compensation  any
        Foreclosure  Profits,  and  any  amounts  remitted  by  Subservicers  as
        interest in respect of Curtailments pursuant to Section 3.08(b);

               (vi) to pay to itself, a Subservicer,  Residential  Funding,  the
        Depositor  or any other  appropriate  Person,  as the case may be,  with
        respect to each  Mortgage Loan or property  acquired in respect  thereof
        that has been  purchased  or otherwise  transferred  pursuant to Section
        2.02,  2.03,  2.04, 4.07 or 9.01, all amounts  received  thereon and not
        required to be distributed to Certificateholders as of the date on which
        the related Stated Principal Balance or Purchase Price is determined;

               (vii) to  reimburse  itself or the  related  Subservicer  for any
        Nonrecoverable  Advance  or  Advances  in the  manner  and to the extent
        provided in subsection (c) below,  and any Advance or Servicing  Advance
        made in connection with a modified  Mortgage Loan that is in default or,
        in  the  judgment  of  the  Master   Servicer,   default  is  reasonably
        foreseeable pursuant to Section 3.07(a), to the extent the amount of the
        Advance or  Servicing  Advance  was added to the  outstanding  principal
        balance of the Mortgage Loan in the prior calendar month;

               (viii) to reimburse itself or the Depositor for expenses incurred
        by and reimbursable to it or the Depositor  pursuant to Section 3.14(c),
        6.03, 10.01 or otherwise;

               (ix) to reimburse  itself for amounts expended by it (a) pursuant
        to Section 3.14

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        in good faith in connection with the restoration of property  damaged by
        an Uninsured  Cause,  and (b) in connection  with the  liquidation  of a
        Mortgage  Loan or  disposition  of an REO  Property  to the  extent  not
        otherwise reimbursed pursuant to clause (ii) or (viii) above; and

               (x) to withdraw  any amount  deposited in the  Custodial  Account
        that was not required to be deposited  therein pursuant to Section 3.07,
        including any payoff fees or penalties or any other  additional  amounts
        payable to the Master  Servicer or Subservicer  pursuant to the terms of
        the Mortgage Note.

        (b) Since,  in  connection  with  withdrawals  pursuant to clauses (ii),
(iii),  (v) and (vi), the Master  Servicer's  entitlement  thereto is limited to
collections  or other  recoveries  on the  related  Mortgage  Loan,  the  Master
Servicer  shall keep and maintain  separate  accounting,  on a Mortgage  Loan by
Mortgage  Loan basis,  for the purpose of  justifying  any  withdrawal  from the
Custodial Account pursuant to such clauses.

        (c) The Master  Servicer  shall be entitled to  reimburse  itself or the
related  Subservicer for any Advance or Subservicer Advance made in respect of a
Mortgage Loan that the Master Servicer determines to be a Nonrecoverable Advance
by  withdrawal  from  the  Custodial  Account  of  amounts  on  deposit  therein
attributable  to the  Mortgage  Loans on any  Certificate  Account  Deposit Date
succeeding  the  date of such  determination.  Such  right of  reimbursement  in
respect of a  Nonrecoverable  Advance relating to an Advance pursuant to Section
4.04 on any such Certificate  Account Deposit Date shall be limited to an amount
not exceeding the portion of such Advance or Subservicer Advance previously paid
to Certificateholders  (and not theretofore reimbursed to the Master Servicer or
the related Subservicer).

        Section  3.11 Maintenance of Primary Insurance Coverage.
                      -----------------------------------------

        (a) The Master  Servicer  shall not take, or permit any  Subservicer  to
take, any action which would result in noncoverage under any applicable  Primary
Insurance  Policy of any loss which,  but for the actions of the Master Servicer
or Subservicer,  would have been covered  thereunder.  To the extent coverage is
available,  the Master Servicer shall keep or cause to be kept in full force and
effect each such Primary  Insurance  Policy until the  principal  balance of the
related Mortgage Loan secured by a Mortgaged  Property is reduced to 80% or less
of the Appraised Value at origination in the case of such a Mortgage Loan having
a  Loan-to-Value  Ratio at  origination  in  excess of 80%,  provided  that such
Primary  Insurance  Policy  was in place as of the  Cut-off  Date and the Master
Servicer had knowledge of such Primary  Insurance  Policy.  The Master  Servicer
shall not cancel or refuse to renew any such Primary Insurance Policy applicable
to a  Nonsubserviced  Mortgage Loan, or consent to any Subservicer  canceling or
refusing to renew any such Primary  Insurance  Policy  applicable  to a Mortgage
Loan subserviced by it, that is in effect at the date of the initial issuance of
the  Certificates  and is  required  to be kept in force  hereunder  unless  the
replacement  Primary Insurance Policy for such canceled or non-renewed policy is
maintained  with an insurer  whose  claims-paying  ability is acceptable to each
Rating Agency for mortgage pass-through certificates having a rating equal to or
better than the lower of the then-current rating or the rating assigned to

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the Certificates as of the Closing Date by such Rating Agency.

        (b) In connection with its activities as  administrator  and servicer of
the  Mortgage  Loans,  the  Master  Servicer  agrees to  present or to cause the
related  Subservicer  to  present,  on  behalf  of  the  Master  Servicer,   the
Subservicer,  if any, the Trustee and Certificateholders,  claims to the insurer
under any Primary Insurance Policies, in a timely manner in accordance with such
policies,  and,  in this  regard,  to take or cause to be taken such  reasonable
action as shall be  necessary  to permit  recovery  under any Primary  Insurance
Policies  respecting  defaulted  Mortgage  Loans.  Pursuant to Section 3.07, any
Insurance  Proceeds  collected by or remitted to the Master  Servicer  under any
Primary Insurance Policies shall be deposited in the Custodial Account,  subject
to withdrawal pursuant to Section 3.10.

Section 3.12 Maintenance of Fire Insurance and Omissions and Fidelity Coverage.

        (a) The Master  Servicer  shall cause to be maintained for each Mortgage
Loan fire  insurance  with extended  coverage in an amount which is equal to the
lesser of the principal  balance owing on such Mortgage Loan  (together with the
principal  balance of any mortgage  loan secured by a lien that is senior to the
Mortgage  Loan) or 100  percent  of the  insurable  value  of the  improvements;
provided,  however,  that such coverage may not be less than the minimum  amount
required to fully compensate for any loss or damage on a replacement cost basis.
To the extent it may do so without breaching the related Subservicing Agreement,
the Master  Servicer  shall  replace  any  Subservicer  that does not cause such
insurance, to the extent it is available, to be maintained.  The Master Servicer
shall also cause to be maintained on property acquired upon foreclosure, or deed
in lieu of  foreclosure,  of any Mortgage  Loan,  fire  insurance  with extended
coverage in an amount  which is at least equal to the amount  necessary to avoid
the  application  of any  co-insurance  clause  contained in the related  hazard
insurance policy.  Pursuant to Section 3.07, any amounts collected by the Master
Servicer  under any such  policies  (other  than  amounts  to be  applied to the
restoration  or  repair of the  related  Mortgaged  Property  or  property  thus
acquired or amounts  released to the  Mortgagor  in  accordance  with the Master
Servicer's  normal  servicing  procedures)  shall be deposited in the  Custodial
Account,  subject to withdrawal  pursuant to Section 3.10.  Any cost incurred by
the Master Servicer in maintaining any such insurance shall not, for the purpose
of calculating  monthly  distributions  to  Certificateholders,  be added to the
amount  owing under the  Mortgage  Loan,  notwithstanding  that the terms of the
Mortgage Loan so permit.  Such costs shall be recoverable by the Master Servicer
out of related late payments by the  Mortgagor or out of Insurance  Proceeds and
Liquidation  Proceeds to the extent  permitted by Section 3.10. It is understood
and agreed that no earthquake or other additional insurance is to be required of
any Mortgagor or  maintained on property  acquired in respect of a Mortgage Loan
other than pursuant to such applicable laws and regulations as shall at any time
be in  force  and as shall  require  such  additional  insurance.  Whenever  the
improvements  securing a Mortgage Loan are located at the time of origination of
such Mortgage  Loan in a federally  designated  special  flood hazard area,  the
Master  Servicer  shall cause flood  insurance  (to the extent  available) to be
maintained in respect thereof.  Such flood insurance shall be in an amount equal
to the lesser of (i) the amount required to compensate for any loss or damage to
the Mortgaged  Property on a replacement  cost basis and (ii) the maximum amount
of such insurance

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available for the related Mortgaged  Property under the national flood insurance
program  (assuming that the area in which such Mortgaged  Property is located is
participating in such program).

        In the event  that the  Master  Servicer  shall  obtain  and  maintain a
blanket fire insurance  policy with extended  coverage  insuring  against hazard
losses on all of the Mortgage  Loans,  it shall  conclusively  be deemed to have
satisfied  its  obligations  as set forth in the first  sentence of this Section
3.12(a),  it being  understood  and  agreed  that  such  policy  may  contain  a
deductible  clause,  in which case the Master  Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged  Property a policy
complying with the first  sentence of this Section  3.12(a) and there shall have
been a loss  which  would  have been  covered  by such  policy,  deposit  in the
Certificate  Account the amount not otherwise  payable under the blanket  policy
because of such deductible clause. Any such deposit by the Master Servicer shall
be made on the Certificate  Account Deposit Date next preceding the Distribution
Date which occurs in the month  following the month in which  payments under any
such policy would have been  deposited in the Custodial  Account.  In connection
with its activities as  administrator  and servicer of the Mortgage  Loans,  the
Master  Servicer  agrees to  present,  on  behalf of  itself,  the  Trustee  and
Certificateholders, claims under any such blanket policy.

        (b) The Master Servicer shall obtain and maintain at its own expense and
keep in full force and effect  throughout  the term of this  Agreement a blanket
fidelity bond and an errors and omissions  insurance  policy covering the Master
Servicer's  officers and  employees  and other  persons  acting on behalf of the
Master  Servicer in connection  with its activities  under this  Agreement.  The
amount  of  coverage  shall be at  least  equal to the  coverage  that  would be
required by Fannie Mae or Freddie Mac, whichever is greater, with respect to the
Master  Servicer if the Master  Servicer were  servicing and  administering  the
Mortgage Loans for Fannie Mae or Freddie Mac. In the event that any such bond or
policy  ceases to be in effect,  the Master  Servicer  shall obtain a comparable
replacement  bond or  policy  from an  issuer  or  insurer,  as the case may be,
meeting the  requirements,  if any, of the Program  Guide and  acceptable to the
Depositor. Coverage of the Master Servicer under a policy or bond obtained by an
Affiliate of the Master  Servicer and  providing  the coverage  required by this
Section 3.12(b) shall satisfy the requirements of this Section 3.12(b).

Section 3.13  Enforcement of Due-on-Sale  Clauses;  Assumption and  Modification
     Agreements; Certain Assignments.

        (a) When any Mortgaged Property is conveyed by the Mortgagor, the Master
Servicer or  Subservicer,  to the extent it has  knowledge  of such  conveyance,
shall enforce any due-on-sale clause contained in any Mortgage Note or Mortgage,
to the extent permitted under applicable law and governmental  regulations,  but
only to the extent that such enforcement will not adversely affect or jeopardize
coverage under any Required Insurance Policy. Notwithstanding the foregoing:

               (i) the  Master  Servicer  shall not be  deemed to be in  default
        under this Section 3.13(a) by reason of any transfer or assumption which
        the Master Servicer is restricted by law from preventing; and

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               (ii) if the  Master  Servicer  determines  that it is  reasonably
        likely that any Mortgagor  will bring,  or if any Mortgagor  does bring,
        legal action to declare  invalid or  otherwise  avoid  enforcement  of a
        due-on-sale  clause  contained  in any Mortgage  Note or  Mortgage,  the
        Master Servicer shall not be required to enforce the due-on-sale  clause
        or to contest such action.

        (b) Subject to the Master  Servicer's  duty to enforce  any  due-on-sale
clause  to the  extent  set  forth in  Section  3.13(a),  in any case in which a
Mortgaged Property is to be conveyed to a Person by a Mortgagor, and such Person
is to enter into an  assumption or  modification  agreement or supplement to the
Mortgage Note or Mortgage which requires the signature of the Trustee,  or if an
instrument of release signed by the Trustee is required  releasing the Mortgagor
from liability on the Mortgage Loan, the Master Servicer is authorized,  subject
to the requirements of the sentence next following,  to execute and deliver,  on
behalf of the  Trustee,  the  assumption  agreement  with the Person to whom the
Mortgaged  Property  is  to be  conveyed  and  such  modification  agreement  or
supplement  to the  Mortgage  Note  or  Mortgage  or  other  instruments  as are
reasonable  or necessary to carry out the terms of the Mortgage Note or Mortgage
or otherwise to comply with any  applicable  laws  regarding  assumptions or the
transfer of the Mortgaged Property to such Person;  provided,  however,  none of
such terms and requirements  shall both constitute a "significant  modification"
effecting an exchange or  reissuance  of such  Mortgage  Loan under the Code (or
final,  temporary or proposed Treasury regulations  promulgated  thereunder) and
cause any of REMIC I,  REMIC II,  REMIC  III or REMIC IV to fail to  qualify  as
REMICs under the Code or the imposition of any tax on "prohibited  transactions"
or "contributions" after the startup date under the REMIC Provisions. The Master
Servicer  shall  execute  and  deliver  such  documents  only  if it  reasonably
determines that (i) its execution and delivery thereof will not conflict with or
violate any terms of this  Agreement or cause the unpaid balance and interest on
the Mortgage  Loan to be  uncollectible  in whole or in part,  (ii) any required
consents of insurers  under any Required  Insurance  Policies have been obtained
and (iii) subsequent to the closing of the transaction  involving the assumption
or  transfer  (A) the  Mortgage  Loan will  continue  to be  secured  by a first
mortgage  lien (or junior  lien of the same  priority  in relation to any senior
mortgage loan,  with respect to any Mortgage Loan secured by a junior  Mortgage)
pursuant to the terms of the Mortgage,  (B) such  transaction will not adversely
affect the coverage under any Required Insurance Policies, (C) the Mortgage Loan
will fully amortize over the remaining term thereof, (D) no material term of the
Mortgage Loan (including the interest rate on the Mortgage Loan) will be altered
nor  will  the  term  of  the   Mortgage   Loan  be  changed   and  (E)  if  the
seller/transferor  of the Mortgaged Property is to be released from liability on
the Mortgage  Loan,  the  buyer/transferee  of the Mortgaged  Property  would be
qualified  to assume the  Mortgage  Loan based on  generally  comparable  credit
quality  and  such  release  will  not  (based  on  the  Master   Servicer's  or
Subservicer's good faith  determination)  adversely affect the collectability of
the Mortgage  Loan.  Upon receipt of  appropriate  instructions  from the Master
Servicer  in  accordance  with the  foregoing,  the  Trustee  shall  execute any
necessary  instruments  for such  assumption  or  substitution  of  liability as
directed  by  the  Master  Servicer.   Upon  the  closing  of  the  transactions
contemplated by such documents, the Master Servicer shall cause the originals or
true and correct  copies of the assumption  agreement,  the release (if any), or
the modification or

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supplement  to the  Mortgage  Note or Mortgage to be delivered to the Trustee or
the Custodian and deposited  with the Mortgage File for such Mortgage  Loan. Any
fee collected by the Master  Servicer or such related  Subservicer  for entering
into an assumption or  substitution  of liability  agreement will be retained by
the Master Servicer or such Subservicer as additional servicing compensation.

        (c) The Master Servicer or the related Subservicer,  as the case may be,
shall be entitled to approve a request from a Mortgagor for a partial release of
the related Mortgaged Property,  the granting of an easement thereon in favor of
another Person,  any alteration or demolition of the related Mortgaged  Property
or other  similar  matters  if it has  determined,  exercising  its  good  faith
business  judgment  in the same  manner  as it would if it were the owner of the
related  Mortgage  Loan,  that  the  security  for,  and  the  timely  and  full
collectability  of, such Mortgage Loan would not be adversely  affected  thereby
and that each of REMIC I,  REMIC II,  REMIC  III or REMIC IV would  continue  to
qualify  as a REMIC  under  the  Code as a  result  thereof  and  that no tax on
"prohibited  transactions"  or  "contributions"  after the  startup day would be
imposed on any of REMIC I, REMIC II, REMIC III or REMIC IV as a result  thereof.
Any  fee  collected  by the  Master  Servicer  or the  related  Subservicer  for
processing  such a request  will be  retained  by the  Master  Servicer  or such
Subservicer as additional servicing compensation.

        (d)  Subject  to any  other  applicable  terms  and  conditions  of this
Agreement,  the  Trustee  and Master  Servicer  shall be  entitled to approve an
assignment in lieu of satisfaction  with respect to any Mortgage Loan,  provided
the  obligee  with  respect  to  such  Mortgage  Loan  following  such  proposed
assignment provides the Trustee and Master Servicer with a "Lender Certification
for  Assignment of Mortgage  Loan" in the form attached  hereto as Exhibit M, in
form and substance  satisfactory to the Trustee and Master  Servicer,  providing
the  following:  (i) that the  Mortgage  Loan is secured by  Mortgaged  Property
located in a  jurisdiction  in which an  assignment in lieu of  satisfaction  is
required to preserve lien priority,  minimize or avoid mortgage  recording taxes
or otherwise  comply with, or facilitate a refinancing  under,  the laws of such
jurisdiction;  (ii) that the substance of the  assignment is, and is intended to
be, a refinancing of such Mortgage Loan and that the form of the  transaction is
solely to comply with, or facilitate  the  transaction  under,  such local laws;
(iii) that the Mortgage Loan following the proposed  assignment will have a rate
of  interest at least 0.25  percent  below or above the rate of interest on such
Mortgage Loan prior to such proposed  assignment;  and (iv) that such assignment
is at the request of the borrower under the related Mortgage Loan. Upon approval
of an assignment in lieu of satisfaction  with respect to any Mortgage Loan, the
Master  Servicer  shall receive cash in an amount equal to the unpaid  principal
balance of and accrued  interest on such Mortgage  Loan and the Master  Servicer
shall treat such amount as a Principal  Prepayment  in Full with respect to such
Mortgage Loan for all purposes hereof.

        Section  3.14 Realization Upon Defaulted Mortgage Loans.
                      -----------------------------------------

        (a) The Master  Servicer shall  foreclose  upon or otherwise  comparably
convert  (which may include an REO  Acquisition)  the  ownership  of  properties
securing such of the Mortgage  Loans as come into and continue in default and as
to which no satisfactory  arrangements  can be made for collection of delinquent
payments pursuant to Section 3.07. Alternatively, the Master Servicer may

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take other actions in respect of a defaulted  Mortgage  Loan,  which may include
(i)  accepting  a short sale (a payoff of the  Mortgage  Loan for an amount less
than the total amount  contractually  owed in order to  facilitate a sale of the
Mortgaged Property by the Mortgagor) or permitting a short refinancing (a payoff
of the Mortgage Loan for an amount less than the total amount contractually owed
in order to facilitate refinancing transactions by the Mortgagor not involving a
sale of the Mortgaged  Property),  (ii)  arranging for a repayment plan or (iii)
agreeing to a modification  in accordance  with Section 3.07. In connection with
such  foreclosure  or other  conversion or action,  the Master  Servicer  shall,
consistent  with Section 3.11,  follow such practices and procedures as it shall
deem  necessary  or  advisable,  as shall be  normal  and  usual in its  general
mortgage  servicing  activities  and as shall be  required or  permitted  by the
Program  Guide;  provided  that the Master  Servicer  shall not be liable in any
respect  hereunder if the Master  Servicer is acting in connection with any such
foreclosure  or other  conversion or action in a manner that is consistent  with
the provisions of this Agreement.  The Master  Servicer,  however,  shall not be
required  to  expend  its own  funds  or incur  other  reimbursable  charges  in
connection  with  any  foreclosure,   or  attempted  foreclosure  which  is  not
completed, or towards the correction of any default on a related senior mortgage
loan, or towards the  restoration of any property  unless it shall determine (i)
that  such  restoration   and/or  foreclosure  will  increase  the  proceeds  of
liquidation  of the  Mortgage  Loan to  Holders of  Certificates  of one or more
Classes after reimbursement to itself for such expenses or charges and (ii) that
such  expenses  and  charges  will  be  recoverable  to it  through  Liquidation
Proceeds,  Insurance Proceeds,  or REO Proceeds  (respecting which it shall have
priority for purposes of  withdrawals  from the  Custodial  Account  pursuant to
Section 3.10, whether or not such expenses and charges are actually  recoverable
from related Liquidation Proceeds,  Insurance Proceeds or REO Proceeds).  In the
event of such a determination  by the Master  Servicer  pursuant to this Section
3.14(a),  the Master Servicer shall be entitled to reimbursement of its funds so
expended pursuant to Section 3.10.

        In addition,  the Master  Servicer  may pursue any remedies  that may be
available in  connection  with a breach of a  representation  and warranty  with
respect to any such  Mortgage  Loan in  accordance  with Sections 2.03 and 2.04.
However,  the  Master  Servicer  is not  required  to  continue  to pursue  both
foreclosure  (or  similar  remedies)  with  respect  to the  Mortgage  Loans and
remedies in  connection  with a breach of a  representation  and warranty if the
Master Servicer determines in its reasonable  discretion that one such remedy is
more likely to result in a greater  recovery as to the Mortgage  Loan.  Upon the
occurrence of a Cash  Liquidation or REO  Disposition,  following the deposit in
the Custodial Account of all Insurance Proceeds,  Liquidation Proceeds and other
payments and recoveries  referred to in the definition of "Cash  Liquidation" or
"REO  Disposition,"  as  applicable,  upon  receipt  by the  Trustee  of written
notification of such deposit signed by a Servicing  Officer,  the Trustee or any
Custodian,  as the case may be, shall release to the Master Servicer the related
Mortgage  File and the Trustee  shall  execute and deliver such  instruments  of
transfer or  assignment  prepared by the Master  Servicer,  in each case without
recourse,  as shall be necessary to vest in the Master Servicer or its designee,
as the case may be, the related Mortgage Loan, and thereafter such Mortgage Loan
shall not be part of the Trust Fund.  Notwithstanding the foregoing or any other
provision of this  Agreement,  in the Master  Servicer's  sole  discretion  with
respect  to any  defaulted  Mortgage  Loan or REO  Property  as to either of the
following provisions, (i) a Cash Liquidation or REO Disposition may be deemed to
have occurred if substantially all amounts

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expected by the Master  Servicer to be received in  connection  with the related
defaulted  Mortgage  Loan or REO  Property  have  been  received,  and  (ii) for
purposes  of  determining  the  amount of any  Liquidation  Proceeds,  Insurance
Proceeds,  REO Proceeds or other  unscheduled  collections  or the amount of any
Realized  Loss,  the Master  Servicer may take into account  minimal  amounts of
additional  receipts  expected  to  be  received  or  any  estimated  additional
liquidation  expenses  expected to be incurred  in  connection  with the related
defaulted Mortgage Loan or REO Property.

        (b) In the event that title to any Mortgaged Property is acquired by the
Trust Fund as an REO Property by foreclosure or by deed in lieu of  foreclosure,
the deed or certificate of sale shall be issued to the Trustee or to its nominee
on behalf of  Certificateholders.  Notwithstanding any such acquisition of title
and  cancellation of the related  Mortgage Loan, such REO Property shall (except
as otherwise  expressly  provided  herein) be  considered  to be an  Outstanding
Mortgage  Loan held in the Trust Fund until such time as the REO Property  shall
be  sold.  Consistent  with  the  foregoing  for  purposes  of all  calculations
hereunder so long as such REO Property  shall be considered to be an Outstanding
Mortgage Loan it shall be assumed that,  notwithstanding  that the  indebtedness
evidenced by the related Mortgage Note shall have been discharged, such Mortgage
Note and the  related  amortization  schedule  in effect at the time of any such
acquisition  of title  (after  giving  effect to any previous  Curtailments  and
before any adjustment  thereto by reason of any bankruptcy or similar proceeding
or any moratorium or similar waiver or grace period) remain in effect.

        (c) In the event  that the  Trust  Fund  acquires  any REO  Property  as
aforesaid  or otherwise in  connection  with a default or imminent  default on a
Mortgage Loan, the Master  Servicer on behalf of the Trust Fund shall dispose of
such REO  Property  as soon as  practicable,  giving  due  consideration  to the
interests  of the  Certificateholders,  but in all cases within three full years
after the  taxable  year of its  acquisition  by the Trust Fund for  purposes of
Section 860G(a)(8) of the Code (or such shorter period as may be necessary under
applicable  state (including any state in which such property is located) law to
maintain  the  status of each of REMIC I,  REMIC II,  REMIC III or REMIC IV as a
REMIC under  applicable  state law and avoid taxes  resulting from such property
failing  to be  foreclosure  property  under  applicable  state  law) or, at the
expense of the Trust  Fund,  request,  more than 60 days before the day on which
such grace  period  would  otherwise  expire,  an extension of such grace period
unless the  Master  Servicer  obtains  for the  Trustee  an Opinion of  Counsel,
addressed to the Trustee and the Master Servicer, to the effect that the holding
by the Trust Fund of such REO Property subsequent to such period will not result
in the  imposition of taxes on "prohibited  transactions"  as defined in Section
860F of the Code or cause  any of REMIC I,  REMIC  II,  REMIC III or REMIC IV to
fail to qualify  as a REMIC  (for  federal  (or any  applicable  State or local)
income tax purposes) at any time that any Certificates are outstanding, in which
case the Trust  Fund may  continue  to hold such REO  Property  (subject  to any
conditions  contained in such Opinion of Counsel).  The Master Servicer shall be
entitled to be reimbursed  from the Custodial  Account for any costs incurred in
obtaining such Opinion of Counsel, as provided in Section 3.10.  Notwithstanding
any other  provision of this  Agreement,  no REO Property  acquired by the Trust
Fund shall be rented (or allowed to continue to be rented) or otherwise  used by
or on behalf of the Trust  Fund in such a manner or  pursuant  to any terms that
would (i) cause such REO Property to fail to qualify as  "foreclosure  property"
within the meaning of Section 860G(a)(8) of the Code or (ii)

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subject  REMIC I,  REMIC  II,  REMIC  III or REMIC IV to the  imposition  of any
federal income taxes on the income earned from such REO Property,  including any
taxes  imposed  by reason of  Section  860G(c)  of the Code,  unless  the Master
Servicer has agreed to indemnify  and hold  harmless the Trust Fund with respect
to the imposition of any such taxes.

        (d) The proceeds of any Cash Liquidation, REO Disposition or purchase or
repurchase of any Mortgage Loan pursuant to the terms of this Agreement, as well
as any recovery resulting from a collection of Liquidation  Proceeds,  Insurance
Proceeds or REO Proceeds,  will be applied in the  following  order of priority:
first, to reimburse the Master Servicer or the related Subservicer in accordance
with Section  3.10(a)(ii);  second, to the  Certificateholders  to the extent of
accrued and unpaid  interest on the Mortgage  Loan,  and any related REO Imputed
Interest,  at the Net Mortgage  Rate (or the  Modified Net Mortgage  Rate in the
case of a Modified  Mortgage  Loan),  to the Due Date in the  related Due Period
prior to the  Distribution  Date on which such  amounts  are to be  distributed;
third, to the Certificateholders as a recovery of principal on the Mortgage Loan
(or REO Property) (provided that if any such Class of Certificates to which such
Realized Loss was allocated is no longer  outstanding,  such subsequent recovery
shall be  distributed  to the  persons  who were the  Holders  of such  Class of
Certificates when it was retired); fourth, to the Master Servicer; fifth, to all
Servicing Fees and Subservicing  Fees payable therefrom (and the Master Servicer
and the Subservicer  shall have no claims for any  deficiencies  with respect to
such fees which result from the foregoing allocation); and sixth, to Foreclosure
Profits.

        Section  3.15 Trustee to Cooperate; Release of Mortgage Files.
                      -----------------------------------------------

        (a) Upon becoming  aware of the payment in full of any Mortgage Loan, or
upon the receipt by the Master  Servicer of a notification  that payment in full
will be escrowed in a manner  customary for such purposes,  the Master  Servicer
will  immediately  notify the Trustee (if it holds the related Mortgage File) or
the Custodian by a  certification  of a Servicing  Officer (which  certification
shall  include a  statement  to the effect  that all  amounts  received or to be
received in  connection  with such payment which are required to be deposited in
the  Custodial  Account  pursuant  to  Section  3.07  have  been  or  will be so
deposited),  substantially  in one of the forms  attached  hereto  as  Exhibit G
requesting   delivery  to  it  of  the  Mortgage  File.  Upon  receipt  of  such
certification  and request,  the Trustee shall  promptly  release,  or cause the
Custodian to release,  the related  Mortgage  File to the Master  Servicer.  The
Master  Servicer  is  authorized  to execute and  deliver to the  Mortgagor  the
request for  reconveyance,  deed of  reconveyance  or release or satisfaction of
mortgage or such  instrument  releasing the lien of the Mortgage,  together with
the Mortgage Note with, as appropriate, written evidence of cancellation thereon
and to cause the removal  from the  registration  on the MERS(R)  System of such
Mortgage  and to  execute  and  deliver,  on  behalf  of  the  Trustee  and  the
Certificateholders  or any of them, any and all  instruments of  satisfaction or
cancellation  or of  partial  or full  release,  including  any  applicable  UCC
termination  statements.  No expenses incurred in connection with any instrument
of  satisfaction  or deed of  reconveyance  shall be chargeable to the Custodial
Account or the Certificate Account.

        (b) From time to time as is appropriate for the servicing or foreclosure
of any Mortgage

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Loan, the Master  Servicer  shall deliver to the  Custodian,  with a copy to the
Trustee, a certificate of a Servicing Officer  substantially in one of the forms
attached as Exhibit G hereto, requesting that possession of all, or any document
constituting  part of, the Mortgage File be released to the Master  Servicer and
certifying  as to the reason for such  release  and that such  release  will not
invalidate any insurance coverage provided in respect of the Mortgage Loan under
any Required Insurance Policy. Upon receipt of the foregoing,  the Trustee shall
deliver,  or cause the  Custodian to deliver,  the Mortgage File or any document
therein to the Master  Servicer.  The Master  Servicer shall cause each Mortgage
File or any document  therein so released to be returned to the Trustee,  or the
Custodian as agent for the Trustee when the need therefor by the Master Servicer
no longer  exists,  unless (i) the  Mortgage  Loan has been  liquidated  and the
Liquidation  Proceeds  relating to the Mortgage Loan have been  deposited in the
Custodial  Account or (ii) the Mortgage File or such document has been delivered
directly or through a  Subservicer  to an  attorney,  or to a public  trustee or
other public official as required by law, for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged  Property
either  judicially  or  non-judicially,  and the Master  Servicer has  delivered
directly or through a Subservicer  to the Trustee a  certificate  of a Servicing
Officer  certifying  as to the name and  address  of the  Person  to which  such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery.  In the event of the liquidation of a Mortgage Loan, the Trustee shall
deliver the Request for Release with respect thereto to the Master Servicer upon
deposit of the related Liquidation Proceeds in the Custodial Account.

        (c) The Trustee or the Master  Servicer on the  Trustee's  behalf  shall
execute and deliver to the Master Servicer,  if necessary,  any court pleadings,
requests for trustee's sale or other  documents  necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment  against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a  deficiency  judgment,  or to  enforce  any  other  remedies  or rights
provided by the Mortgage  Note or Mortgage or  otherwise  available at law or in
equity.  Together  with such  documents or pleadings (if signed by the Trustee),
the Master  Servicer  shall deliver to the Trustee a certificate  of a Servicing
Officer  requesting  that such pleadings or documents be executed by the Trustee
and  certifying  as to the reason such  documents or pleadings  are required and
that the execution and delivery  thereof by the Trustee will not  invalidate any
insurance  coverage  under  any  Required  Insurance  Policy  or  invalidate  or
otherwise affect the lien of the Mortgage,  except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.

        Section  3.16 Servicing and Other Compensation; Compensating Interest.
                      -------------------------------------------------------

        (a) The Master Servicer,  as compensation for its activities  hereunder,
shall be entitled to receive on each  Distribution Date the amounts provided for
by clauses (iii),  (iv), (v) and (vi) of Section 3.10(a),  subject to clause (e)
below. The amount of servicing  compensation  provided for in such clauses shall
be accounted for on a Mortgage  Loan-by-Mortgage  Loan basis.  In the event that
Liquidation  Proceeds,  Insurance  Proceeds  and REO  Proceeds  (net of  amounts
reimbursable  therefrom  pursuant to Section  3.10(a)(ii))  in respect of a Cash
Liquidation  or REO  Disposition  exceed  the unpaid  principal  balance of such
Mortgage  Loan plus  unpaid  interest  accrued  thereon  (including  REO Imputed
Interest) at a per annum rate equal to the related Net Mortgage Rate (or the

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Modified Net Mortgage Rate in the case of a Modified  Mortgage Loan), the Master
Servicer  shall be entitled to retain  therefrom and to pay to itself and/or the
related   Subservicer,   any  Foreclosure  Profits  and  any  Servicing  Fee  or
Subservicing Fee considered to be accrued but unpaid.

        (b) Additional servicing compensation in the form of prepayment charges,
assumption  fees,  late  payment  charges,  investment  income on amounts in the
Custodial  Account or the Certificate  Account or otherwise shall be retained by
the Master Servicer or the Subservicer to the extent provided herein, subject to
clause (e) below.

        (c) The Master  Servicer  shall be required to pay, or cause to be paid,
all  expenses  incurred  by it  in  connection  with  its  servicing  activities
hereunder (including payment of premiums for the Primary Insurance Policies,  if
any,  to the extent  such  premiums  are not  required to be paid by the related
Mortgagors,  and the fees and  expenses of the Trustee  and any  Custodian)  and
shall not be entitled to reimbursement  therefor except as specifically provided
in Sections 3.10 and 3.14.

        (d) The Master  Servicer's right to receive  servicing  compensation may
not be transferred in whole or in part except in connection with the transfer of
all of its  responsibilities  and  obligations of the Master Servicer under this
Agreement.

        (e)  Notwithstanding  clauses (a) and (b) above, the amount of servicing
compensation  that the Master  Servicer  shall be  entitled  to receive  for its
activities  hereunder for the period ending on each  Distribution  Date shall be
reduced  (but not below zero) by an amount  equal to  Compensating  Interest (if
any) for such  Distribution  Date.  Such reduction  shall be applied during such
period as follows:  first, to any Servicing Fee or Subservicing Fee to which the
Master Servicer is entitled  pursuant to Section  3.10(a)(iii);  second,  to any
income or gain  realized  from any  investment  of funds  held in the  Custodial
Account or the  Certificate  Account to which the Master  Servicer  is  entitled
pursuant to Sections 3.07(c) or 4.01(b), respectively; and third, to any amounts
of servicing  compensation to which the Master Servicer is entitled  pursuant to
Section  3.10(a)(v) or (vi). In making such reduction,  the Master Servicer will
not withdraw from the Custodial  Account any such amount  representing  all or a
portion  of the  Servicing  Fee to  which it is  entitled  pursuant  to  Section
3.10(a)(iii);  (ii) will not withdraw from the Custodial  Account or Certificate
Account any such amount to which it is entitled  pursuant to Section  3.07(c) or
4.01(b) and (iii) will not withdraw from the  Custodial  Account any such amount
of servicing compensation to which it is entitled pursuant to Section 3.10(a)(v)
or (vi).  With  respect to any  Distribution  Date,  (i)  Compensating  Interest
derived from Loan Group I shall be used on such  Distribution  Date to cover any
Prepayment Interest Shortfalls on the Group I Loans, (ii) Compensating  Interest
derived from Loan Group II shall be used on such  Distribution Date to cover any
Prepayment  Interest  Shortfalls  on the Group II Loans  and (iii)  Compensating
Interest derived from Loan Group III shall be used on such  Distribution Date to
cover any Prepayment Interest Shortfalls on the Group III Loans.

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        Section 3.17 Reports to the Trustee and the Depositor.

        Not later than fifteen  days after each  Distribution  Date,  the Master
Servicer  shall forward to the Trustee and the Depositor a statement,  certified
by a Servicing Officer,  setting forth the status of the Custodial Account as of
the close of business on such  Distribution  Date as it relates to the  Mortgage
Loans and showing,  for the period covered by such  statement,  the aggregate of
deposits in or withdrawals from the Custodial Account in respect of the Mortgage
Loans for each  category of deposit  specified in Section 3.07 and each category
of withdrawal specified in Section 3.10.

        Section  3.18 Annual Statement as to Compliance.

        The Master  Servicer will deliver to the Depositor and the Trustee on or
before the earlier of (a) March 31 of each year,  beginning with the first March
31 that occurs at least six months after the Cut-off Date or (b) with respect to
any calendar  year during which the  Depositor's  annual  report on Form 10-K is
required  to be filed in  accordance  with the  Exchange  Act and the  rules and
regulations of the Commission,  the date on which the Depositor's  annual report
on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and  regulations of the Commission (or, in each case, if such day is not a
Business Day, the immediately  preceding Business Day), an Officers' Certificate
stating,  as to each signer thereof,  that (i) a review of the activities of the
Master Servicer  during the preceding  calendar year related to its servicing of
mortgage  loans  and  of  its  performance   under  the  pooling  and  servicing
agreements,  including  this  Agreement,  has been  made  under  such  officers'
supervision, (ii) to the best of such officers' knowledge, based on such review,
the Master  Servicer  has  complied in all  material  respects  with the minimum
servicing  standards  set forth in the Uniform  Single  Attestation  Program for
Mortgage  Bankers  and has  fulfilled  all of its  material  obligations  in all
material  respects  throughout  such  year,  or,  if  there  has  been  material
noncompliance  with such servicing  standards or a default in the fulfillment in
all material  respects of any such obligation  relating to this Agreement,  such
statement shall include a description of such noncompliance or specify each such
default,  as the case may be,  known to such  officer  and the nature and status
thereof and (iii) to the best of such officers' knowledge,  each Subservicer has
complied in all material respects with the minimum servicing standards set forth
in the Uniform Single Attestation Program for Mortgage Bankers and has fulfilled
all of its material obligations under its Subservicing Agreement in all material
respects throughout such year, or if there has been material  noncompliance with
such  servicing  standards  or a  material  default in the  fulfillment  of such
obligations relating to this Agreement,  specifying such statement shall include
a description of such  noncompliance  or specify each such default,  as the case
may be, known to such officer and the nature and status thereof.

        Section  3.19 Annual Independent Public Accountants' Servicing Report.
                      -------------------------------------------------------

        On or before the  earlier of (a) March 31 of each year,  beginning  with
the first March 31 that occurs at least six months after the Cut-off Date or (b)
with respect to any calendar year during which the Depositor's  annual report on
Form 10-K is required to be filed in  accordance  with the  Exchange Act and the
rules and regulations of the Commission, the date on which the Depositor's

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annual  report  on Form  10-K is  required  to be filed in  accordance  with the
Exchange Act and the rules and  regulations of the Commission (or, in each case,
if such day is not a Business Day, the immediately  preceding Business Day), the
Master  Servicer  at its  expense  shall  cause  a firm  of  independent  public
accountants which shall be members of the American Institute of Certified Public
Accountants  to furnish a report to the  Depositor  and the Trustee  stating its
opinion  that,  on  the  basis  of  an   examination   conducted  by  such  firm
substantially in accordance with standards established by the American Institute
of Certified  Public  Accountants,  the assertions made pursuant to Section 3.18
regarding  compliance  with the  minimum  servicing  standards  set forth in the
Uniform  Single  Attestation  Program for Mortgage  Bankers during the preceding
calendar  year are  fairly  stated in all  material  respects,  subject  to such
exceptions  and other  qualifications  that,  in the opinion of such firm,  such
accounting  standards  require it to report.  In rendering such statement,  such
firm may rely, as to matters  relating to the direct servicing of mortgage loans
by  Subservicers,  upon  comparable  statements  for  examinations  conducted by
independent  public  accountants  substantially  in  accordance  with  standards
established by the American Institute of Certified Public Accountants  (rendered
within one year of such statement) with respect to such Subservicers.

        Section 3.20 Right of the Depositor in Respect of the Master Servicer.

        The Master Servicer shall afford the Depositor,  upon reasonable notice,
during  normal  business  hours access to all records  maintained  by the Master
Servicer  in  respect  of its rights  and  obligations  hereunder  and access to
officers of the Master Servicer responsible for such obligations.  Upon request,
the Master  Servicer shall furnish the Depositor with its most recent  financial
statements and such other information as the Master Servicer possesses regarding
its business,  affairs,  property and  condition,  financial or  otherwise.  The
Master   Servicer  shall  also  cooperate  with  all  reasonable   requests  for
information  including,  but not limited to, notices, tapes and copies of files,
regarding  itself,  the Mortgage  Loans or the  Certificates  from any Person or
Persons identified by the Depositor or Residential  Funding.  The Depositor may,
but is not obligated to perform,  or cause a designee to perform,  any defaulted
obligation of the Master Servicer hereunder or exercise the rights of the Master
Servicer  hereunder;  provided that the Master Servicer shall not be relieved of
any of its obligations  hereunder by virtue of such performance by the Depositor
or its designee.  The Depositor shall not have the  responsibility  or liability
for any action or failure to act by the Master  Servicer and is not obligated to
supervise  the  performance  of the  Master  Servicer  under this  Agreement  or
otherwise.

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                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

        Section  4.01 Certificate Account.

        (a) The Master  Servicer  acting as agent of the Trustee shall establish
and maintain a Certificate  Account in which the Master  Servicer shall cause to
be  deposited  on behalf of the Trustee on or before 2:00 P.M.  New York time on
each Certificate Account Deposit Date by wire transfer of immediately  available
funds  an  amount  equal  to the sum of (i)  any  Advance  for  the  immediately
succeeding  Distribution  Date,  (ii) any amount required to be deposited in the
Certificate Account pursuant to Section 3.12(a), (iii) any amount required to be
deposited  in the  Certificate  Account  pursuant to Section  3.16(e) or Section
4.07,  (iv) any amount required to be paid pursuant to Section 9.01, and (v) all
other  amounts  constituting  the  Group I,  Group II and  Group  III  Available
Distribution Amount for the immediately succeeding Distribution Date.

        (b) The Trustee shall,  upon written  request from the Master  Servicer,
invest or cause the institution  maintaining  the Certificate  Account to invest
the funds in the Certificate Account in Permitted Investments  designated in the
name of the  Trustee  for the  benefit of the  Certificateholders,  which  shall
mature not later than the Business Day next preceding the Distribution Date next
following  the date of such  investment  (except that (i) any  investment in the
institution with which the Certificate  Account is maintained may mature on such
Distribution  Date and (ii) any other investment may mature on such Distribution
Date  if the  Trustee  shall  advance  funds  on such  Distribution  Date to the
Certificate   Account  in  the  amount  payable  on  such   investment  on  such
Distribution  Date,  pending  receipt  thereof to the extent  necessary  to make
distributions on the Certificates) and shall not be sold or disposed of prior to
maturity. All income and gain realized from any such investment shall be for the
benefit of the Master  Servicer and shall be subject to its  withdrawal or order
from time to time.  The  amount of any  losses  incurred  in respect of any such
investments shall be deposited in the Certificate Account by the Master Servicer
out of its own funds immediately as realized.  The Trustee or its Affiliates are
permitted to receive  compensation  that could be deemed to be in the  Trustee's
economic  self-interest  for (i) serving as investment  adviser (with respect to
investments made through its Affiliates),  administrator,  shareholder servicing
agent,  custodian  or  sub-custodian  with  respect to certain of the  Permitted
Investments,  (ii) using Affiliates to effect  transactions in certain Permitted
Investments and (iii) effecting transactions in certain Permitted Investments.

        Section  4.02 Distributions.

        (a) On each  Distribution  Date (x) the Master Servicer on behalf of the
Trustee  or (y) the  Paying  Agent  appointed  by the  Trustee  based  solely on
information   provided  by  the  Master  Servicer,   shall  distribute  to  each
Certificateholder  of record on the next  preceding  Record  Date (other than as
provided  in  Section  9.01  respecting  the  final   distribution)   either  in
immediately available funds (by

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wire transfer or otherwise) to the account of such  Certificateholder  at a bank
or   other   entity   having   appropriate    facilities   therefor,   if   such
Certificateholder  has so notified the Master  Servicer or the Paying Agent,  as
the case may be, or, if such  Certificateholder  has not so notified  the Master
Servicer  or the  Paying  Agent by the  Record  Date,  by check  mailed  to such
Certificateholder  at the address of such Holder  appearing  in the  Certificate
Register  such  Certificateholder's  share  (which  share  shall be based on the
aggregate  of  the  Percentage  Interests  represented  by  Certificates  of the
applicable Class held by such Holder) of the following amounts, in the following
order of priority  (subject to the provisions of Section 4.02(b) below), in each
case to the extent of the Group I, Group II and Group III Available Distribution
Amount:

               (i) (X) from the Group I Available  Distribution  Amount,  to the
        Group I Senior Certificates (other than the Class AP-I Certificates), on
        a pro rata basis based on the Accrued  Certificate  Interest  payable on
        such  Classes  of  Certificates  for such  Distribution  Date,  plus any
        Accrued Certificate  Interest thereon remaining unpaid from any previous
        Distribution  Date  except as  provided  in the last  paragraph  of this
        Section 4.02(a) (the "Group I Senior Interest Distribution Amount");

                      (Y) from the Group II Available  Distribution  Amount,  to
               the  Group II Senior  Certificates  (other  than the Class  AP-II
               Certificates),   on  a  pro  rata  basis  based  on  the  Accrued
               Certificate  Interest payable on such Classes of Certificates for
               such  Distribution  Date, plus any Accrued  Certificate  Interest
               thereon  remaining  unpaid from any  previous  Distribution  Date
               except as provided in the last paragraph of this Section  4.02(a)
               (the "Group II Senior Interest Distribution Amount");

                      (Z) from the Group III Available  Distribution  Amount, to
               the Group III Senior  Certificates  (other than the Class  AP-III
               Certificates),   on  a  pro  rata  basis  based  on  the  Accrued
               Certificate  Interest payable on such Classes of Certificates for
               such  Distribution  Date, plus any Accrued  Certificate  Interest
               thereon  remaining  unpaid from any  previous  Distribution  Date
               except as provided in the last paragraph of this Section  4.02(a)
               (the "Group III Senior Interest Distribution Amount");

               (ii)  (X)  to  the  Class  AP-I,  Class  AP-II  or  Class  AP-III
        Certificates, as applicable, the related Class AP Principal Distribution
        Amount (as defined in Section 4.02(b)(i) herein); and

                      (Y) to the  related  Senior  Certificates  (other than the
               Class AP-I, Class AP- II and Class AP-III  Certificates),  in the
               priorities and amounts set forth in Section  4.02(b)(ii)  through
               (iv), the sum of the following (applied to reduce the Certificate
               Principal Balances of such Senior Certificates, as applicable):

                      (A) the related Senior  Percentage  for such  Distribution
               Date times the sum of the following:

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<PAGE>

                             (i) the principal  portion of each Monthly  Payment
                      due during  the  related  Due  Period on each  Outstanding
                      Mortgage Loan (other than the related Discount Fraction of
                      the  principal  portion of such  payment with respect to a
                      related Discount Mortgage Loan) in the related Loan Group,
                      whether  or  not  received  on or  prior  to  the  related
                      Determination  Date,  minus the  principal  portion of any
                      Debt Service  Reduction  (other than the related  Discount
                      Fraction  of the  principal  portion of such Debt  Service
                      Reductions with respect to each related Discount  Mortgage
                      Loan) which together with other related  Bankruptcy Losses
                      exceeds the related Bankruptcy Amount;

                             (ii) the Stated  Principal  Balance of any Mortgage
                      Loan in the  related  Loan  Group  repurchased  during the
                      preceding  calendar  month  (or  deemed  to  have  been so
                      repurchased in accordance with Section  3.07(b))  pursuant
                      to Sections 2.02,  2.03,  2.04 or 4.07 of this  Agreement,
                      and the amount of any shortfall deposited in the Custodial
                      Account in connection  with the  substitution of a Deleted
                      Mortgage  Loan  pursuant  to Section  2.03 or 2.04 of this
                      Agreement during the preceding  calendar month (other than
                      the related  Discount  Fraction  of such Stated  Principal
                      Balance or shortfall with respect to each related Discount
                      Mortgage Loan); and

                             (iii)   the   principal   portion   of  all   other
                      unscheduled  collections  with respect to the related Loan
                      Group  (other  than  Principal  Prepayments  in  Full  and
                      Curtailments  and amounts  received in  connection  with a
                      Cash  Liquidation  or REO  Disposition  of a Mortgage Loan
                      described  in Section  4.02(a)(ii)(B),  including  without
                      limitation  Insurance Proceeds,  Liquidation  Proceeds and
                      REO Proceeds) received during the preceding calendar month
                      (or deemed to have been so  received  in  accordance  with
                      Section  3.07(b))  to the  extent  applied  by the  Master
                      Servicer  as   recoveries  of  principal  of  the  related
                      Mortgage  Loan  pursuant  to Section  3.14 (other than the
                      related Discount Fraction of the principal portion of such
                      unscheduled  collections,  with  respect  to each  related
                      Discount Mortgage Loan);

                      (B) with respect to each Mortgage Loan in the related Loan
               Group for which a Cash Liquidation or a REO Disposition  occurred
               during  the  preceding  calendar  month  (or was  deemed  to have
               occurred during such period in accordance  with Section  3.07(b))
               and did not result in any Excess Special  Hazard  Losses,  Excess
               Bankruptcy Losses,  Excess Fraud Losses or Extraordinary  Losses,
               an  amount  equal  to  the  lesser  of  (a)  the  related  Senior
               Percentage for such  Distribution Date times the Stated Principal
               Balance of such  Mortgage  Loan (other than the related  Discount
               Fraction of such Stated  Principal  Balance  with respect to each
               related  Discount  Mortgage  Loan)  and  (b) the  related  Senior
               Accelerated  Distribution  Percentage for such  Distribution Date
               times the  related  unscheduled  collections  (including  without
               limitation  Insurance  Proceeds,  Liquidation  Proceeds  and  REO
               Proceeds) to the extent

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               applied by the Master  Servicer as recoveries of principal of the
               related  Mortgage  Loan  pursuant  to Section  3.14 (in each case
               other than the  portion  of such  unscheduled  collections,  with
               respect to a related Discount Mortgage Loan,  included in Section
               4.02(b)(i)(3) of this Agreement);

                      (C) the related Senior Accelerated Distribution Percentage
               for such  Distribution  Date times the aggregate of all Principal
               Prepayments in Full received in the related Prepayment Period and
               Curtailments  with respect to the related Loan Group  received in
               the  preceding  calendar  month (other than the related  Discount
               Fraction of such Principal  Prepayments in Full and  Curtailments
               with respect to each related Discount Mortgage Loan);

                      (D) any Excess  Subordinate  Principal Amount allocated to
               the related  Loan Group but only to the extent of Eligible  Funds
               in the related Loan Group for such Distribution Date; and

                      (E) any amounts described in subsection (ii),  clauses (Y)
               (A), (B) and (C) of this Section  4.02(a),  as determined for any
               previous Distribution Date, which remain unpaid after application
               of amounts previously  distributed pursuant to this clause (E) to
               the extent  that such  amounts are not  attributable  to Realized
               Losses  which  have been  allocated  to the  related  Subordinate
               Certificates; and

                      (F) to the Holders of the Group I  Certificates,  Group II
               Certificates or Group III  Certificates,  as applicable,  amounts
               required to be distributed pursuant to Section 4.02(c);

               (iii) to the  Holders  of the  Class M-1  Certificates  and Class
        M-III-1  Certificates,  as applicable,  the Accrued Certificate Interest
        thereon  for  such  Distribution  Date,  plus  any  Accrued  Certificate
        Interest thereon remaining unpaid from any previous  Distribution  Date,
        except as provided below;

               (iv) to the  Holders  of the  Class  M-1  Certificates  and Class
        M-III-1  Certificates,  as  applicable,  an  amount  equal  to  (x)  the
        Subordinate Principal Distribution Amount for such Class of Certificates
        for such  Distribution  Date,  applied in reduction  of the  Certificate
        Principal  Balance  of the Class  M-1  Certificates  and  Class  M-III-1
        Certificates;

               (v) to the  Holders  of the  Class  M-2  Certificates  and  Class
        M-III-2  Certificates,  as applicable,  the Accrued Certificate Interest
        thereon  for  such  Distribution  Date,  plus  any  Accrued  Certificate
        Interest thereon remaining unpaid from any previous  Distribution  Date,
        except as provided below;

               (vi) to the  Holders  of the  Class  M-2  Certificates  and Class
        M-III-2  Certificates,  as  applicable,  an  amount  equal  to  (x)  the
        Subordinate Principal Distribution Amount for such

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        Class of Certificates for such Distribution  Date,  applied in reduction
        of the Certificate  Principal  Balance of the Class M-2 Certificates and
        Class M-III-2 Certificates;

               (vii) to the  Holders  of the  Class M-3  Certificates  and Class
        M-III-3  Certificates,  as applicable,  the Accrued Certificate Interest
        thereon  for  such  Distribution  Date,  plus  any  Accrued  Certificate
        Interest thereon remaining unpaid from any previous  Distribution  Date,
        except as provided below;

               (viii) to the  Holders  of the Class M-3  Certificates  and Class
        M-III-3  Certificates,  as  applicable,  an  amount  equal  to  (x)  the
        Subordinate Principal Distribution Amount for such Class of Certificates
        for such  Distribution  Date,  applied in reduction  of the  Certificate
        Principal  Balance  of the Class  M-3  Certificates  and  Class  M-III-3
        Certificates;

               (ix) to the  Holders  of the  Class  B-1  Certificates  and Class
        B-III-1  Certificates,  as applicable,  the Accrued Certificate Interest
        thereon  for  such  Distribution  Date,  plus  any  Accrued  Certificate
        Interest thereon remaining unpaid from any previous  Distribution  Date,
        except as provided below;

               (x) to the  Holders  of the  Class  B-1  Certificates  and  Class
        B-III-1  Certificates,  as  applicable,  an  amount  equal  to  (x)  the
        Subordinate Principal Distribution Amount for such Class of Certificates
        for such  Distribution  Date,  applied in reduction  of the  Certificate
        Principal  Balance  of the Class  B-1  Certificates  and  Class  B-III-1
        Certificates;

               (xi) to the  Holders  of the  Class  B-2  Certificates  and Class
        B-III-2  Certificates,  as applicable,  the Accrued Certificate Interest
        thereon  for  such  Distribution  Date,  plus  any  Accrued  Certificate
        Interest thereon remaining unpaid from any previous  Distribution  Date,
        except as provided below;

               (xii) to the  Holders  of the  Class B-2  Certificates  and Class
        B-III-2  Certificates,  as  applicable,  an  amount  equal  to  (x)  the
        Subordinate Principal Distribution Amount for such Class of Certificates
        for such  Distribution  Date,  applied in reduction  of the  Certificate
        Principal  Balance  of the Class  B-2  Certificates  and  Class  B-III-2
        Certificates;

               (xiii) to the  Holders  of the Class B-3  Certificates  and Class
        B-III-3 Certificates,  as applicable, an amount equal to (x) the Accrued
        Certificate  Interest  thereon  for  such  Distribution  Date,  plus any
        Accrued Certificate  Interest thereon remaining unpaid from any previous
        Distribution Date, except as provided below;

               (xiv) to the  Holders  of the  Class B-3  Certificates  and Class
        B-III-3 Certificates,  as applicable, an amount equal to the Subordinate
        Principal  Distribution  Amount for such Class of Certificates  for such
        Distribution Date;

               (xv) to the related  Senior  Certificates,  in the  priority  set
        forth in Section 4.02(b),

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<PAGE>

        the  portion,  if any,  of the  related  Available  Distribution  Amount
        remaining  after the  foregoing  distributions,  applied  to reduce  the
        Certificate  Principal Balances of such Senior  Certificates,  but in no
        event more than the aggregate of the outstanding  Certificate  Principal
        Balances of each such Class of Senior Certificates,  and thereafter,  to
        each  Class  of  related   Subordinate   Certificates  then  outstanding
        beginning with such Class with the Highest Priority,  any portion of the
        related Available Distribution Amount remaining after the related Senior
        Certificates  have  been  retired,  applied  to reduce  the  Certificate
        Principal Balance of each such Class of Subordinate Certificates, but in
        no event more than the outstanding Certificate Principal Balance of each
        such Class of Subordinate Certificates; and

               (xvi) to the Class R-IV Certificates, the balance, if any, of the
        related Available Distribution Amount.

        Notwithstanding the foregoing, on any Distribution Date, with respect to
the Class of Subordinate Certificates outstanding on such Distribution Date with
the Lowest Priority, or in the event the related Subordinate Certificates are no
longer  outstanding,  the  Senior  Certificates,  Accrued  Certificate  Interest
thereon   remaining  unpaid  from  any  previous   Distribution   Date  will  be
distributable only to the extent that such unpaid Accrued  Certificate  Interest
was  attributable to interest  shortfalls  relating to the failure of the Master
Servicer  to make any  required  Advance,  or the  determination  by the  Master
Servicer  that any  proposed  Advance  would be a  Nonrecoverable  Advance  with
respect to the related  Mortgage  Loan where such Mortgage Loan has not yet been
the subject of a Cash Liquidation or REO Disposition or the related  Liquidation
Proceeds,  Insurance  Proceeds and REO Proceeds have not yet been distributed to
the Certificateholders.

        (b)  Distributions  of  principal  on the  Senior  Certificates  on each
Distribution  Date occurring prior to the Credit Support  Depletion Date will be
made as follows:

               (i) to the Class AP-I, Class AP-II and Class AP-III  Certificates
        from the  Group I  Available  Distribution  Amount,  Group II  Available
        Distribution  Amount  and  Group  III  Available   Distribution  Amount,
        respectively, until the Certificate Principal Balance thereof is reduced
        to zero,  an  amount  (the  related  "Class  AP  Principal  Distribution
        Amount") equal to the aggregate of:

                             (1) the related Discount  Fraction of the principal
                      portion of each Monthly  Payment on each related  Discount
                      Mortgage  Loan due during the related Due Period,  whether
                      or not  received on or prior to the related  Determination
                      Date, minus the related Discount Fraction of the principal
                      portion  of  any  related  Debt  Service  Reduction  which
                      together with other related  Bankruptcy Losses exceeds the
                      related Bankruptcy Amount;

                             (2) the related Discount  Fraction of the principal
                      portion of all  unscheduled  collections  on each  related
                      Discount  Mortgage  Loan  received  during  the  preceding
                      calendar month or, in the case of Principal Prepayments

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                      in Full, during the related  Prepayment Period (other than
                      amounts  received in connection with a Cash Liquidation or
                      REO  Disposition  of  a  related  Discount  Mortgage  Loan
                      described  in  clause  (3)  below),   including  Principal
                      Prepayments   in  Full,   Curtailments   and   repurchases
                      (including repurchases deemed to have occurred during such
                      period in  accordance  with  Section  3.07(b))  of related
                      Discount Mortgage Loans(or,  in the case of a substitution
                      of a related Deleted  Mortgage Loan, the related  Discount
                      Fraction of the amount of any  shortfall  deposited in the
                      Custodial Account in connection with such substitution);

                             (3) in connection with the Cash  Liquidation or REO
                      Disposition of a related  Discount  Mortgage Loan that did
                      not result in any Excess  Special  Hazard  Losses,  Excess
                      Fraud Losses,  Excess  Bankruptcy  Losses or Extraordinary
                      Losses,   an  amount  equal  to  the  lesser  of  (1)  the
                      applicable  Discount  Fraction  of  the  Stated  Principal
                      Balance of such related Discount Mortgage Loan immediately
                      prior  to such  Distribution  Date  and (2) the  aggregate
                      amount  of  the  collections  on  such  related   Discount
                      Mortgage  Loan to the  extent  applied  as  recoveries  of
                      principal;

                             (4) any  amounts  allocable  to  principal  for the
                      related  Loan  Group for any  previous  Distribution  Date
                      (calculated  pursuant  to clauses  (1)  through (3) above)
                      that remain undistributed; and

                             (5) the amount of any related  Class AP  Collection
                      Shortfalls  for such  Distribution  Date and the amount of
                      any such Class AP Collection  Shortfalls  remaining unpaid
                      for  all  previous  Distribution  Dates,  but  only to the
                      extent of the Eligible Funds in the related Loan Group for
                      such Distribution Date;

               (ii) the following  amounts shall be  distributed  to the Group I
        Senior  Certificates  (other than the Class A-I-2 Certificates and Class
        AP-I Certificates) as follows:

                      (A) the Group I Senior Principal Distribution Amount shall
               be  distributed  to the Class  R-I,  Class  R-III and Class  R-IV
               Certificates,  concurrently  on  a  pro  rata  basis,  until  the
               Certificate Principal Balances thereof have been reduced to zero;

                      (B)  the   balance   of  the  Group  I  Senior   Principal
               Distribution Amount remaining after the distribution described in
               clause (A) above,  if any,  shall be distributed in the following
               order of  priority,  until the  aggregate  Certificate  Principal
               Balance of the Class I-A-1, Class I-A-3, Class I-A-4, Class I-A-5
               and  Class  I-A-6  Certificates  has  been  reduced  to the PAC I
               Aggregate Planned Principal Balance for such Distribution Date:

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<PAGE>

                             (1) first, concurrently as follows:

                                    (a) 75% to the Class A-I-1,  Class A-I-3 and
                             Class A-I-4  Certificates,  in that order,  in each
                             case  until the  Certificate  Principal  Balance of
                             that class has been reduced to zero; and

                                    (b)  25% to the  Class  A-I-5  Certificates,
                             until the Certificate Principal Balance thereof has
                             been reduced to zero; and

                             (2) second, to the Class A-I-6 Certificates,  until
                      the Certificate Principal Balance thereof has been reduced
                      to zero;

                      (C)  the   balance   of  the  Group  I  Senior   Principal
               Distribution  Amount remaining after the distributions  described
               in  clauses  (A) and (B)  above,  if any,  shall  be  distributed
               sequentially  to the Class  A-I-7  Certificates  and Class  A-I-8
               Certificates,  in  each  case  until  the  aggregate  Certificate
               Principal Balance of the Class A-I-7 Certificates and Class A-I-8
               Certificates  has been  reduced to the PAC II  Aggregate  Planned
               Principal Balance for such Distribution Date;

                      (D)  the   balance   of  the  Group  I  Senior   Principal
               Distribution  Amount remaining after the distributions  described
               in clauses (A) through (C) above,  if any,  shall be  distributed
               concurrently on a pro rata basis, to the Class A-I-9 Certificates
               and Class A-I-10  Certificates,  until the Certificate  Principal
               Balances thereof have been reduced to zero;

                      (E)  the   balance   of  the  Group  I  Senior   Principal
               Distribution Amount remaining after the distribution described in
               clauses  (A)  through  (D) above,  if any,  shall be  distributed
               sequentially  to the Class  A-I-7  Certificates  and Class  A-I-8
               Certificates,  without  regard  to the PAC II  Aggregate  Planned
               Principal Balance for such Distribution  Date, in each case until
               the Certificate Principal Balance has been reduced to zero;

                      (F)  the   balance   of  the  Group  I  Senior   Principal
               Distribution  Amount remaining after the distributions  described
               in clauses (A) through (E) above, if any, shall be distributed to
               the Class A-I-1,  Class A-I-3, Class A-I-4, Class A-I-5 and Class
               A-I-6  Certificates in the manner and order of priority set forth
               in  clauses  (B)(1) and (2)  above,  without  regard to the PAC I
               Aggregate Planned  Principal Balance for such Distribution  Date,
               until  the  Certificate  Principal  Balances  thereof  have  been
               reduced to zero.

               (iii) the Group II Senior Principal  Distribution Amount shall be
        distributed  to the  Class  A-II  Certificates,  until  the  Certificate
        Principal Balance thereof has been reduced to zero.

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<PAGE>

               (iv) the following  amounts shall be distributed to the Group III
        Senior  Certificates  (other  than the  Class  AP-III  Certificates)  as
        follows:

                      (A) the Group III  Senior  Principal  Distribution  Amount
               shall be  distributed to the Class R-II  Certificates,  until the
               Certificate  Principal  Balance thereof has been reduced to zero;
               and

                      (B)  the   balance   of  the  Group  I  Senior   Principal
               Distribution Amount remaining after the distribution described in
               clause (A) above, if any, shall be distributed to the Class A-III
               Certificates, until the Certificate Principal Balance thereof has
               been reduced to zero.

               (v) With  respect to the Group I Loans and Group II Loans,  prior
        to the  occurrence of the Credit  Support  Depletion  Date but after the
        reduction of the  Certificate  Principal  Balances of either the Group I
        Senior  Certificates  or  the  Group  II  Senior  Certificates  to  zero
        (exclusive of the related Class AP Certificates),  the remaining Group I
        Senior Certificates or Group II Senior Certificates, as applicable, will
        be entitled to receive, in addition to any Principal Prepayments in Full
        and Curtailments  related to such  Certificates'  respective Loan Group,
        100% of the  Principal  Prepayments  in  Full  and  Curtailments  on the
        Mortgage  Loans  in the  other  Loan  Group  (exclusive  of the  related
        Discount  Fraction  thereof),  and in accordance with the priorities set
        forth in clause  4.02(b)(ii)  or (iii)  above,  and in  reduction of the
        Certificate  Principal Balances thereof, on any Distribution Date unless
        (i) the weighted average of the initial Subordinate Percentages for both
        Loan Groups,  weighted on the basis of the Stated Principal  Balances of
        the Mortgage Loans in the related Loan Group,  is at least two times the
        weighted  average of the initial  Subordinate  Percentages for both Loan
        Groups  (calculated  on such basis) and (ii) the  outstanding  principal
        balance of the Mortgage Loans in both Loan Groups  delinquent 60 days or
        more averaged over the last six months, as a percentage of the aggregate
        outstanding  Certificate  Principal Balance of the Class M-1, Class M-2,
        Class M-3, Class B-1, Class B-2 and Class B-3 Certificates, is less than
        50%. In addition,  on any Distribution  Date prior to the Credit Support
        Depletion Date on which the aggregate  Certificate  Principal Balance of
        either  the  Group  I  Senior   Certificates  or  the  Group  II  Senior
        Certificates,  as  applicable,  is  greater  than the  aggregate  Stated
        Principal  Balance of the  Mortgage  Loans in the related  Loan Group in
        each  case  after  giving  effect  to  distributions  to be made on such
        Distribution  Date,  (1) 100% of the Principal  Prepayments  in Full and
        Curtailments  allocable to the Class M-1,  Class M-2,  Class M-3,  Class
        B-1, Class B-2 and Class B-3  Certificates  on the Mortgage Loans in the
        other Loan Group will be distributed to such Class or Classes (exclusive
        of the related Class AP Certificates) of Group I Senior  Certificates or
        Group II Senior Certificates,  as applicable, and in accordance with the
        priorities  set  forth in  clause  4.02(b)(ii)  or (iii)  above,  and in
        reduction  of the  Certificate  Principal  Balances  thereof,  until the
        aggregate  Certificate  Principal  Balance  of such  Class or Classes of
        Certificates  equals  the  aggregate  Stated  Principal  Balance  of the
        Mortgage Loans in the related Loan Group, and (2) an amount equal to one
        month's interest

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<PAGE>

        at the  applicable  Pass-Through  Rate for  such  Class  or  Classes  of
        Certificates on the amount of such  difference will be distributed  from
        the  related  Available  Distribution  Amount  for the other  Loan Group
        allocable to the Class M-1,  Class M-2,  Class M-3, Class B-1, Class B-2
        and Class B-3  Certificates  first to pay any  unpaid  interest  on such
        Class or  Classes  of  Certificates  and then to pay  principal  on such
        Classes in the manner described in (1) above.

               (vi) With respect to the Group I Loans and Group II Loans,  on or
        after  the  occurrence  of  the  Credit  Support   Depletion  Date,  all
        priorities relating to distributions as described in Section 4.02(b)(ii)
        or (iii) of this  Agreement  in  respect of  principal  among the Senior
        Certificates (other than the Class AP Certificates) will be disregarded,
        and (i) the remaining Group I Senior Principal  Distribution Amount will
        be distributed to the Group I Senior  Certificates (other than the Class
        AP-I   Certificates)  pro  rata  in  accordance  with  their  respective
        outstanding  Certificate Principal Balances, (ii) the remaining Group II
        Senior Principal Distribution Amount will be distributed to the Group II
        Senior  Certificates  (other than the Class AP-II Certificates) pro rata
        in accordance with their respective  outstanding  Certificate  Principal
        Balances,  (iii) the related Senior Interest Distribution Amount will be
        distributed as described in Section 4.02(a)(i)(X),  (Y) and (Z) and (iv)
        an  amount  equal to the  related  Discount  Fraction  of the  principal
        portion of scheduled  payments and unscheduled  collections  received or
        advanced  in  respect  of  related  Discount   Mortgage  Loans  will  be
        distributed to the Class AP-I Certificates and Class AP-II Certificates,
        as applicable.

               (vii)  Except  as  described  in  clause  (v)  above,  after  the
        reduction of the  Certificate  Principal  Balances of the Group I Senior
        Certificates  or Group II Senior  Certificates  (other  than the related
        Class AP Certificates) to zero but prior to the Credit Support Depletion
        Date, the related Senior  Certificates  (other than the related Class AP
        Certificates) will be entitled to no further  distributions of principal
        thereon  and the  related  Available  Distribution  Amount  will be paid
        solely to the holders of the related Class AP Certificates,  the related
        Class AV  Certificates  and the Class M-1,  Class M-2,  Class M-3, Class
        B-1,  Class B-2 and Class B-3  Certificates,  in each case as  described
        herein.

               (viii)  With  respect  to the  Group III  Loans,  on or after the
        occurrence of the Credit Support Depletion Date, all priorities relating
        to distributions  as described in Section  4.02(b)(iv) of this Agreement
        in respect of principal among the Group III Senior  Certificates  (other
        than the Class AP-III  Certificates)  will be  disregarded,  and (i) the
        remaining  Group  III  Senior  Principal  Distribution  Amount  will  be
        distributed to the Group III Senior  Certificates  (other than the Class
        AP-III  Certificates)  pro  rata in  accordance  with  their  respective
        outstanding  Certificate  Principal Balances,  (ii) the Group III Senior
        Interest Distribution Amount will be distributed as described in Section
        4.02(a)(i)(Z)  and (iii) an amount equal to the Discount Fraction of the
        principal  portion of  scheduled  payments and  unscheduled  collections
        received  or advanced in respect of Group III  Discount  Mortgage  Loans
        will be distributed to the Class AP-III Certificates.

               (ix) With respect to the Group III Loans,  after the reduction of
        the Certificate

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        Principal Balances of the Group III Senior  Certificates (other than the
        Class  AP-III  Certificates)  to zero but  prior to the  Credit  Support
        Depletion Date, the Group III Senior  Certificates (other than the Class
        AP-III  Certificates)  will be entitled to no further  distributions  of
        principal thereon and the related Available  Distribution Amount will be
        paid  solely to the  holders  of the Class  AP-III  Certificates,  Class
        AV-III   Certificates,   Class  M-III   Certificates   and  Class  B-III
        Certificates, in each case as described herein.

               (x)  Notwithstanding  the foregoing clauses (i) through (ix), if,
        on any Distribution Date, (1) Excess Special Hazard Losses, Excess Fraud
        Losses  and  Excess  Bankruptcy  Losses on the Group I Loans or Group II
        Loans are  allocated  to any Class  M-III  Certificates  or Class  B-III
        Certificates  as described in Section  4.05(c) below, an amount equal to
        the lesser of (a) the aggregate  amount of such allocated Excess Special
        Hazard Losses,  Excess Fraud Losses and Excess Bankruptcy Losses and (b)
        the aggregate  amount of Principal  Prepayments in Full and Curtailments
        on the Group III Loans will be  diverted  to the Class A-I,  Class AP-I,
        Class AV-I, Class A-II, Class AP-II,  Class AV-II, Class M-1, Class M-2,
        Class M-3, Class B-1, Class B-2 and Class B-3  Certificates and shall be
        paid to such  Certificates  as a  Principal  Prepayment  in Full and (2)
        Excess Special Hazard Losses,  Excess Fraud Losses and Excess Bankruptcy
        Losses on the Group III Loans are allocated to any Class M-1, Class M-2,
        Class M-3, Class B-1, Class B-2 or Class B-3  Certificates  as described
        in  Section  4.05(c)  below,  an amount  equal to the  lesser of (a) the
        aggregate amount of such allocated Excess Special Hazard Losses,  Excess
        Fraud Losses and Excess  Bankruptcy  Losses and (b) the aggregate amount
        of Principal  Prepayments in Full and  Curtailments on the Group I Loans
        and Group II Loans will be diverted to the Class  A-III,  Class  AP-III,
        Class AV-III, Class M-III and Class B-III Certificates and shall be paid
        to such Certificates as a Principal Prepayment in Full.

        (c) In  addition to the  foregoing  distributions,  with  respect to any
Mortgage Loan that was  previously  the subject of a Cash  Liquidation or an REO
Disposition that resulted in a Realized Loss, in the event that within two years
of the date on which such  Realized  Loss was  determined  to have  occurred the
Master Servicer receives amounts which the Master Servicer  reasonably  believes
to represent subsequent recoveries (net of any related liquidation expenses), or
determines that it holds surplus amounts previously  reserved to cover estimated
expenses specifically related to such Mortgage Loan (including,  but not limited
to,  recoveries  (net of any  related  liquidation  expenses)  in respect of the
representations  and  warranties  made by the  related  Seller  pursuant  to the
applicable  Seller's  Agreement),  the Master  Servicer  shall  distribute  such
amounts to the Class or Classes to which such Realized Loss was allocated  (with
the  amounts  to be  distributed  allocated  among  such  Classes  in  the  same
proportions as such Realized Loss was allocated),  and within each such Class to
the Certificateholders of record as of the Record Date immediately preceding the
date of such  distribution  (or if  such  Class  of  Certificates  is no  longer
outstanding,  to the Certificateholders of record at the time that such Realized
Loss was allocated) with respect to the Certificates of any Class, on a pro rata
basis based on the Percentage  Interest  represented by each Certificate of such
Class as of such Record Date; provided that no such distribution to any Class of
Certificates of subsequent  recoveries  related to a Mortgage Loan shall exceed,
either individually or in the

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aggregate and together with any other  amounts paid in  reimbursement  therefor,
the amount of the  related  Realized  Loss that was  allocated  to such Class of
Certificates.

        (d) Each distribution with respect to a Book-Entry  Certificate shall be
paid  to the  Depository,  as  Holder  thereof,  and  the  Depository  shall  be
responsible for crediting the amount of such distribution to the accounts of its
Depository   Participants  in  accordance  with  its  normal  procedures.   Each
Depository  Participant shall be responsible for disbursing such distribution to
the  Certificate  Owners that it represents  and to each indirect  participating
brokerage firm (a "brokerage firm" or "indirect  participating  firm") for which
it acts as agent.  Each brokerage firm shall be responsible for disbursing funds
to  the  Certificate  Owners  that  it  represents.  None  of the  Trustee,  the
Certificate  Registrar,  the  Depositor  or the Master  Servicer  shall have any
responsibility  therefor  except as  otherwise  provided  by this  Agreement  or
applicable law.

        (e) Except as otherwise provided in Section 9.01, if the Master Servicer
anticipates that a final  distribution with respect to any Class of Certificates
will be made on the next Distribution  Date, the Master Servicer shall, no later
than the Determination Date in the month of such final distribution,  notify the
Trustee and the Trustee  shall,  no later than two (2) Business  Days after such
Determination  Date,  mail  on  such  date  to each  Holder  of  such  Class  of
Certificates a notice to the effect that: (i) the Trustee  anticipates  that the
final  distribution  with respect to such Class of Certificates  will be made on
such  Distribution  Date  but  only  upon  presentation  and  surrender  of such
Certificates at the office of the Trustee or as otherwise specified therein, and
(ii) no interest shall accrue on such Certificates from and after the end of the
prior calendar month. In the event that Certificateholders required to surrender
their   Certificates   pursuant  to  Section  9.01(c)  do  not  surrender  their
Certificates for final cancellation, the Trustee shall cause funds distributable
with respect to such  Certificates to be withdrawn from the Certificate  Account
and   credited   to  a  separate   escrow   account  for  the  benefit  of  such
Certificateholders as provided in Section 9.01(d).

        Section  4.03 Statements to Certificateholders; Exchange Act Reporting.
                      --------------------------------------------------------

        (a) The Master  Servicer shall forward to the Trustee no later than 5:00
P.M. New York time on the second Business Day prior to each  Distribution  Date,
and the Trustee shall on such  Distribution  Date make available  electronically
via  the   Trustee's   internet   website   which  is   presently   located   at
https://www.corporatetrust.db.com/invr,  or  for  persons  unable  to  use  this
website by mail by contacting the investor relations desk at (800) 735-7777,  to
each  Holder  and  the  Depositor,  a  statement  setting  forth  the  following
information  as to  each  Class  of  Certificates,  in each  case to the  extent
applicable:

               (i) (A) the amount of such distribution to the Certificateholders
        of such  Class  applied  to reduce  the  Certificate  Principal  Balance
        thereof,  and (B) the aggregate  amount  included  therein  representing
        Principal Prepayments;

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

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<PAGE>

               (iii)  if the  distribution  to the  Holders  of  such  Class  of
        Certificates is less than the full amount that would be distributable to
        such Holders if there were  sufficient  funds  available  therefor,  the
        amount of the shortfall;

               (iv) the  amount  of any  Advance  by the  Master  Servicer  with
        respect to the Group I, Group II and Group III Loans pursuant to Section
        4.04;

               (v) the  number of Group I,  Group II and Group III Loans and the
        Stated  Principal  Balance  after giving effect to the  distribution  of
        principal on such Distribution Date;

               (vi) the aggregate Certificate Principal Balance of each Class of
        the Certificates, after giving effect to the amounts distributed on such
        Distribution Date,  separately  identifying any reduction thereof due to
        Realized  Losses  other  than  pursuant  to an  actual  distribution  of
        principal;

               (vii) on the basis of the most recent reports  furnished to it by
        Subservicers,  the number and aggregate  principal  balances of Group I,
        Group II and Group III Loans that are Delinquent (A) one month,  (B) two
        months  and (C)  three  or more  months  and the  number  and  aggregate
        principal  balance  of Group I, Group II and Group III Loans that are in
        foreclosure;

               (viii) the number,  aggregate principal balance and book value of
        any REO Properties;

               (ix) the aggregate Accrued Certificate Interest remaining unpaid,
        if any,  for each  Class of  Certificates,  after  giving  effect to the
        distribution made on such Distribution Date;

               (x) the aggregate amount of Realized Losses for such Distribution
        Date and the aggregate  amount of Realized  Losses on the Group I, Group
        II and Group III Loans incurred since the Cut-off Date;

               (xi) the Special Hazard Amount,  Bankruptcy Amount and Fraud Loss
        Amount  as of the  close of  business  on such  Distribution  Date and a
        description of any change in the calculation of such amounts;

               (xii) the Pass-Through Rate on each Class of Certificates;

               (xiii)  the number and  aggregate  principal  balance of Group I,
        Group II and Group III Loans repurchased under Section 4.07;

               (xiv)  the  aggregate  amount  of any  recoveries  on  previously
        foreclosed   loans  from   Residential   Funding  due  to  a  breach  of
        representation or warranty;

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<PAGE>

               (xv) the weighted average remaining term to maturity of the Group
        I,  Group II and Group  III Loans  after  giving  effect to the  amounts
        distributed on such Distribution Date; and

               (xvi) the weighted  average  Mortgage Rates of the Group I, Group
        II and Group III Loans after giving effect to the amounts distributed on
        such Distribution Date.

        In the case of  information  furnished  pursuant to clauses (i) and (ii)
above,  the amounts shall be expressed as a dollar amount per Certificate with a
$1,000 denomination. In addition to the statement provided to the Trustee as set
forth in this Section 4.03(a),  the Master Servicer shall provide to any manager
of a trust fund consisting of some or all of the  Certificates,  upon reasonable
request,  such additional  information as is reasonably obtainable by the Master
Servicer at no additional expense to the Master Servicer.

        (b) Within a  reasonable  period of time after the end of each  calendar
year,  the Master  Servicer  shall  prepare,  or cause to be  prepared,  and the
Trustee shall forward, or cause to be forwarded,  to each Person who at any time
during the calendar year was the Holder of a  Certificate,  other than a Class R
Certificate, a statement containing the information set forth in clauses (i) and
(ii) of  subsection  (a) above  aggregated  for such calendar year or applicable
portion  thereof  during  which  such  Person  was  a  Certificateholder.   Such
obligation  of the  Master  Servicer  and  Trustee  shall be deemed to have been
satisfied  to the extent  that  substantially  comparable  information  shall be
provided by the Master Servicer and Trustee  pursuant to any requirements of the
Code.

        (c) As soon as reasonably  practicable,  upon the written request of any
Certificateholder,   the  Master   Servicer   shall   provide   the   requesting
Certificateholder with such information as is necessary and appropriate,  in the
Master  Servicer's  sole  discretion,  for  purposes  of  satisfying  applicable
reporting requirements under Rule 144A.

        (d) The Master Servicer shall, on behalf of the Depositor and in respect
of the Trust Fund,  sign and cause to be filed with the  Commission any periodic
reports  required to be filed under the  provisions of the Exchange Act, and the
rules and  regulations  of the  Commission  thereunder.  In connection  with the
preparation  and filing of such  periodic  reports,  the  Trustee  shall  timely
provide to the Master Servicer (I) a list of  Certificateholders as shown on the
Certificate  Register as of the end of each  calendar  year,  (II) copies of all
pleadings,  other legal process and any other documents  relating to any claims,
charges or complaints involving the Trustee, as trustee hereunder,  or the Trust
Fund that are received by the Trustee,  (III) notice of all matters that, to the
actual knowledge of a Responsible Officer of the Trustee, have been submitted to
a vote of the  Certificateholders,  other  than  those  matters  that  have been
submitted to a vote of the Certificateholders at the request of the Depositor or
the Master  Servicer,  and (IV) notice of any failure of the Trustee to make any
distribution to the  Certificateholders  as required pursuant to this Agreement.
Neither  the Master  Servicer  nor the  Trustee  shall have any  liability  with
respect  to the  Master  Servicer's  failure  to  properly  prepare or file such
periodic reports resulting from or relating to the Master  Servicer's  inability
or failure to obtain any  information  not resulting from the Master  Servicer's
own negligence

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<PAGE>

or willful  misconduct.  Any Form 10-K filed with the  Commission  in connection
with this clause (d) shall include a certification, signed by the senior officer
in  charge  of the  servicing  functions  of the  Master  Servicer,  in the form
attached  as  Exhibit  R-1  hereto  or such  other  form as may be  required  or
permitted by the Commission (the "Form 10-K Certification"),  in compliance with
Rule 13a-14 and 15d-14 under the Exchange Act and any  additional  directives of
the  Commission.  In connection  with the Form 10-K  Certification,  the Trustee
shall provide the Master Servicer with a back-up certification  substantially in
the form attached  hereto as Exhibit R-2. This Section 4.03(d) may be amended in
accordance with this Agreement without the consent of the Certificateholders.

        Section       4.04  Distribution  of  Reports  to the  Trustee  and  the
                      Depositor; Advances by the Master Servicer.

        (a) Prior to the close of business on the Business  Day next  succeeding
each  Determination  Date, the Master Servicer shall furnish a written statement
(which may be in a mutually  agreeable  electronic  format) to the Trustee,  any
Paying Agent and the Depositor  (the  information  in such  statement to be made
available to  Certificateholders  by the Master  Servicer on request)  (provided
that the Master  Servicer  will use its best  efforts to  deliver  such  written
statement  not later than 12:00 p.m.  New York time on the second  Business  Day
prior to the  Distribution  Date)  setting  forth (i) the Group I,  Group II and
Group III  Available  Distribution  Amounts,  (ii) the  amounts  required  to be
withdrawn from the Custodial Account and deposited into the Certificate  Account
on the  immediately  succeeding  Certificate  Account  Deposit Date  pursuant to
clause  (iii) of  Section  4.01(a),  (iii)  the  amount of  Prepayment  Interest
Shortfalls,  and (iv) to the  extent  required,  a report  detailing  the Stated
Principal  Balance,  Mortgage Rate,  Modified  Mortgage Rate,  remaining term to
maturity and Monthly Payment for any Modified  Mortgage Loan pursuant to Section
3.13. The  determination  by the Master  Servicer of such amounts shall,  in the
absence of obvious error, be presumptively deemed to be correct for all purposes
hereunder  and the Trustee  shall be  protected in relying upon the same without
any independent check or verification.

        (b) On or before  2:00 P.M.  New York time on each  Certificate  Account
Deposit Date, the Master  Servicer  shall either (i) deposit in the  Certificate
Account from its own funds, or funds received therefor from the Subservicers, an
amount equal to the Advances to be made by the Master Servicer in respect of the
related  Distribution  Date,  which shall be in an aggregate amount equal to the
aggregate  amount of  Monthly  Payments  (with  each  interest  portion  thereof
adjusted to a per annum rate equal to the Net Mortgage Rate), less the amount of
any related Servicing  Modifications,  Debt Service  Reductions or reductions in
the amount of interest collectable from the Mortgagor pursuant to the Relief Act
or  similar  legislation  or  regulations  then in  effect,  on the  Outstanding
Mortgage  Loans as of the related  Due Date in the  related  Due  Period,  which
Monthly  Payments  were due during the related Due Period and not received as of
the close of business as of the related  Determination  Date;  provided  that no
Advance  shall be made if it would be a  Nonrecoverable  Advance,  (ii) withdraw
from amounts on deposit in the Custodial  Account and deposit in the Certificate
Account all or a portion of the Amount Held for Future Distribution in discharge
of any such Advance,  or (iii) make advances in the form of any  combination  of
clauses (i) and (ii)

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<PAGE>

aggregating  the amount of such  Advance.  Any  portion  of the Amount  Held for
Future  Distribution so used shall be replaced by the Master Servicer by deposit
in the  Certificate  Account on or before 11:00 A.M. New York time on any future
Certificate  Account  Deposit Date to the extent that funds  attributable to the
Mortgage  Loans that are available in the  Custodial  Account for deposit in the
Certificate  Account on such Certificate Account Deposit Date shall be less than
payments to Certificateholders required to be made on the following Distribution
Date.  The  Master  Servicer  shall be  entitled  to use any  Advance  made by a
Subservicer  as  described  in Section  3.07(b)  that has been  deposited in the
Custodial  Account on or before  such  Distribution  Date as part of the Advance
made by the Master Servicer pursuant to this Section 4.04.

        The   determination   by  the  Master   Servicer  that  it  has  made  a
Nonrecoverable Advance or that any proposed Advance, if made, would constitute a
Nonrecoverable  Advance,  shall be  evidenced  by a  certificate  of a Servicing
Officer delivered to the Depositor and the Trustee.

        In the event that the Master Servicer  determines as of the Business Day
preceding any Certificate Account Deposit Date that it will be unable to deposit
in the  Certificate  Account an amount equal to the Advance  required to be made
for the immediately  succeeding  Distribution  Date, it shall give notice to the
Trustee of its inability to advance (such notice may be given by telecopy),  not
later than 3:00 P.M.,  New York  time,  on such  Business  Day,  specifying  the
portion of such amount  that it will be unable to  deposit.  Not later than 3:00
P.M., New York time, on the Certificate  Account Deposit Date the Trustee shall,
unless by 12:00 Noon,  New York time,  on such day the  Trustee  shall have been
notified in writing (by telecopy)  that the Master  Servicer shall have directly
or indirectly deposited in the Certificate Account such portion of the amount of
the Advance as to which the Master  Servicer shall have given notice pursuant to
the  preceding  sentence,  pursuant to Section  7.01,  (a)  terminate all of the
rights and obligations of the Master Servicer under this Agreement in accordance
with  Section  7.01 and (b)  assume the  rights  and  obligations  of the Master
Servicer  hereunder,  including  the  obligation  to deposit in the  Certificate
Account  an  amount  equal  to  the  Advance  for  the  immediately   succeeding
Distribution Date.

        The Trustee shall deposit all funds it receives pursuant to this Section
4.04 into the Certificate Account.

        Section  4.05 Allocation of Realized Losses.

        (a) Prior to each Distribution Date, the Master Servicer shall determine
the  total  amount of  Realized  Losses,  if any,  that  resulted  from any Cash
Liquidation,   Servicing  Modifications,   Debt  Service  Reduction,   Deficient
Valuation or REO Disposition that occurred during the related  Prepayment Period
or, in the case of a Servicing  Modification that constitutes a reduction of the
interest  rate on a Mortgage  Loan,  the amount of the reduction in the interest
portion of the Monthly Payment due in the month in which such  Distribution Date
occurs.  The amount of each  Realized  Loss shall be  evidenced  by an Officers'
Certificate.  All  Realized  Losses on the  Mortgage  Loans  (other  than Excess
Losses)  shall be allocated  as follows:  (a) with respect to the Group I Loans,
first, to the Class B-3  Certificates  until the Certificate  Principal  Balance
thereof has been reduced to zero;

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<PAGE>

second,  to the Class B-2 Certificates  until the Certificate  Principal Balance
thereof has been reduced to zero; third, to the Class B-1 Certificates until the
Certificate  Principal Balance thereof has been reduced to zero;  fourth, to the
Class M-3 Certificates until the Certificate  Principal Balance thereof has been
reduced to zero;  fifth,  to the Class M-2  Certificates  until the  Certificate
Principal  Balance  thereof has been  reduced to zero;  sixth,  to the Class M-1
Certificates until the Certificate Principal Balance thereof has been reduced to
zero;  and,  thereafter,  if any such Realized  Losses are on a Group I Discount
Mortgage Loan, to the Class AP-I  Certificates in an amount equal to the related
Group I Discount Fraction of the principal portion thereof, and the remainder of
such  Realized  Losses on the Group I  Discount  Mortgage  Loans and the  entire
amount of such Realized Losses on Group I Non-Discount Mortgage Loans, among the
Group I Senior  Certificates  (other than the Class AP-I  Certificates) on a pro
rata basis, as described below,  (b) with respect to the Group II Loans,  first,
to the Class B-3 Certificates  until the Certificate  Principal  Balance thereof
has been  reduced  to zero;  second,  to the  Class B-2  Certificates  until the
Certificate  Principal  Balance thereof has been reduced to zero;  third, to the
Class B-1 Certificates until the Certificate  Principal Balance thereof has been
reduced to zero;  fourth,  to the Class M-3  Certificates  until the Certificate
Principal  Balance  thereof has been  reduced to zero;  fifth,  to the Class M-2
Certificates until the Certificate Principal Balance thereof has been reduced to
zero;  sixth,  to the Class M-1  Certificates  until the  Certificate  Principal
Balance thereof has been reduced to zero; and, thereafter,  if any such Realized
Losses are on a Group II Discount Mortgage Loan, to the Class AP-II Certificates
in an amount equal to the related  Group II Discount  Fraction of the  principal
portion  thereof,  and the  remainder  of such  Realized  Losses on the Group II
Discount  Mortgage Loans and the entire amount of such Realized  Losses on Group
II Non-Discount  Mortgage Loans, among the Group II Senior  Certificates  (other
than the Class AP-II  Certificates)  on a pro rata basis, as described below and
(c)  with  respect  to  the  Group  III  Loans,  first,  to  the  Class  B-III-3
Certificates until the Certificate Principal Balance thereof has been reduced to
zero; second, to the Class B-III-2 Certificates until the Certificate  Principal
Balance  thereof  has  been  reduced  to  zero;  third,  to  the  Class  B-III-1
Certificates until the Certificate Principal Balance thereof has been reduced to
zero; fourth, to the Class M-III-3 Certificates until the Certificate  Principal
Balance  thereof  has  been  reduced  to  zero;  fifth,  to  the  Class  M-III-2
Certificates until the Certificate Principal Balance thereof has been reduced to
zero; sixth, to the Class M-III-1  Certificates until the Certificate  Principal
Balance thereof has been reduced to zero; and, thereafter,  if any such Realized
Losses  are  on a  Group  III  Discount  Mortgage  Loan,  to  the  Class  AP-III
Certificates  in an amount equal to the related  Group III Discount  Fraction of
the principal portion thereof,  and the remainder of such Realized Losses on the
Group III Discount  Mortgage Loans and the entire amount of such Realized Losses
on  Group  III  Non-Discount   Mortgage  Loans,   among  the  Group  III  Senior
Certificates (other than the Class AP-III  Certificates) on a pro rata basis, as
described below.

        (b) Any  Extraordinary  Losses with respect to the Group I Loans will be
allocated  among the Group I Senior  Certificates  and the Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2 and Class B-3  Certificates on a pro rata basis;
provided  that the  related  Discount  Fraction  of the  principal  portion of a
Realized  Loss on a Group I Discount  Mortgage  Loans will be  allocated  to the
Class AP-I Certificates.  Any Extraordinary  Losses with respect to the Group II
Loans will be  allocated  among the Group II Senior  Certificates  and the Class
M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3  Certificates on a
pro rata basis; provided that the related Discount Fraction of the principal

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<PAGE>

portion  of a  Realized  Loss on a Group  II  Discount  Mortgage  Loans  will be
allocated  to the Class  AP- II  Certificates.  Any  Extraordinary  Losses  with
respect  to the Group III Loans  will be  allocated  among the Group III  Senior
Certificates,  Class M-III  Certificates  and Class B-III  Certificates on a pro
rata basis; provided that the related Discount Fraction of the principal portion
of a Realized Loss on a Group III Discount  Mortgage  Loans will be allocated to
the Class AP-III  Certificates.  With respect to Loan Group I and Loan Group II,
the portion  allocated to the Class M-1,  Class M-2, Class M-3, Class B-1, Class
B-2 and Class B-3 Certificates will be based on each  Certificates'  interest in
the related Loan Group.

        (c) Excess Special Hazard Losses,  Excess  Bankruptcy  Losses and Excess
Fraud Losses will be allocated as follows: (a) with respect to the Group I Loans
and  Group II  Loans,  first,  to the  Class  B-III-3  Certificates,  until  the
Certificate  Principal Balance thereof has been reduced to zero;  second, to the
Class B-III-2 Certificates,  until the Certificate Principal Balance thereof has
been  reduced  to zero;  third,  to the Class  B-III-1  Certificates,  until the
Certificate  Principal Balance thereof has been reduced to zero;  fourth, to the
Class M-III-3 Certificates,  until the Certificate Principal Balance thereof has
been  reduced  to zero;  fifth,  to the Class  M-III-2  Certificates,  until the
Certificate  Principal  Balance  thereof has been reduced to zero; and sixth, to
the Class M-III-1 Certificates,  until the Certificate Principal Balance thereof
has been reduced to zero; and (b) with respect to the Group III Loans, first, to
the Class B-3 Certificates,  until the Certificate Principal Balance thereof has
been  reduced  to  zero;  second,  to the  Class  B-2  Certificates,  until  the
Certificate  Principal  Balance thereof has been reduced to zero;  third, to the
Class B-1 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero;  fourth, to the Class M-3  Certificates,  until the Certificate
Principal  Balance  thereof has been  reduced to zero;  fifth,  to the Class M-2
Certificates,  until the Certificate  Principal Balance thereof has been reduced
to zero;  and  sixth,  to the Class  M-1  Certificates,  until  the  Certificate
Principal  Balance thereof has been reduced to zero;  provided however that such
losses will be so allocated  pursuant to this provision  solely to the extent of
the  remaining  Special  Hazard  Loss  Amount,  Bankruptcy  Amount or Fraud Loss
Amount,  as applicable,  related to the certificate  group to which these losses
are  allocated  and to the extent of the  Certificate  Principal  Balance of the
Class B  Certificates  or Class M Certificates  related to that Loan Group,  and
thereafter  shall  be  allocated  pro rata  among  all the  Certificates  in the
certificate group in which these losses occurred; and provided further, that the
related  Discount  Fraction  of the  principal  portion of any Excess  Loss on a
Discount Mortgage Loan will be allocated to the Class AP-I, Class AP-II or Class
AP-III Certificates, as applicable.

        As used herein,  an  allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a pro
rata  basis,  among the  various  Classes  so  specified,  to each such Class of
Certificates  on the  basis  of their  then  outstanding  Certificate  Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date in the case of the  principal  portion of a  Realized  Loss or based on the
Accrued Certificate  Interest thereon payable on such Distribution Date (without
regard to any Compensating  Interest for such Distribution  Date) in the case of
an interest portion of a Realized Loss.

        (d) Any  allocation of the principal  portion of Realized  Losses (other
than Debt Service

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<PAGE>

Reductions)  to the Class A, Class R, Class M or Class B  Certificates  shall be
made by reducing  the  Certificate  Principal  Balance  thereof by the amount so
allocated,   which   allocation  shall  be  deemed  to  have  occurred  on  such
Distribution Date. Allocations of the interest portions of Realized Losses shall
be made by operation of the definition of "Accrued Certificate  Interest" and by
operation of the priority of payment provisions of Section 4.02(a). All Realized
Losses and all other losses allocated to a Class of Certificates  hereunder will
be  allocated  among  the  Certificates  of  such  Class  in  proportion  to the
Percentage Interests evidenced thereby.

        (e) Realized Losses on the Group I Loans and the Group II Loans shall be
applied after all distributions  have been made on each Distribution Date first,
to each REMIC I Regular Interest ending with the designation  "SUB," so that the
Uncertificated  Principal Balance of each such REMIC I Regular Interest is equal
to 0.01% of the  excess of (x) the  aggregate  Stated  Principal  Balance of the
Mortgage  Loans in the  related  Loan Group over (y) the  Certificate  Principal
Balance of the Senior  Certificates  relating to the related Loan Group  (except
that if any such excess is a larger  number than in the  preceding  distribution
period,  the least  amount of Realized  Losses  shall be applied to such REMIC I
Regular  Interests  such  that  the  REMIC  I  Subordinated   Balance  Ratio  is
maintained);  and second,  any  remaining  Realized  Losses on the Group I Loans
shall be  allocated  to REMIC I  Regular  Interest  LT-I-ZZZ  and any  remaining
Realized  Losses on the  Group II Loans  shall be  allocated  to REMIC I Regular
Interest LT-II-ZZZ (except that if a Realized Loss is recognized with respect to
a Group I Discount  Mortgage  Loan or a Group II  Discount  Mortgage  Loan,  the
applicable  Group I Discount  Fraction  or Group II  Discount  Fraction  of such
Realized Loss will be allocated to REMIC I Regular  Interest  LT-I-AP or REMIC I
Regular  Interest  LT-II-AP,  as  applicable).  Realized Losses on the Group III
Loans  shall  be  applied  to  REMIC  II  Regular  Interest  LT-IIIA  until  the
Certificate  Principal  Balance  has  been  reduced  to zero  (except  that if a
Realized Loss is recognized with respect to a Group III Discount  Mortgage Loan,
the  applicable  Group  III  Discount  Fraction  of such  Realized  Loss will be
allocated  to  REMIC  III  Regular  Interest  LT-III-AP).  Realized  Losses  are
allocable to the REMIC III Regular  Interests  as such amounts are  allocable to
the Corresponding Certificates.

Section 4.06 Reports of Foreclosures and Abandonment of Mortgaged Property.

        The Master Servicer or the Subservicers  shall file information  returns
with  respect  to the  receipt  of  mortgage  interest  received  in a trade  or
business, the reports of foreclosures and abandonments of any Mortgaged Property
and the  informational  returns relating to cancellation of indebtedness  income
with respect to any Mortgaged  Property  required by Sections  6050H,  6050J and
6050P of the  Code,  respectively,  and  deliver  to the  Trustee  an  Officers'
Certificate  on or before March 31 of each year (other than the calendar year in
which the  Certificates  are issued)  stating that such reports have been filed.
Such reports  shall be in form and  substance  sufficient  to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.

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<PAGE>

        Section  4.07 Optional Purchase of Defaulted Mortgage Loans.
                      ---------------------------------------------

        As to any  Mortgage  Loan which is  delinquent  in payment by 90 days or
more, the Master  Servicer may, at its option,  purchase such Mortgage Loan from
the Trustee at the Purchase  Price  therefor;  provided,  that any such Mortgage
Loan that becomes 90 days or more delinquent  during any given Calendar  Quarter
shall only be eligible for purchase  pursuant to this Section  during the period
beginning  on the first  Business Day of the  following  Calendar  Quarter,  and
ending at the  close of  business  on the  second-to-last  Business  Day of such
following Calendar Quarter. Such option if not exercised shall not thereafter be
reinstated  as to any Mortgage  Loan,  unless the  delinquency  is cured and the
Mortgage Loan thereafter again becomes  delinquent in payment by 90 days or more
in a subsequent  Calendar  Quarter.  If at any time the Master  Servicer makes a
payment to the Certificate Account covering the amount of the Purchase Price for
such a  Mortgage  Loan,  and the  Master  Servicer  provides  to the  Trustee  a
certification  signed by a  Servicing  Officer  stating  that the amount of such
payment has been deposited in the  Certificate  Account,  then the Trustee shall
execute  the  assignment  of such  Mortgage  Loan at the  request  of the Master
Servicer  without recourse to the Master Servicer which shall succeed to all the
Trustee's  right,  title and  interest  in and to such  Mortgage  Loan,  and all
security and documents relative thereto.  Such assignment shall be an assignment
outright and not for  security.  The Master  Servicer  will  thereupon  own such
Mortgage, and all such security and documents, free of any further obligation to
the Trustee or the Certificateholders with respect thereto.

        Section  4.08 Distributions on the Uncertificated Regular Interests.
                      -----------------------------------------------------

        (a) On each  Distribution  Date, the Trustee shall be deemed to allocate
and distribute  the Group I Available  Distribution  Amount,  Group II Available
Distribution Amount and Group III Available Distribution Amount to the extent on
deposit in the  Certificate  Account  for such date to the  interests  issued in
respect of REMIC I, REMIC II and REMIC III as specified in this Section.

        (b) On each Distribution Date, the following  amounts,  in the following
order of priority,  to the extent of the Group I Available  Distribution  Amount
and Group II Available  Distribution Amount reduced by distributions made to the
Class R-I Certificates pursuant to Section 4.02(a),  shall be deemed distributed
by REMIC I to REMIC III on account of the REMIC I Regular Interests:

               (i)  Uncertificated  Accrued  Interest  on the  REMIC  I  Regular
Interests for such Distribution Date, plus any  Uncertificated  Accrued Interest
thereon remaining unpaid from any previous Distribution Date; and

               (ii) to the extent of amounts  remaining after the  distributions
made  pursuant  to clause (i) above,  allocated  as follows:  (A) first,  to the
Holders of REMIC I Regular  Interests LT-I- AP and LT-II-AP,  an amount equal to
the amount deemed distributed in respect of the Corresponding  Interest for such
Distribution  Date, (B) second, to each REMIC I Regular Interest ending with the
designation  "SUB," so that the  principal  balance of each such REMIC I Regular
Interest is equal to 0.01% of the excess of (x) the aggregate  Stated  Principal
Balance of the Mortgage

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<PAGE>

Loans in the related Loan Group over (y) the Certificate  Principal  Balances of
the Senior  Certificates  related to such Loan  Group  (except  that if any such
excess is a larger number than in the preceding  distribution  period, the least
amount of principal shall be distributed to such REMIC I Regular  Interests such
that the REMIC I Subordinated Balance Ratio is maintained);  and (C) thereafter,
any remaining principal from the Group I Available  Distribution Amount to REMIC
I  Regular  Interest  LT-I-ZZZ  and any  remaining  principal  from the Group II
Available Distribution Amount to REMIC I Regular Interest LT-II-ZZZ.

        (c) On each Distribution Date, the following  amounts,  in the following
order of priority, to the extent of the Group III Available  Distribution Amount
reduced by distributions made to the Class R-II Certificates pursuant to Section
4.02(a),  shall be deemed distributed by REMIC II to REMIC III on account of the
REMIC II Regular Interests:

               (i)  Uncertificated  Accrued  Interest  on the  REMIC II  Regular
Interests for such Distribution Date, plus any  Uncertificated  Accrued Interest
thereon remaining unpaid from any previous Distribution Date; and

               (ii) to the extent of amounts  remaining after the  distributions
made  pursuant  to clause (i) above,  allocated  as follows:  (A) first,  to the
Holders of REMIC II Regular  Interest  LT-III- AP, an amount equal to the amount
deemed   distributed  in  respect  of  the   Corresponding   Interest  for  such
Distribution  Date, and (B) thereafter,  any remaining  principal from the Group
III Available Distribution Amount to REMIC II Regular Interest LT-IIIA until the
Uncertificated Principal Balance of such REMIC II Regular Interest is reduced to
zero.

        (d) On each Distribution Date, the following  amounts,  in the following
order of priority, to the extent of the Available Distribution Amount reduced by
distributions made to the Class R-III Certificates  pursuant to Section 4.02(a),
shall be deemed distributed by REMIC III to REMIC IV on account of the REMIC III
Regular Interests:

               (i)  Uncertificated  Accrued  Interest  on the REMIC III  Regular
Interests for such Distribution Date, plus any  Uncertificated  Accrued Interest
thereon remaining unpaid from any previous Distribution Date; and

               (ii) an amount  equal to the sum of the  amounts  in  respect  of
principal  distributed  on account of the  Certificates  (other than the Class R
Certificates)  for such  Distribution  Date shall be deemed  distributed  on the
REMIC III Regular  Interests in  accordance  with the  priority  assigned to the
Corresponding  Certificates,  until the Uncertificated Principal Balance of each
such REMIC III Regular Interest is reduced to zero.

        (e) Notwithstanding the deemed distributions on the Uncertificated REMIC
I Regular  Interests,  the  Uncertificated  REMIC II Regular  Interests  and the
Uncertificated  REMIC III Regular  Interests  described  in this  Section  4.08,
distributions  of  funds  from the  Certificate  Account  shall be made  only in
accordance with Section 4.02.

                                             115

<PAGE>

                                             116

<PAGE>

                                    ARTICLE V

                                THE CERTIFICATES

        Section  5.01 The Certificates.

        (a) The Class A Certificates, Class M Certificates, Class B Certificates
and  Class R  Certificates  shall be  substantially  in the  forms  set forth in
Exhibits A, B, C and D, respectively,  and shall, on original issue, be executed
and delivered by the Trustee to the Certificate Registrar for authentication and
delivery to or upon the order of the  Depositor  upon  receipt by the Trustee or
one or more  Custodians of the documents  specified in Section 2.01. The Class A
(other  than the  Interest  Only  Certificates),  Class  M-1 and  Class  M-III-1
Certificates  shall be issuable in minimum dollar  denominations  of $25,000 and
integral multiples of $1 in excess thereof. The Class M-2, Class M- III-2, Class
M-3,  Class M-III-3,  Class B-1,  Class B-2,  Class B-3 , Class  B-III-1,  Class
B-III-2 and Class  B-III-3  Certificates  shall be  issuable  in minimum  dollar
denominations  of $250,000 and integral  multiples of $1 in excess thereof.  The
Class A-I-2,  Class AV-I,  Class  AV-II,  Class AV-III and each Class of Class R
Certificates  shall  be  issued  in  registered,  certificated  form in  minimum
percentage  interests  of  20.00%  and  integral  multiples  of 0.01% in  excess
thereof;  provided,  however, that one Class R Certificate of each Class will be
issuable to the REMIC  Administrator as "tax matters person" pursuant to Section
10.01(c) in a minimum  denomination  representing  a Percentage  Interest of not
less than 0.01%.

        The Certificates  shall be executed by manual or facsimile  signature on
behalf of an authorized officer of the Trustee.  Certificates bearing the manual
or facsimile  signatures of individuals who were at any time the proper officers
of the Trustee shall bind the Trustee,  notwithstanding that such individuals or
any of them have ceased to hold such  offices  prior to the  authentication  and
delivery of such  Certificate  or did not hold such  offices at the date of such
Certificates.  No  Certificate  shall be  entitled  to any  benefit  under  this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of  authentication  substantially  in the form provided for herein
executed by the Certificate Registrar by manual signature,  and such certificate
upon any Certificate shall be conclusive evidence,  and the only evidence,  that
such  Certificate  has been duly  authenticated  and  delivered  hereunder.  All
Certificates shall be dated the date of their authentication.

        (b) The Class A and Class M  Certificates  shall  initially be issued as
one or more Certificates registered in the name of the Depository or its nominee
and, except as provided  below,  registration  of such  Certificates  may not be
transferred by the Trustee except to another Depository that agrees to hold such
Certificates  for the respective  Certificate  Owners with  Ownership  Interests
therein.  The Certificate Owners shall hold their respective Ownership Interests
in and to each Class A or Class M Certificate, through the book-entry facilities
of the  Depository  and,  except as  provided  below,  shall not be  entitled to
Definitive Certificates in respect of such Ownership Interests. All transfers by
Certificate  Owners of their  respective  Ownership  Interests in the Book-Entry
Certificates shall be made in accordance with the procedures  established by the
Depository Participant or

                                             117

<PAGE>

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

        The Trustee,  the Master Servicer and the Depositor may for all purposes
(including  the making of payments due on the  respective  Classes of Book-Entry
Certificates)  deal with the Depository as the authorized  representative of the
Certificate  Owners  with  respect  to  the  respective  Classes  of  Book-Entry
Certificates  for the purposes of  exercising  the rights of  Certificateholders
hereunder.  The rights of  Certificate  Owners  with  respect to the  respective
Classes of Book-Entry  Certificates shall be limited to those established by law
and agreements between such Certificate  Owners and the Depository  Participants
and brokerage firms representing such Certificate Owners.  Multiple requests and
directions  from,  and votes of, the  Depository as Holder of any Class of Book-
Entry  Certificates  with respect to any  particular  matter shall not be deemed
inconsistent if they are made with respect to different  Certificate Owners. The
Trustee may establish a reasonable record date in connection with  solicitations
of consents  from or voting by  Certificateholders  and shall give notice to the
Depository of such record date.

        If  (i)(A)  the  Depositor  advises  the  Trustee  in  writing  that the
Depository   is  no  longer   willing  or  able  to   properly   discharge   its
responsibilities  as  Depository  and (B) the  Depositor  is  unable to locate a
qualified  successor or (ii) the Depositor at its option  advises the Trustee in
writing  that  it  elects  to  terminate  the  book-entry   system  through  the
Depository,  the  Trustee  shall  notify all  Certificate  Owners,  through  the
Depository,  of the  occurrence  of any such  event and of the  availability  of
Definitive   Certificates  to  Certificate  Owners  requesting  the  same.  Upon
surrender  to the  Trustee of the  Book-Entry  Certificates  by the  Depository,
accompanied by registration instructions from the Depository for registration of
transfer,  the Trustee  shall  issue the  Definitive  Certificates.  Neither the
Depositor,  the Master  Servicer nor the Trustee shall be liable for any actions
taken by the Depository or its nominee, including, without limitation, any delay
in  delivery of such  instructions  and may  conclusively  rely on, and shall be
protected  in relying on, such  instructions.  Upon the  issuance of  Definitive
Certificates  all  references  herein  to  obligations  imposed  upon  or  to be
performed by the  Depositor in  connection  with the issuance of the  Definitive
Certificates  pursuant to this  Section  5.01 shall be deemed to be imposed upon
and  performed by the  Trustee,  and the Trustee and the Master  Servicer  shall
recognize  the  Holders of the  Definitive  Certificates  as  Certificateholders
hereunder.

        (c) Each of the Certificates is intended to be a "security"  governed by
Article 8 of the Uniform  Commercial  Code as in effect in the State of New York
and any other applicable  jurisdiction,  to the extent that any of such laws may
be applicable.

                                             118

<PAGE>

        Section  5.02 Registration of Transfer and Exchange of Certificates.
                      -----------------------------------------------------

        (a) The Trustee shall cause to be kept at one of the offices or agencies
to be appointed by the Trustee in accordance with the provisions of Section 8.12
a Certificate  Register in which,  subject to such reasonable  regulations as it
may prescribe,  the Trustee shall provide for the  registration  of Certificates
and of transfers and exchanges of Certificates as herein  provided.  The Trustee
is initially  appointed  Certificate  Registrar  for the purpose of  registering
Certificates and transfers and exchanges of Certificates as herein provided. The
Certificate Registrar,  or the Trustee, shall provide the Master Servicer with a
certified list of Certificateholders as of each Record Date prior to the related
Determination Date.

        (b) Upon surrender for  registration  of transfer of any  Certificate at
any office or agency of the  Trustee  maintained  for such  purpose  pursuant to
Section 8.12 and, in the case of any Class R Certificate,  upon  satisfaction of
the  conditions set forth below,  the Trustee shall execute and the  Certificate
Registrar  shall  authenticate  and  deliver,  in the  name  of  the  designated
transferee  or  transferees,  one or more new  Certificates  of a like Class and
aggregate Percentage Interest.

        (c)  At  the  option  of  the  Certificateholders,  Certificates  may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate  Percentage  Interest,  upon  surrender  of  the  Certificates  to  be
exchanged  at any such  office  or  agency.  Whenever  any  Certificates  are so
surrendered for exchange the Trustee shall execute and the Certificate Registrar
shall  authenticate  and  deliver  the  Certificates  of such  Class  which  the
Certificateholder  making the exchange is entitled to receive. Every Certificate
presented or  surrendered  for transfer or exchange shall (if so required by the
Trustee or the Certificate  Registrar) be duly endorsed by, or be accompanied by
a written  instrument  of transfer in form  satisfactory  to the Trustee and the
Certificate  Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.

        (d) No  transfer,  sale,  pledge  or  other  disposition  of a  Class  B
Certificate  shall  be  made  unless  such  transfer,   sale,  pledge  or  other
disposition is exempt from the  registration  requirements of the Securities Act
of 1933, as amended (the "1933 Act"),  and any applicable  state securities laws
or is made in accordance with said Act and laws. Except as otherwise provided in
this Section  5.02(d),  in the event that a transfer of a Class B Certificate is
to be made, (i) unless the Depositor directs the Trustee otherwise,  the Trustee
shall  require  a  written  Opinion  of  Counsel  acceptable  to and in form and
substance  satisfactory  to the Trustee and the Depositor that such transfer may
be made pursuant to an exemption,  describing the  applicable  exemption and the
basis therefor, from said Act and laws or is being made pursuant to said Act and
laws, which Opinion of Counsel shall not be an expense of the Trustee, the Trust
Fund, the Depositor or the Master  Servicer,  and (ii) the Trustee shall require
the transferee to execute a representation letter,  substantially in the form of
Exhibit I hereto,  and the Trustee  shall  require the  transferor  to execute a
representation  letter,  substantially  in the form of  Exhibit J  hereto,  each
acceptable  to and in form and substance  satisfactory  to the Depositor and the
Trustee  certifying to the Depositor and the Trustee the facts  surrounding such
transfer,  which representation  letters shall not be an expense of the Trustee,
the  Trust  Fund,  the  Depositor  or  the  Master  Servicer.  In  lieu  of  the
requirements set forth in the

                                             119

<PAGE>

preceding sentence,  transfers of Class B Certificates may be made in accordance
with this Section  5.02(d) if the  prospective  transferee of such a Certificate
provides  the  Trustee  and  the  Master  Servicer  with  an  investment  letter
substantially in the form of Exhibit N attached hereto,  which investment letter
shall not be an expense of the Trustee,  the Depositor,  or the Master Servicer,
and which investment letter states that, among other things, such transferee (i)
is a "qualified  institutional buyer" as defined under Rule 144A, acting for its
own account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A, and (ii) is aware that the proposed  transferor intends to rely
on the exemption from registration  requirements  under the 1933 Act provided by
Rule 144A. The Holder of a Class B Certificate  desiring to effect any transfer,
sale, pledge or other disposition shall, and does hereby agree to, indemnify the
Trustee,  the  Depositor,  the Master  Servicer  and the  Certificate  Registrar
against any  liability  that may result if the transfer,  sale,  pledge or other
disposition is not so exempt or is not made in accordance  with such federal and
state laws and this Agreement.

        (e) (i) In the case of any Class B or Class R Certificate  presented for
registration in the name of any Person,  either (i) the Trustee shall require an
Opinion of Counsel  acceptable to and in form and substance  satisfactory to the
Trustee,  the Depositor and the Master  Servicer to the effect that the purchase
or  holding  of  such  Class B or  Class  R  Certificate  is  permissible  under
applicable  law,  will not  constitute  or result in any  non-exempt  prohibited
transaction  under  Section  406 of  ERISA,  or  Section  4975 of the  Code  (or
comparable  provisions of any subsequent  enactments),  and will not subject the
Trustee,  the  Depositor or the Master  Servicer to any  obligation or liability
(including  obligations or liabilities  under ERISA or Section 4975 of the Code)
in addition to those  undertaken  in this  Agreement,  which  Opinion of Counsel
shall not be an expense of the Trustee,  the Depositor or the Master Servicer or
(ii) the prospective  transferee  shall be required to provide the Trustee,  the
Depositor and the Master Servicer with a  certification  to the effect set forth
in Exhibit O (with respect to a Class B Certificate),  or in paragraph  fourteen
of Exhibit H-1 (with  respect to a Class R  Certificate),  which the Trustee may
rely upon without further inquiry or investigation, or such other certifications
as the Trustee may deem  desirable or necessary in order to establish  that such
transferee or the Person in whose name such registration is requested either (a)
is not an  employee  benefit  plan  or  other  plan  subject  to the  prohibited
transaction  provisions  of ERISA or  Section  4975 of the Code,  or any  Person
(including an insurance company  investing its general  accounts,  an investment
manager,  a named  fiduciary  or a trustee of any such plan) who is using  "plan
assets" of any such plan to effect such acquisition (each, a "Plan Investor") or
(b) in  the  case  of a  Class  B  Certificate,  the  following  conditions  are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company  general  account" (as defined in U.S.  Department  of Labor  Prohibited
Transaction  Class Exemption  ("PTCE") 95-60, and (iii) the conditions set forth
in  Sections I and III of PTCE  95-60  have been  satisfied  (each  entity  that
satisfies this clause (b), a "Complying Insurance Company").

        (f) Any  Transferee  of a Class M  Certificate  will be  deemed  to have
represented  by  virtue of its  purchase  or  holding  of such  Certificate  (or
interest therein) that either (a) such Transferee is not a Plan Investor, (b) it
has acquired and is holding such Certificate in reliance on Prohibited

                                             120

<PAGE>

Transaction  Exemption  ("PTE") 94-29,  59 Fed. Reg. 14674 (March 29, 1994),  as
amended by PTE 97-34,  62 Fed. Reg. 39021 (July 21, 1997),  and PTE 2000-58,  65
Fed. Reg. 67765  (November 13, 2000) and PTE 2002-41,  67 Fed Reg. 54487 (August
22, 2002) (the "RFC Exemption"),  and that it understands that there are certain
conditions  to the  availability  of  the  RFC  Exemption  including  that  such
Certificate  must be rated,  at the time of purchase,  not lower than "BBB-" (or
its equivalent) by Standard & Poor's, Fitch or Moody's or (c) such Transferee is
a Complying Insurance Company.

        (g) (A) If any Class M Certificate (or any interest therein) is acquired
or held by any  Person  that  does  not  satisfy  the  conditions  described  in
paragraph (ii) above, then the last preceding  Transferee that either (i) is not
a Plan  Investor,  (ii) acquired  such  Certificate  in compliance  with the RFC
Exemption,  or (iii) is a Complying Insurance Company shall be restored,  to the
extent  permitted by law, to all rights and  obligations  as  Certificate  Owner
thereof  retroactive  to the date of such Transfer of such Class M  Certificate.
The Trustee  shall be under no  liability  to any Person for making any payments
due on such Certificate to such preceding Transferee.

        (B) Any purported  Certificate Owner whose acquisition or holding of any
Class M  Certificate  (or  interest  therein)  was  effected in violation of the
restrictions  in this Section  5.02(e)  shall  indemnify  and hold  harmless the
Company, the Trustee, the Master Servicer,  any Subservicer,  and the Trust Fund
from and against any and all liabilities,  claims, costs or expenses incurred by
such parties as a result of such acquisition or holding.

        (h) (i) Each Person who has or who acquires any Ownership  Interest in a
Class R Certificate  shall be deemed by the  acceptance or  acquisition  of such
Ownership Interest to have agreed to be bound by the following provisions and to
have  irrevocably  authorized the Trustee or its designee under clause  (iii)(A)
below to deliver  payments to a Person  other than such Person and to  negotiate
the terms of any mandatory  sale under clause  (iii)(B) below and to execute all
instruments of transfer and to do all other things  necessary in connection with
any such sale. The rights of each Person  acquiring any Ownership  Interest in a
Class R Certificate are expressly subject to the following provisions:

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

                      (B)  In  connection  with  any  proposed  Transfer  of any
               Ownership  Interest in a Class R  Certificate,  the Trustee shall
               require  delivery to it, and shall not  register  the Transfer of
               any Class R  Certificate  until its receipt of, (I) an  affidavit
               and agreement (a "Transfer  Affidavit and Agreement," in the form
               attached hereto as Exhibit H-1) from the proposed Transferee,  in
               form  and  substance   satisfactory   to  the  Master   Servicer,
               representing  and  warranting,  among other things,  that it is a
               Permitted  Transferee,  that it is not  acquiring  its  Ownership
               Interest  in the Class R  Certificate  that is the subject of the
               proposed  Transfer as a nominee,  trustee or agent for any Person
               who is not a Permitted Transferee, that for so long as it retains
               its

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               Ownership Interest in a Class R Certificate,  it will endeavor to
               remain  a  Permitted  Transferee,  and that it has  reviewed  the
               provisions  of this  Section  5.02(f)  and  agrees to be bound by
               them,  and (II) a  certificate,  in the form  attached  hereto as
               Exhibit  H-2,  from the Holder  wishing to  transfer  the Class R
               Certificate,  in form and  substance  satisfactory  to the Master
               Servicer,  representing and warranting,  among other things, that
               no purpose of the proposed  Transfer is to impede the  assessment
               or collection of tax.

                      (C)  Notwithstanding  the delivery of a Transfer Affidavit
               and Agreement by a proposed Transferee under clause (B) above, if
               a  Responsible  Officer of the  Trustee  who is  assigned to this
               Agreement has actual  knowledge  that the proposed  Transferee is
               not a Permitted Transferee,  no Transfer of an Ownership Interest
               in a Class R  Certificate  to such proposed  Transferee  shall be
               effected.

                      (D)  Each  Person   holding  or  acquiring  any  Ownership
               Interest  in a Class R  Certificate  shall agree (x) to require a
               Transfer  Affidavit and  Agreement  from any other Person to whom
               such  Person  attempts to transfer  its  Ownership  Interest in a
               Class  R  Certificate  and  (y)  not to  transfer  its  Ownership
               Interest  unless it provides a certificate  to the Trustee in the
               form attached hereto as Exhibit H-2.

                      (E) Each Person holding or acquiring an Ownership Interest
               in a Class R Certificate,  by purchasing an Ownership Interest in
               such Certificate,  agrees to give the Trustee written notice that
               it is a "pass-  through  interest  holder"  within the meaning of
               Temporary  Treasury   Regulations   Section   1.67-3T(a)(2)(i)(A)
               immediately  upon  acquiring an  Ownership  Interest in a Class R
               Certificate,  if it is, or is holding an Ownership  Interest in a
               Class R  Certificate  on  behalf  of, a "pass-  through  interest
               holder."

               (ii) The  Trustee  will  register  the  Transfer  of any  Class R
        Certificate  only if it shall have  received the Transfer  Affidavit and
        Agreement,  a certificate of the Holder  requesting such transfer in the
        form attached  hereto as Exhibit H-2 and all of such other  documents as
        shall have been  reasonably  required by the  Trustee as a condition  to
        such  registration.  Transfers of the Class R Certificates to Non-United
        States  Persons and  Disqualified  Organizations  (as defined in Section
        860E(e)(5) of the Code) are prohibited.

               (iii) If any Disqualified Organization shall become a holder of a
        Class R Certificate,  then the last preceding Permitted Transferee shall
        be  restored,  to  the  extent  permitted  by  law,  to all  rights  and
        obligations as Holder thereof retroactive to the date of registration of
        such Transfer of such Class R Certificate. If a Non-United States Person
        shall become a holder of a Class R Certificate,  then the last preceding
        United States Person shall be restored,  to the extent permitted by law,
        to all rights and obligations as Holder thereof  retroactive to the date
        of  registration  of such  Transfer  of such Class R  Certificate.  If a
        transfer  of a  Class  R  Certificate  is  disregarded  pursuant  to the
        provisions of Treasury

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<PAGE>

        Regulations  Section  1.860E-1  or  Section  1.860G-3,   then  the  last
        preceding  Permitted  Transferee  shall  be  restored,   to  the  extent
        permitted  by law,  to all  rights  and  obligations  as Holder  thereof
        retroactive to the date of registration of such Transfer of such Class R
        Certificate.  The Trustee  shall be under no liability to any Person for
        any  registration  of Transfer of a Class R Certificate  that is in fact
        not permitted by this Section  5.02(f) or for making any payments due on
        such  Certificate  to the holder  thereof or for taking any other action
        with respect to such holder under the provisions of this Agreement.

               (iv) If any purported Transferee shall become a Holder of a Class
        R Certificate in violation of the  restrictions  in this Section 5.02(f)
        and to the extent that the retroactive  restoration of the rights of the
        Holder of such Class R Certificate as described in clause (iii)(A) above
        shall be invalid,  illegal or  unenforceable,  then the Master  Servicer
        shall have the right,  without  notice to the holder or any prior holder
        of such  Class R  Certificate,  to sell such  Class R  Certificate  to a
        purchaser  selected  by the Master  Servicer on such terms as the Master
        Servicer may choose.  Such purported  Transferee  shall promptly endorse
        and deliver each Class R Certificate in accordance with the instructions
        of the Master Servicer. Such purchaser may be the Master Servicer itself
        or any Affiliate of the Master Servicer.  The proceeds of such sale, net
        of the commissions (which may include  commissions payable to the Master
        Servicer or its  Affiliates),  expenses  and taxes due, if any,  will be
        remitted by the Master Servicer to such purported Transferee.  The terms
        and  conditions  of  any  sale  under  this  clause  (iii)(B)  shall  be
        determined in the sole discretion of the Master Servicer, and the Master
        Servicer shall not be liable to any Person having an Ownership  Interest
        in a Class R Certificate as a result of its exercise of such discretion.

               (v) The Master  Servicer,  on behalf of the  Trustee,  shall make
        available,  upon  written  request  from the  Trustee,  all  information
        necessary  to compute any tax imposed (A) as a result of the Transfer of
        an Ownership  Interest in a Class R  Certificate  to any Person who is a
        Disqualified  Organization,  including the information regarding "excess
        inclusions" of such Class R Certificates  required to be provided to the
        Internal  Revenue  Service and certain  Persons as described in Treasury
        Regulations  Sections  1.860D-1(b)(5) and 1.860E- 2(a)(5),  and (B) as a
        result of any  regulated  investment  company,  real  estate  investment
        trust,  common trust fund,  partnership,  trust,  estate or organization
        described in Section  1381 of the Code that holds an Ownership  Interest
        in a Class R Certificate  having as among its record holders at any time
        any Person who is a Disqualified  Organization.  Reasonable compensation
        for providing such  information  may be required by the Master  Servicer
        from such Person.

               (vi) The  provisions  of this Section  5.02(f) set forth prior to
        this clause (v) may be modified,  added to or eliminated,  provided that
        there shall have been delivered to the Trustee the following:

                      (A) Written  notification  from each Rating  Agency to the
               effect that the modification,  addition to or elimination of such
               provisions will not cause such Rating

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<PAGE>

               Agency to  downgrade  its  then-current  ratings,  if any, of the
               Class A, Class M or Class B  Certificates  below the lower of the
               then-current  rating or the rating assigned to such  Certificates
               as of the Closing Date by such Rating Agency; and

                      (B) A certificate of the Master Servicer  stating that the
               Master  Servicer has received an Opinion of Counsel,  in form and
               substance satisfactory to the Master Servicer, to the effect that
               such modification, addition to or absence of such provisions will
               not  cause  any of REMIC I,  REMIC  II,  REMIC III or REMIC IV to
               cease to  qualify  as a REMIC and will not cause (x) any of REMIC
               I,  REMIC  II,  REMIC  III  or  REMIC  IV  to  be  subject  to an
               entity-level   tax  caused  by  the   Transfer  of  any  Class  R
               Certificate  to a Person that is a Disqualified  Organization  or
               (y) a  Certificateholder  or  another  Person to be  subject to a
               REMIC-related tax caused by the Transfer of a Class R Certificate
               to a Person that is not a Permitted Transferee.

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

        (j) All  Certificates  surrendered  for transfer  and exchange  shall be
destroyed by the Certificate Registrar.

        Section  5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
                      -------------------------------------------------

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

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        Section  5.04 Persons Deemed Owners.

        Prior to due presentation of a Certificate for registration of transfer,
the Depositor,  the Master Servicer,  the Trustee, the Certificate Registrar and
any agent of the Depositor,  the Master Servicer, the Trustee or the Certificate
Registrar  may treat the Person in whose name any  Certificate  is registered as
the  owner  of such  Certificate  for the  purpose  of  receiving  distributions
pursuant to Section 4.02 and for all other purposes whatsoever, except as and to
the extent  provided in the  definition  of  "Certificateholder"  and in Section
4.08,  and  neither  the  Depositor,  the  Master  Servicer,  the  Trustee,  the
Certificate Registrar nor any agent of the Depositor,  the Master Servicer,  the
Trustee or the Certificate Registrar shall be affected by notice to the contrary
except as provided in Section 5.02(f).

        Section  5.05 Appointment of Paying Agent.

        The  Trustee  may  appoint  a Paying  Agent  for the  purpose  of making
distributions  to  Certificateholders  pursuant to Section 4.02. In the event of
any such appointment,  on or prior to each Distribution Date the Master Servicer
on behalf of the Trustee shall deposit or cause to be deposited  with the Paying
Agent a sum sufficient to make the payments to Certificateholders in the amounts
and in the manner  provided for in Section 4.02 and 4.03, such sum to be held in
trust for the benefit of Certificateholders.

        The Trustee  shall cause each Paying Agent to execute and deliver to the
Trustee an  instrument  in which such Paying  Agent shall agree with the Trustee
that  such  Paying  Agent  will  hold all  sums  held by it for the  payment  to
Certificateholders in trust for the benefit of the  Certificateholders  entitled
thereto  until such sums shall be paid to such  Certificateholders.  Any sums so
held by such Paying Agent shall be held only in Eligible  Accounts to the extent
such sums are not distributed to the  Certificateholders  on the date of receipt
by such Paying Agent.

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                                          ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

Section 6.01 Respective Liabilities of the Depositor and the Master Servicer.

        The Depositor and the Master Servicer shall each be liable in accordance
herewith only to the extent of the  obligations  specifically  and  respectively
imposed upon and undertaken by the Depositor and the Master Servicer herein.  By
way of  illustration  and not  limitation,  the  Depositor is not liable for the
servicing  and  administration  of the  Mortgage  Loans,  nor is it obligated by
Section  7.01 or 10.01 to assume any  obligations  of the Master  Servicer or to
appoint a designee  to assume such  obligations,  nor is it liable for any other
obligation  hereunder  that it may, but is not  obligated  to,  assume unless it
elects to assume such obligation in accordance herewith.

        Section       6.02  Merger  or  Consolidation  of the  Depositor  or the
                      Master  Servicer;  Assignment of Rights and  Delegation of
                      Duties by Master Servicer.

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

        (b) Any Person into which the  Depositor  or the Master  Servicer may be
merged  or  consolidated,  or any  corporation  resulting  from  any  merger  or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person  succeeding to the business of the Depositor or the Master  Servicer,
shall be the successor of the Depositor or the Master Servicer,  as the case may
be,  hereunder,  without the execution or filing of any paper or any further act
on the  part of any of the  parties  hereto,  anything  herein  to the  contrary
notwithstanding;  provided,  however,  that the successor or surviving Person to
the Master  Servicer  shall be qualified to service  mortgage loans on behalf of
Fannie Mae or Freddie  Mac;  and  provided  further  that each  Rating  Agency's
ratings,  if any, of the Class A, Class R, Class M or Class B Certificates  will
not be  qualified,  reduced or withdrawn as a result  thereof (as evidenced by a
letter to such effect from each Rating Agency).

        (c) Notwithstanding  anything else in this Section 6.02 and Section 6.04
to the  contrary,  the Master  Servicer  may assign its rights and  delegate its
duties and obligations under this Agreement;  provided that the Person accepting
such  assignment or  delegation  shall be a Person which is qualified to service
mortgage   loans  on  behalf  of  Fannie  Mae  or  Freddie  Mac,  is  reasonably
satisfactory  to the  Trustee  and the  Depositor,  is willing  to  service  the
Mortgage  Loans and executes and  delivers to the  Depositor  and the Trustee an
agreement,  in form and substance  reasonably  satisfactory to the Depositor and
the Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or

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<PAGE>

observed by the Master Servicer under this Agreement; provided further that each
Rating Agency's  rating of the Classes of  Certificates  that have been rated in
effect  immediately  prior  to  such  assignment  and  delegation  will  not  be
qualified,  reduced or withdrawn as a result of such  assignment  and delegation
(as evidenced by a letter to such effect from each Rating  Agency).  In the case
of any such  assignment and  delegation,  the Master  Servicer shall be released
from its obligations under this Agreement, except that the Master Servicer shall
remain  liable for all  liabilities  and  obligations  incurred  by it as Master
Servicer  hereunder  prior  to  the  satisfaction  of  the  conditions  to  such
assignment and delegation set forth in the next preceding sentence.

        Section  6.03  Limitation  on  Liability  of the  Depositor,  the Master
Servicer and Others.

        Neither the  Depositor,  the Master  Servicer nor any of the  directors,
officers,  employees or agents of the Depositor or the Master  Servicer shall be
under any liability to the Trust Fund or the  Certificateholders  for any action
taken or for refraining  from the taking of any action in good faith pursuant to
this  Agreement,  or for  errors  in  judgment;  provided,  however,  that  this
provision  shall not  protect  the  Depositor,  the Master  Servicer or any such
Person  against any breach of warranties or  representations  made herein or any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross  negligence in the performance of duties or by reason of reckless
disregard  of  obligations  and  duties  hereunder.  The  Depositor,  the Master
Servicer and any  director,  officer,  employee or agent of the Depositor or the
Master  Servicer  may rely in good faith on any document of any kind prima facie
properly  executed and submitted by any Person  respecting  any matters  arising
hereunder.  The  Depositor,  the  Master  Servicer  and any  director,  officer,
employee or agent of the Depositor or the Master  Servicer  shall be indemnified
by the Trust  Fund and held  harmless  against  any loss,  liability  or expense
incurred in connection  with any legal action  relating to this Agreement or the
Certificates,  other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage  Loans (except as any such loss,  liability or expense
shall be  otherwise  reimbursable  pursuant  to this  Agreement)  and any  loss,
liability  or expense  incurred by reason of willful  misfeasance,  bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.

        Neither  the  Depositor  nor the  Master  Servicer  shall be  under  any
obligation to appear in, prosecute or defend any legal or administrative action,
proceeding,  hearing or  examination  that is not  incidental to its  respective
duties  under this  Agreement  and which in its  opinion  may  involve it in any
expense  or  liability;  provided,  however,  that the  Depositor  or the Master
Servicer may in its discretion undertake any such action, proceeding, hearing or
examination that it may deem necessary or desirable in respect to this Agreement
and the  rights  and  duties of the  parties  hereto  and the  interests  of the
Certificateholders  hereunder.  In such event,  the legal  expenses and costs of
such action,  proceeding,  hearing or  examination  and any liability  resulting
therefrom  shall be expenses,  costs and  liabilities of the Trust Fund, and the
Depositor and the Master  Servicer  shall be entitled to be reimbursed  therefor
out of amounts  attributable  to the Mortgage  Loans on deposit in the Custodial
Account as provided by Section 3.10 and, on the Distribution  Date(s)  following
such reimbursement,  the aggregate of such expenses and costs shall be allocated
in reduction of the Accrued Certificate  Interest on each Class entitled thereto
in the same manner as if such expenses

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<PAGE>

and costs constituted a Prepayment Interest Shortfall.

        Section  6.04 Depositor and Master Servicer Not to Resign.
                      -------------------------------------------

        Subject to the provisions of Section 6.02, neither the Depositor nor the
Master  Servicer shall resign from its respective  obligations and duties hereby
imposed on it except upon  determination that its duties hereunder are no longer
permissible  under  applicable  law.  Any  such  determination   permitting  the
resignation  of the  Depositor or the Master  Servicer  shall be evidenced by an
Opinion  of  Counsel  (at the  expense of the  resigning  party) to such  effect
delivered to the  Trustee.  No such  resignation  by the Master  Servicer  shall
become  effective  until the Trustee or a successor  servicer shall have assumed
the Master  Servicer's  responsibilities  and  obligations  in  accordance  with
Section 7.02.

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<PAGE>

                                   ARTICLE VII

                                     DEFAULT

        Section  7.01 Events of Default.

        Event of Default,  wherever used herein,  means any one of the following
events  (whatever  reason  for such  Event of  Default  and  whether it shall be
voluntary or  involuntary  or be effected by operation of law or pursuant to any
judgment,  decree or order of any court or any order,  rule or regulation of any
administrative or governmental body):

        (a)  the  Master  Servicer  shall  fail to  distribute  or  cause  to be
distributed to Holders of Certificates of any Class any distribution required to
be made under the terms of the  Certificates  of such  Class and this  Agreement
and, in either case,  such failure shall  continue  unremedied for a period of 5
days after the date upon which written  notice of such failure,  requiring  such
failure to be  remedied,  shall have been  given to the Master  Servicer  by the
Trustee  or the  Depositor  or to the Master  Servicer,  the  Depositor  and the
Trustee by the  Holders of  Certificates  of such  Class  evidencing  Percentage
Interests aggregating not less than 25%; or

               (i) the Master  Servicer  shall fail to observe or perform in any
        material respect any other of the covenants or agreements on the part of
        the Master  Servicer  contained in the  Certificates  of any Class or in
        this Agreement and such failure shall  continue  unremedied for a period
        of 30 days (except that such number of days shall be 15 in the case of a
        failure to pay the premium for any Required  Insurance Policy) after the
        date on which written  notice of such failure,  requiring the same to be
        remedied, shall have been given to the Master Servicer by the Trustee or
        the Depositor,  or to the Master Servicer, the Depositor and the Trustee
        by the  Holders  of  Certificates  of any Class  evidencing,  as to such
        Class, Percentage Interests aggregating not less than 25%; or

               (ii) a  decree  or  order of a court  or  agency  or  supervisory
        authority  having  jurisdiction  in the premises in an involuntary  case
        under any present or future federal or state  bankruptcy,  insolvency or
        similar law or appointing a conservator or receiver or liquidator in any
        insolvency,  readjustment of debt, marshalling of assets and liabilities
        or similar  proceedings,  or for the  winding-up or  liquidation  of its
        affairs,  shall have been entered  against the Master  Servicer and such
        decree or order shall have  remained in force  undischarged  or unstayed
        for a period of 60 days; or

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

               (iv) the Master  Servicer shall admit in writing its inability to
        pay its debts

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<PAGE>

        generally as they become due,  file a petition to take  advantage of, or
        commence  a  voluntary  case  under,   any   applicable   insolvency  or
        reorganization  statute,  make  an  assignment  for the  benefit  of its
        creditors, or voluntarily suspend payment of its obligations; or

               (v) the Master  Servicer  shall  notify the  Trustee  pursuant to
        Section 4.04(b) that it is unable to deposit in the Certificate  Account
        an amount equal to the Advance.

        If an Event of  Default  described  in clauses  (i)-(v) of this  Section
shall  occur,  then,  and in each and every such case,  so long as such Event of
Default shall not have been remedied,  either the Depositor or the Trustee shall
at the  direction  of Holders of  Certificates  entitled  to at least 51% of the
Voting Rights, by notice in writing to the Master Servicer (and to the Depositor
if given by the Trustee or to the Trustee if given by the Depositor),  terminate
all of the rights and  obligations  of the Master  Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof, other than its rights
as a Certificateholder hereunder; provided, however, the successor to the Master
Servicer  appointed  pursuant to Section 7.02 shall have  accepted the duties of
Master  Servicer  effective upon the resignation of the Master  Servicer.  If an
Event of Default  described in clause (v) hereof shall occur, the Trustee shall,
by notice to the Master Servicer and the Depositor, immediately terminate all of
the rights and  obligations  of the Master  Servicer under this Agreement and in
and to the Mortgage Loans and the proceeds  thereof,  other than its rights as a
Certificateholder  hereunder  as  provided in Section  4.04(b).  On or after the
receipt by the Master Servicer of such written  notice,  all authority and power
of the  Master  Servicer  under  this  Agreement,  whether  with  respect to the
Certificates  (other  than  as a  Holder  thereof)  or  the  Mortgage  Loans  or
otherwise, shall subject to Section 7.02 pass to and be vested in the Trustee or
the  Trustee's  designee  appointed  pursuant  to  Section  7.02;  and,  without
limitation,  the  Trustee is hereby  authorized  and  empowered  to execute  and
deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments,  and to do or accomplish all other acts
or things  necessary  or  appropriate  to effect the  purposes of such notice of
termination,  whether to complete the transfer and  endorsement or assignment of
the Mortgage  Loans and related  documents,  or otherwise.  The Master  Servicer
agrees to cooperate with the Trustee in effecting the  termination of the Master
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee or its designee for administration by it of all cash
amounts  which  shall at the time be credited  to the  Custodial  Account or the
Certificate  Account or  thereafter  be received  with  respect to the  Mortgage
Loans. No such  termination  shall release the Master Servicer for any liability
that it would  otherwise  have  hereunder  for any act or omission  prior to the
effective time of such termination.

        Notwithstanding any termination of the activities of Residential Funding
in its  capacity as Master  Servicer  hereunder,  Residential  Funding  shall be
entitled  to  receive,  out of any late  collection  of a Monthly  Payment  on a
Mortgage  Loan  which  was  due  prior  to the  notice  terminating  Residential
Funding's rights and obligations as Master Servicer hereunder and received after
such notice,  that portion to which Residential Funding would have been entitled
pursuant to Sections 3.10(a)(ii), (vi) and (vii) as well as its Servicing Fee in
respect thereof,  and any other amounts payable to Residential Funding hereunder
the  entitlement  to which  arose  prior to the  termination  of its  activities
hereunder.  Upon the  termination  of  Residential  Funding  as Master  Servicer
hereunder the Depositor shall

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deliver to the Trustee a copy of the Program Guide.

        Section  7.02 Trustee or Depositor to Act; Appointment of Successor.
                      -----------------------------------------------------

        (a) On and  after  the time the  Master  Servicer  receives  a notice of
termination pursuant to Section 7.01 or resigns in accordance with Section 6.04,
the Trustee or, upon notice to the  Depositor and with the  Depositor's  consent
(which shall not be unreasonably withheld) a designee (which meets the standards
set forth below) of the Trustee,  shall be the  successor in all respects to the
Master  Servicer  in its  capacity  as  servicer  under this  Agreement  and the
transactions  set forth or  provided  for herein and shall be subject to all the
responsibilities,  duties and liabilities  relating thereto placed on the Master
Servicer (except for the  responsibilities,  duties and liabilities contained in
Sections 2.02 and 2.03(a),  excluding the duty to notify related Subservicers as
set forth in such Sections, and its obligations to deposit amounts in respect of
losses  incurred  prior to such notice or termination on the investment of funds
in the Custodial Account or the Certificate Account pursuant to Sections 3.07(c)
and 4.01(c) by the terms and provisions  hereof);  provided,  however,  that any
failure to  perform  such  duties or  responsibilities  caused by the  preceding
Master Servicer's failure to provide information  required by Section 4.04 shall
not be considered a default by the Trustee hereunder.  As compensation therefor,
the Trustee shall be entitled to all funds  relating to the Mortgage Loans which
the Master Servicer would have been entitled to charge to the Custodial  Account
or the Certificate Account if the Master Servicer had continued to act hereunder
and, in addition, shall be entitled to the income from any Permitted Investments
made with  amounts  attributable  to the  Mortgage  Loans held in the  Custodial
Account or the Certificate  Account.  If the Trustee has become the successor to
the Master  Servicer in  accordance  with  Section  6.04 or Section  7.01,  then
notwithstanding  the above, the Trustee may, if it shall be unwilling to so act,
or shall, if it is unable to so act,  appoint,  or petition a court of competent
jurisdiction to appoint,  any established housing and home finance  institution,
which  is  also  a  Fannie  Mae  or  Freddie  Mac-approved   mortgage  servicing
institution, having a net worth of not less than $10,000,000 as the successor to
the  Master  Servicer  hereunder  in the  assumption  of all or any  part of the
responsibilities,  duties  or  liabilities  of the  Master  Servicer  hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall become  successor to the Master Servicer and shall act in such capacity as
hereinabove  provided.  In connection with such appointment and assumption,  the
Trustee may make such arrangements for the compensation of such successor out of
payments on  Mortgage  Loans as it and such  successor  shall  agree;  provided,
however,  that no such  compensation  shall be in excess of that  permitted  the
initial Master Servicer hereunder. The Depositor, the Trustee, the Custodian and
such successor shall take such action,  consistent with this Agreement, as shall
be  necessary to  effectuate  any such  succession.  The  Servicing  Fee for any
successor  Master  Servicer  appointed  pursuant  to this  Section  7.02 will be
lowered with respect to those Mortgage Loans, if any, where the Subservicing Fee
accrues at a rate of less than  0.50% per annum in the event that the  successor
Master  Servicer  is  not  servicing  such  Mortgage  Loans  directly  and it is
necessary to raise the related  Subservicing Fee to a rate of 0.50% per annum in
order to hire a Subservicer with respect to such Mortgage Loans.

        (b) In connection  with the  termination  or  resignation  of the Master
Servicer hereunder,

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<PAGE>

either (i) the successor Master  Servicer,  including the Trustee if the Trustee
is acting as successor Master Servicer, shall represent and warrant that it is a
member  of MERS in good  standing  and shall  agree to  comply  in all  material
respects with the rules and procedures of MERS in connection  with the servicing
of the  Mortgage  Loans  that  are  registered  with  MERS,  in  which  case the
predecessor  Master Servicer shall cooperate with the successor  Master Servicer
in causing  MERS to revise its records to reflect the  transfer of  servicing to
the successor Master Servicer as necessary under MERS' rules and regulations, or
(ii) the predecessor  Master Servicer shall cooperate with the successor  Master
Servicer in causing  MERS to execute and  deliver an  assignment  of Mortgage in
recordable form to transfer the Mortgage from MERS to the Trustee and to execute
and  deliver  such other  notices,  documents  and other  instruments  as may be
necessary or desirable to effect a transfer of such  Mortgage  Loan or servicing
of such Mortgage Loan on the MERS(R)  System to the successor  Master  Servicer.
The  predecessor  Master  Servicer  shall  file or cause  to be  filed  any such
assignment in the appropriate  recording office. The predecessor Master Servicer
shall  bear any and all fees of MERS,  costs of  preparing  any  assignments  of
Mortgage,  and fees and costs of filing any  assignments of Mortgage that may be
required under this  subsection  (b). The successor  Master Servicer shall cause
such  assignment to be delivered to the Trustee or the  Custodian  promptly upon
receipt of the original with evidence of recording  thereon or a copy  certified
by the public recording office in which such assignment was recorded.

        Section  7.03 Notification to Certificateholders.
                      ----------------------------------

        (a) Upon any such  termination  or  appointment  of a  successor  to the
Master  Servicer,  the Trustee shall give prompt  written  notice thereof to the
Certificateholders  at their respective  addresses  appearing in the Certificate
Register.

        (b) Within 60 days after the  occurrence  of any Event of  Default,  the
Trustee  shall  transmit by mail to all Holders of  Certificates  notice of each
such Event of  Default  hereunder  known to the  Trustee,  unless  such Event of
Default shall have been cured or waived as provided in Section 7.04 hereof.

        Section  7.04 Waiver of Events of Default.

        The  Holders   representing  at  least  66%  of  the  Voting  Rights  of
Certificates  affected by a default or Event of Default  hereunder may waive any
default or Event of Default;  provided,  however, that (a) a default or Event of
Default  under  clause  (i) of  Section  7.01 may be  waived  only by all of the
Holders of Certificates  affected by such default or Event of Default and (b) no
waiver pursuant to this Section 7.04 shall affect the Holders of Certificates in
the manner set forth in Section 11.01(b)(i), (ii) or (iii). Upon any such waiver
of a default or Event of  Default  by the  Holders  representing  the  requisite
percentage of Voting Rights of Certificates affected by such default or Event of
Default,  such  default  or Event of Default  shall  cease to exist and shall be
deemed to have been remedied for every purpose  hereunder.  No such waiver shall
extend to any  subsequent  or other  default  or Event of  Default or impair any
right consequent thereon except to the extent expressly so waived.

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                                         ARTICLE VIII

                                    CONCERNING THE TRUSTEE

        Section  8.01 Duties of Trustee.

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

        (b)  The  Trustee,  upon  receipt  of  all  resolutions,   certificates,
statements,  opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically  required to be furnished  pursuant to any
provision  of this  Agreement,  shall  examine  them to  determine  whether they
conform to the  requirements  of this  Agreement.  The Trustee  shall notify the
Certificateholders  of any such documents which do not materially conform to the
requirements  of  this  Agreement  in the  event  that  the  Trustee,  after  so
requesting, does not receive satisfactorily corrected documents.

        The Trustee shall  forward or cause to be forwarded in a timely  fashion
the  notices,  reports and  statements  required to be  forwarded by the Trustee
pursuant to Sections 4.03, 4.06, 7.03, and 10.01. The Trustee shall furnish in a
timely fashion to the Master  Servicer such  information as the Master  Servicer
may reasonably  request from time to time for the Master Servicer to fulfill its
duties as set forth in this Agreement.  The Trustee covenants and agrees that it
shall perform its obligations hereunder in a manner so as to maintain the status
of each of REMIC I, REMIC II,  REMIC III and REMIC IV as a REMIC under the REMIC
Provisions  and (subject to Section  10.01(f)) to prevent the  imposition of any
federal, state or local income,  prohibited  transaction,  contribution or other
tax on the Trust Fund to the extent that  maintaining  such status and  avoiding
such taxes are  reasonably  within the control of the Trustee and are reasonably
within the scope of its duties under this Agreement.

        (c) No  provision  of this  Agreement  shall be construed to relieve the
Trustee from liability for its own negligent  action,  its own negligent failure
to act or its own willful misconduct; provided, however, that:

               (i) Prior to the occurrence of an Event of Default, and after the
        curing or waiver of all such Events of Default which may have  occurred,
        the duties and obligations of the Trustee shall be determined  solely by
        the express  provisions  of this  Agreement,  the  Trustee  shall not be
        liable except for the  performance of such duties and obligations as are
        specifically  set  forth in this  Agreement,  no  implied  covenants  or
        obligations  shall be read into this Agreement  against the Trustee and,
        in the absence of bad faith on the part of the Trustee,  the Trustee may
        conclusively rely, as to the truth of the statements and the

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<PAGE>

        correctness of the opinions expressed therein,  upon any certificates or
        opinions  furnished  to the  Trustee  by  the  Depositor  or the  Master
        Servicer and which on their face, do not contradict the  requirements of
        this Agreement;

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

               (iii) The Trustee shall not be personally  liable with respect to
        any action taken, suffered or omitted to be taken by it in good faith in
        accordance  with  the  direction  of  the   Certificateholders   holding
        Certificates which evidence,  Percentage Interests  aggregating not less
        than 25% of the  affected  classes  as to the time,  method and place of
        conducting any proceeding  for any remedy  available to the Trustee,  or
        exercising  any trust or power  conferred  upon the Trustee,  under this
        Agreement;

               (iv) The  Trustee  shall not be  charged  with  knowledge  of any
        default  (other than a default in payment to the  Trustee)  specified in
        clauses  (i) and  (ii) of  Section  7.01 or an Event  of  Default  under
        clauses (iii), (iv) and (v) of Section 7.01 unless a Responsible Officer
        of the Trustee  assigned to and working in the  Corporate  Trust  Office
        obtains  actual  knowledge  of such  failure  or  event  or the  Trustee
        receives  written notice of such failure or event at its Corporate Trust
        Office from the Master Servicer, the Depositor or any Certificateholder;
        and

               (v) Except to the extent  provided in Section  7.02, no provision
        in this  Agreement  shall  require the Trustee to expend or risk its own
        funds  (including,  without  limitation,  the making of any  Advance) or
        otherwise incur any personal  financial  liability in the performance of
        any of its duties as Trustee hereunder, or in the exercise of any of its
        rights or powers,  if the  Trustee  shall have  reasonable  grounds  for
        believing  that  repayment of funds or adequate  indemnity  against such
        risk or liability is not reasonably assured to it.

        (d) The Trustee shall timely pay, from its own funds,  the amount of any
and all federal,  state and local taxes  imposed on the Trust Fund or its assets
or transactions  including,  without  limitation,  (A) "prohibited  transaction"
penalty  taxes as defined in Section 860F of the Code,  if, when and as the same
shall be due and  payable,  (B) any tax on  contributions  to a REMIC  after the
Closing  Date  imposed  by  Section  860G(d) of the Code and (C) any tax on "net
income from foreclosure property" as defined in Section 860G(c) of the Code, but
only if such  taxes  arise out of a breach  by the  Trustee  of its  obligations
hereunder,  which breach  constitutes  negligence  or willful  misconduct of the
Trustee.

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<PAGE>

        Section  8.02 Certain Matters Affecting the Trustee.
                      -------------------------------------

        (a) Except as otherwise provided in Section 8.01:

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

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

               (iii) The Trustee shall be under no obligation to exercise any of
        the trusts or powers  vested in it by this  Agreement  or to  institute,
        conduct or defend any litigation  hereunder or in relation hereto at the
        request, order or direction of any of the  Certificateholders,  pursuant
        to the  provisions  of this  Agreement,  unless such  Certificateholders
        shall have  offered to the  Trustee  reasonable  security  or  indemnity
        against  the  costs,  expenses  and  liabilities  which may be  incurred
        therein or thereby; nothing contained herein shall, however, relieve the
        Trustee of the  obligation,  upon the  occurrence of an Event of Default
        (which has not been  cured),  to exercise  such of the rights and powers
        vested in it by this  Agreement,  and to use the same degree of care and
        skill in their  exercise  as a prudent  investor  would  exercise or use
        under the circumstances in the conduct of such investor's own affairs;

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

               (v) Prior to the occurrence of an Event of Default  hereunder and
        after the curing of all Events of Default which may have  occurred,  the
        Trustee shall not be bound to make any  investigation  into the facts or
        matters stated in any resolution,  certificate,  statement,  instrument,
        opinion,  report, notice,  request,  consent,  order, approval,  bond or
        other paper or  document,  unless  requested  in writing so to do by the
        Holders  of  Certificates  of any Class  evidencing,  as to such  Class,
        Percentage Interests,  aggregating not less than 50%; provided, however,
        that if the  payment  within a  reasonable  time to the  Trustee  of the
        costs, expenses or liabilities likely to be incurred by it in the making
        of such investigation is, in the opinion of the Trustee,  not reasonably
        assured to the  Trustee by the  security  afforded to it by the terms of
        this Agreement,  the Trustee may require  reasonable  indemnity  against
        such  expense  or  liability  as  a  condition  to  so  proceeding.  The
        reasonable expense of every such examination shall be paid by the Master
        Servicer,  if an Event of Default shall have occurred and is continuing,
        and otherwise by the Certificateholder requesting the investigation;

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<PAGE>

               (vi)  The  Trustee  may  execute  any of  the  trusts  or  powers
        hereunder  or perform  any duties  hereunder  either  directly  or by or
        through  agents or  attorneys  provided  that the Trustee  shall  remain
        liable for any acts of such agents or attorneys; and

               (vii) To the extent authorized under the Code and the regulations
        promulgated  thereunder,  each  Holder of a Class R  Certificate  hereby
        irrevocably   appoints   and   authorizes   the   Trustee   to  be   its
        attorney-in-fact  for purposes of signing any Tax Returns required to be
        filed on behalf of the Trust Fund.  The Trustee  shall sign on behalf of
        the Trust Fund and deliver to the Master Servicer in a timely manner any
        Tax  Returns  prepared by or on behalf of the Master  Servicer  that the
        Trustee  is  required  to  sign as  determined  by the  Master  Servicer
        pursuant to applicable  federal,  state or local tax laws, provided that
        the Master Servicer shall indemnify the Trustee for signing any such Tax
        Returns that contain errors or omissions.

        (b) Following the issuance of the  Certificates  (and except as provided
for in Section 3.22(d)), the Trustee shall not accept any contribution of assets
to the Trust  Fund  unless it shall  have  obtained  or been  furnished  with an
Opinion of Counsel to the effect that such  contribution  will not (i) cause any
of REMIC I, REMIC II, REMIC III or REMIC IV to fail to qualify as a REMIC at any
time that any  Certificates  are  outstanding or (ii) cause the Trust Fund to be
subject  to any  federal  tax as a result of such  contribution  (including  the
imposition of any federal tax on "prohibited transactions" imposed under Section
860F(a) of the Code).

        Section  8.03 Trustee Not Liable for Certificates or Mortgage Loans.
                      -----------------------------------------------------

        The recitals  contained herein and in the  Certificates  (other than the
execution of the  Certificates and relating to the acceptance and receipt of the
Mortgage  Loans) shall be taken as the statements of the Depositor or the Master
Servicer as the case may be, and the Trustee assumes no responsibility for their
correctness.  The  Trustee  makes  no  representations  as to  the  validity  or
sufficiency  of  this  Agreement  or  of  the  Certificates   (except  that  the
Certificates  shall be duly and  validly  executed  and  authenticated  by it as
Certificate  Registrar) or of any Mortgage Loan or related document,  or of MERS
or the MERS(R) System.  Except as otherwise  provided herein,  the Trustee shall
not be  accountable  for the use or  application  by the Depositor or the Master
Servicer of any of the Certificates or of the proceeds of such Certificates,  or
for the use or  application  of any funds  paid to the  Depositor  or the Master
Servicer in respect of the Mortgage  Loans or deposited in or withdrawn from the
Custodial  Account or the  Certificate  Account by the  Depositor  or the Master
Servicer.

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<PAGE>

        Section  8.04 Trustee May Own Certificates.

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

        Section  8.05  Master  Servicer  to Pay  Trustee's  Fees  and  Expenses;
Indemnification.

        (a) The Master  Servicer  covenants and agrees to pay to the Trustee and
any co- trustee from time to time, and the Trustee and any  co-trustee  shall be
entitled  to,  reasonable  compensation  (which  shall  not  be  limited  by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services  rendered by each of them in the execution of the trusts hereby
created  and in the  exercise  and  performance  of any of the powers and duties
hereunder of the Trustee and any co-trustee, and the Master Servicer will pay or
reimburse  the  Trustee  and any  co-trustee  upon  request  for all  reasonable
expenses,  disbursements  and  advances  incurred  or made by the Trustee or any
co-trustee in accordance with any of the provisions of this Agreement (including
the reasonable  compensation  and the expenses and  disbursements of its counsel
and of all persons not regularly in its employ, and the expenses incurred by the
Trustee or any  co-trustee in connection  with the  appointment  of an office or
agency  pursuant  to Section  8.12)  except any such  expense,  disbursement  or
advance as may arise from its negligence or bad faith.

        (b) The Master Servicer agrees to indemnify the Trustee for, and to hold
the Trustee harmless  against,  any loss,  liability or expense incurred without
negligence or willful  misconduct on its part,  arising out of, or in connection
with, the acceptance and  administration of the Trust Fund,  including the costs
and expenses (including  reasonable legal fees and expenses) of defending itself
against any claim in connection  with the exercise or  performance of any of its
powers or duties under this Agreement, provided that:

               (i) with respect to any such claim,  the Trustee shall have given
        the Master  Servicer  written notice thereof  promptly after the Trustee
        shall have actual knowledge thereof;

               (ii) while maintaining control over its own defense,  the Trustee
        shall  cooperate and consult fully with the Master Servicer in preparing
        such defense; and

               (iii) notwithstanding anything in this Agreement to the contrary,
        the Master  Servicer  shall not be liable for settlement of any claim by
        the  Trustee  entered  into  without  the prior  consent  of the  Master
        Servicer which consent shall not be unreasonably withheld.

        No termination of this Agreement shall affect the obligations created by
this Section  8.05(b) of the Master  Servicer to indemnify the Trustee under the
conditions and to the extent set forth herein.

     Notwithstanding the foregoing,  the indemnification  provided by the Master
Servicer in this

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<PAGE>

Section  8.05(b)  shall not  pertain  to any loss,  liability  or expense of the
Trustee, including the costs and expenses of defending itself against any claim,
incurred in connection with any actions taken by the Trustee at the direction of
Certificateholders pursuant to the terms of this Agreement.

        Section  8.06 Eligibility Requirements for Trustee.
                      ------------------------------------

        The  Trustee  hereunder  shall  at  all  times  be  a  national  banking
association or a New York banking  corporation  having its principal office in a
state and city  acceptable to the  Depositor  and  organized and doing  business
under the laws of such state or the United States of America,  authorized  under
such laws to exercise  corporate  trust  powers,  having a combined  capital and
surplus of at least  $50,000,000  and subject to  supervision  or examination by
federal or state authority.  If such corporation or national banking association
publishes  reports of  condition  at least  annually,  pursuant to law or to the
requirements of the aforesaid  supervising or examining authority,  then for the
purposes of this  Section the combined  capital and surplus of such  corporation
shall be deemed to be its combined  capital and surplus as set forth in its most
recent report of condition so published.

        In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07.

        Section 8.07 Resignation and Removal of the Trustee.

        (a) The Trustee may at any time resign and be discharged from the trusts
hereby  created by giving written notice thereof to the Depositor and the Master
Servicer.  Upon  receiving  such  notice of  resignation,  the  Depositor  shall
promptly appoint a successor trustee by written  instrument,  in duplicate,  one
copy of which  instrument  shall be delivered to the  resigning  Trustee and one
copy to the  successor  trustee.  If no  successor  trustee  shall  have been so
appointed and have accepted  appointment within 30 days after the giving of such
notice of  resignation  then the  resigning  Trustee may  petition  any court of
competent jurisdiction for the appointment of a successor trustee.

        (b) If at any time the Trustee  shall cease to be eligible in accordance
with the  provisions  of  Section  8.06 and shall fail to resign  after  written
request  therefor by the  Depositor,  or if at any time the Trustee shall become
incapable of acting, or shall be adjudged  bankrupt or insolvent,  or a receiver
of the Trustee or of its  property  shall be  appointed,  or any public  officer
shall take  charge or control of the  Trustee or of its  property or affairs for
the purpose of rehabilitation,  conservation or liquidation,  then the Depositor
may remove the Trustee and appoint a successor trustee by written instrument, in
duplicate,  one copy of which  instrument  shall be  delivered to the Trustee so
removed and one copy to the successor  trustee.  In addition,  in the event that
the Depositor  determines that the Trustee has failed (i) to distribute or cause
to be distributed to  Certificateholders  any amount  required to be distributed
hereunder, if such amount is held by the Trustee or its Paying Agent (other than
the Master  Servicer or the  Depositor)  for  distribution  or (ii) to otherwise
observe or perform in any material  respect any of its covenants,  agreements or
obligations  hereunder,  and such failure shall continue unremedied for a period
of 5 days (in respect of clause (i) above) or 30 days (in respect of

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<PAGE>

clause  (ii)  above)  after the date on which  written  notice of such  failure,
requiring that the same be remedied, shall have been given to the Trustee by the
Depositor,  then the  Depositor  may remove the  Trustee and appoint a successor
trustee by written instrument  delivered as provided in the preceding  sentence.
In  connection  with the  appointment  of a  successor  trustee  pursuant to the
preceding sentence, the Depositor shall, on or before the date on which any such
appointment   becomes   effective,   obtain  from  each  Rating  Agency  written
confirmation  that the appointment of any such successor trustee will not result
in the  reduction  of the  ratings  on any class of the  Certificates  below the
lesser of the then current or original ratings on such Certificates.

        (c) The Holders of  Certificates  entitled to at least 51% of the Voting
Rights may at any time remove the  Trustee  and  appoint a successor  trustee by
written  instrument or  instruments,  in  triplicate,  signed by such Holders or
their  attorneys-in-fact duly authorized,  one complete set of which instruments
shall be delivered to the Depositor,  one complete set to the Trustee so removed
and one complete set to the successor so appointed.

        (d) Any  resignation  or removal of the  Trustee  and  appointment  of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08.

        Section  8.08 Successor Trustee.

        (a) Any  successor  trustee  appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
an  instrument   accepting  such  appointment   hereunder,   and  thereupon  the
resignation  or removal of the  predecessor  trustee shall become  effective and
such  successor  trustee  shall become  effective  and such  successor  trustee,
without any further act, deed or conveyance,  shall become fully vested with all
the rights,  powers, duties and obligations of its predecessor  hereunder,  with
the like  effect as if  originally  named as  trustee  herein.  The  predecessor
trustee shall deliver to the  successor  trustee all Mortgage  Files and related
documents and statements held by it hereunder  (other than any Mortgage Files at
the time held by a  Custodian,  which  shall  become the agent of any  successor
trustee hereunder),  and the Depositor,  the Master Servicer and the predecessor
trustee shall execute and deliver such  instruments  and do such other things as
may  reasonably be required for more fully and certainly  vesting and confirming
in the successor trustee all such rights, powers, duties and obligations.

        (b) No successor  trustee shall accept  appointment  as provided in this
Section unless at the time of such  acceptance  such successor  trustee shall be
eligible under the provisions of Section 8.06.

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

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        Section  8.09 Merger or Consolidation of Trustee.
                      ----------------------------------

        Any corporation or national  banking  association into which the Trustee
may be  merged  or  converted  or  with  which  it may  be  consolidated  or any
corporation  or  national  banking   association   resulting  from  any  merger,
conversion  or  consolidation  to which  the  Trustee  shall be a party,  or any
corporation or national  banking  association  succeeding to the business of the
Trustee,  shall  be  the  successor  of the  Trustee  hereunder,  provided  such
corporation  or  national  banking  association  shall  be  eligible  under  the
provisions of Section 8.06,  without the execution or filing of any paper or any
further act on the part of any of the  parties  hereto,  anything  herein to the
contrary  notwithstanding.  The Trustee  shall mail notice of any such merger or
consolidation  to the  Certificateholders  at  their  address  as  shown  in the
Certificate Register.

        Section 8.10 Appointment of Co-Trustee or Separate Trustee.

        (a)  Notwithstanding  any other provisions  hereof, at any time, for the
purpose of meeting any legal  requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located,  the
Master  Servicer and the Trustee  acting  jointly shall have the power and shall
execute and deliver all  instruments to appoint one or more Persons  approved by
the Trustee to act as co-trustee or  co-trustees,  jointly with the Trustee,  or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or  Persons,  in such  capacity,  such title to the Trust
Fund, or any part thereof,  and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Master Servicer
and the Trustee may consider  necessary  or  desirable.  If the Master  Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment.  No
co-trustee or separate trustee  hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice to
Holders  of  Certificates  of  the  appointment  of  co-trustee(s)  or  separate
trustee(s) shall be required under Section 8.08 hereof.

        (b) In the case of any  appointment of a co-trustee or separate  trustee
pursuant  to this  Section  8.10 all  rights,  powers,  duties  and  obligations
conferred  or imposed  upon the Trustee  shall be  conferred or imposed upon and
exercised or performed by the Trustee,  and such separate  trustee or co-trustee
jointly,  except to the extent that under any law of any  jurisdiction  in which
any particular act or acts are to be performed  (whether as Trustee hereunder or
as successor to the Master Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,  powers,
duties and obligations  (including the holding of title to the Trust Fund or any
portion  thereof in any such  jurisdiction)  shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.

        (c) Any notice,  request or other  writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as  effectively  as if given to each of them.  Every  instrument  appointing any
separate trustee or co-trustee shall refer to this Agreement and the

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conditions of this Article VIII. Each separate trustee and co-trustee,  upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of  appointment,  either jointly with the Trustee or
separately,  as may be provided  therein,  subject to all the provisions of this
Agreement,  specifically including every provision of this Agreement relating to
the conduct of,  affecting  the liability  of, or affording  protection  to, the
Trustee. Every such instrument shall be filed with the Trustee.

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

        Section  8.11 Appointment of Custodians.

        The  Trustee  may,  with the  consent  of the  Master  Servicer  and the
Depositor,  appoint  one or  more  Custodians  who  are  not  Affiliates  of the
Depositor or the Master  Servicer to hold all or a portion of the Mortgage Files
as agent for the Trustee,  by entering  into a Custodial  Agreement.  Subject to
Article  VIII,  the Trustee  agrees to comply  with the terms of each  Custodial
Agreement and to enforce the terms and provisions  thereof against the Custodian
for the benefit of the Certificateholders.  Each Custodian shall be a depository
institution  subject to supervision by federal or state authority,  shall have a
combined  capital and surplus of at least  $15,000,000 and shall be qualified to
do  business  in the  jurisdiction  in which it holds any  Mortgage  File.  Each
Custodial  Agreement  may be amended  only as  provided  in Section  11.01.  The
Trustee shall notify the  Certificateholders of the appointment of any Custodian
(other than the  Custodian  appointed as of the Closing  Date)  pursuant to this
Section 8.11.

        Section  8.12 Appointment of Office or Agency.

        The  Trustee  will  maintain an office or agency in the City of New York
where  Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially  designates its offices located at DTC Transfer  Services,
55 Water  Street,  Jeanette  Park  Entrance,  New York,  New York  10041 for the
purpose of keeping the Certificate Register. The Trustee will maintain an office
at the address stated in Section 11.05(c) hereof where notices and demands to or
upon the Trustee in respect of this Agreement may be served.

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                                          ARTICLE IX

                     TERMINATION OR OPTIONAL PURCHASE OF ALL CERTIFICATES

        Section       9.01  Optional  Purchase  by the  Master  Servicer  of All
                      Certificates;  Termination  Upon  Purchase  by the  Master
                      Servicer or Liquidation of All Mortgage Loans.

        (a)  Subject  to  Section   9.02,   the   respective   obligations   and
responsibilities  of the Depositor,  the Master Servicer and the Trustee created
hereby in respect of the Certificates  (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to Certificateholders
and the obligation of the Depositor to send certain  notices as hereinafter  set
forth) shall  terminate upon the last action required to be taken by the Trustee
on the Final Distribution Date pursuant to this Article IX following the earlier
of:

               (i) the later of the final payment or other  liquidation  (or any
        Advance with respect thereto) of the last Mortgage Loan remaining in the
        Trust Fund or the disposition of all property  acquired upon foreclosure
        or deed in lieu of foreclosure of any Mortgage Loan, or

               (ii) the purchase by the Master Servicer of all Group I Loans and
        Group II Loans and all property  acquired in respect of any Group I Loan
        and Group II Loan  remaining  in the Trust Fund,  or the purchase by the
        Master  Servicer  of all Group III Loans and all  property  acquired  in
        respect of any Group III Loan remaining in the Trust Fund, in each case,
        at a price  equal  to  100%  of the  unpaid  principal  balance  of each
        Mortgage Loan (or, if less than such unpaid principal balance,  the fair
        market value of the related  underlying  property of such  Mortgage Loan
        with  respect to Mortgage  Loans as to which title has been  acquired if
        such fair market value is less than such unpaid principal  balance) (net
        of any  unreimbursed  Advances  attributable to principal) on the day of
        repurchase,  plus accrued  interest thereon at the Net Mortgage Rate (or
        Modified Net Mortgage Rate in the case of any Modified  Mortgage  Loan),
        to,  but not  including,  the  first  day of the  month  in  which  such
        repurchase  price is distributed;  provided,  however,  that in no event
        shall the trust  created  hereby  continue  beyond the  expiration of 21
        years from the death of the last survivor of the  descendants  of Joseph
        P. Kennedy, the late ambassador of the United States to the Court of St.
        James, living on the date hereof;  provided further, that, if the amount
        due under any  Certificate  shall not have been reduced to zero prior to
        the Maturity  Date,  the Master  Servicer shall be required to terminate
        this  Agreement  in  accordance  with this  clause  (ii);  and  provided
        further,  that the purchase  price set forth above shall be increased as
        is  necessary,   as  determined  by  the  Master   Servicer,   to  avoid
        disqualification of any of REMIC I, REMIC II, REMIC III or REMIC IV as a
        REMIC. The purchase price paid by the Master Servicer shall also include
        any amounts owed by Residential  Funding  pursuant to the last paragraph
        of Section (d) of the Assignment  Agreement in respect of any liability,
        penalty or expense that resulted from a breach of the representation and
        warranty set forth in clause (xxii) of such Section,  that remain unpaid
        on the date of such purchase.

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<PAGE>

        The right of the Master Servicer to purchase all the assets of the Trust
Fund  relating to the Group I Loans and Group II Loans,  pursuant to clause (ii)
above is  conditioned  upon the date of such purchase  occurring on or after the
Group I/Group II Optional  Termination Date. The right of the Master Servicer to
purchase  all the  assets of the Trust  Fund  relating  to the Group III  Loans,
pursuant  to clause  (ii) above is  conditioned  upon the date of such  purchase
occurring on or after the Group III Optional  Termination Date. If such right is
exercised by the Master  Servicer,  the Master  Servicer shall be deemed to have
been  reimbursed for the full amount of any  unreimbursed  Advances  theretofore
made by it with respect to the Mortgage Loans being purchased.  In addition, the
Master  Servicer  shall  provide to the  Trustee the  certification  required by
Section 3.15 and the Trustee and any Custodian shall, promptly following payment
of the  purchase  price,  release  to the Master  Servicer  the  Mortgage  Files
pertaining to the Mortgage Loans being purchased.

        In addition to the foregoing,  on any Distribution  Date on or after the
Group I/Group II Optional  Termination  Date, the Master Servicer shall have the
right,  at its option,  to purchase  the Group I Senior  Certificates,  Group II
Senior  Certificates,  Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and
Class B-3 Certificates in whole, but not in part, at a price equal to the sum of
the outstanding  Certificate Principal Balance of such Certificates plus the sum
of one month's Accrued  Certificate  Interest  thereon,  or, with respect to the
Class  A-I-2,  Class  AV-I and Class  AV-II  Certificates,  on their  respective
Notional Amount,  any previously unpaid Accrued  Certificate  Interest,  and any
unpaid  Prepayment  Interest  Shortfall  previously  allocated  thereto.  On any
Distribution  Date on or after the  Group III  Optional  Termination  Date,  the
Master Servicer shall have the right,  at its option,  to purchase the Group III
Senior  Certificates,  Class M-III  Certificates and Class B-III Certificates in
whole,  but  not  in  part,  at a  price  equal  to the  sum of the  outstanding
Certificate  Principal  Balance of such Certificates plus the sum of one month's
Accrued  Certificate  Interest  thereon,  or, with  respect to the Class  AV-III
Certificates,   on  their  Notional  Amount,   any  previously   unpaid  Accrued
Certificate  Interest,  and any unpaid Prepayment Interest Shortfall  previously
allocated  thereto.  If the Master Servicer exercises this right to purchase the
outstanding Group I Senior  Certificates,  Group II Senior  Certificates,  Class
M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3  Certificates,  or
Group  III  Senior  Certificates,  Class  M-III  Certificates  and  Class  B-III
Certificates,  the  Master  Servicer  will  promptly  terminate  the  respective
obligations and responsibilities created hereby in respect of these Certificates
pursuant to this Article IX.

        (b) The Master  Servicer  shall give the  Trustee not less than 60 days'
prior notice of the Distribution  Date on which the Master Servicer  anticipates
that the final  distribution  will be made to  Certificateholders  (whether as a
result of the  exercise  by the Master  Servicer  of its right to  purchase  the
assets of the Trust Fund or otherwise).  Notice of any  termination,  specifying
the  anticipated  Final  Distribution  Date  (which  shall be a date that  would
otherwise  be  a  Distribution  Date)  upon  which  the  Certificateholders  may
surrender   their   Certificates  to  the  Trustee  for  payment  of  the  final
distribution  and  cancellation,  shall be given promptly by the Master Servicer
(if it is exercising its right to purchase the assets of the Trust Fund),  or by
the  Trustee  (in any other  case) by letter to  Certificateholders  mailed  not
earlier  than the 15th day and not  later  than the 25th day of the  month  next
preceding the month of such final distribution specifying:

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<PAGE>

               (i) the  anticipated  Final  Distribution  Date upon which  final
        payment of the Certificates is anticipated to be made upon  presentation
        and  surrender  of  Certificates  at the office or agency of the Trustee
        therein designated,

               (ii) the amount of any such final payment, if known, and

               (iii)  that  the  Record  Date   otherwise   applicable  to  such
        Distribution Date is not applicable,  and that payment will be made only
        upon  presentation  and surrender of the  Certificates  at the office or
        agency of the Trustee therein specified.

        If the Master Servicer is obligated to give notice to Certificateholders
as aforesaid, it shall give such notice to the Certificate Registrar at the time
such notice is given to Certificateholders. In the event such notice is given by
the  Master  Servicer,  the Master  Servicer  shall  deposit in the  Certificate
Account before the Final  Distribution  Date in immediately  available  funds an
amount equal to the purchase  price for the assets of the Trust Fund computed as
above  provided.  The  Master  Servicer  shall  provide to the  Trustee  written
notification of any change to the anticipated Final Distribution Date as soon as
practicable.  If the  Trust  Fund is not  terminated  on the  anticipated  Final
Distribution  Date,  for any reason,  the  Trustee  shall  promptly  mail notice
thereof to each affected Certificateholder.

        (c)  Upon   presentation  and  surrender  of  the  Certificates  by  the
Certificateholders,  the Trustee shall distribute to the  Certificateholders (i)
the  amount  otherwise  distributable  on  such  Distribution  Date,  if  not in
connection  with the Master  Servicer's  election to repurchase,  or (ii) if the
Master  Servicer  elected to so repurchase,  an amount equal to the  outstanding
Certificate  Principal  Balance of the  Certificates,  plus Accrued  Certificate
Interest  thereon for the related  Interest  Accrual  Period and any  previously
unpaid Accrued Certificate Interest.

        (d) In the event that any  Certificateholders  shall not surrender their
Certificates  for  final  payment  and  cancellation  on  or  before  the  Final
Distribution  Date,  the  Trustee  shall on such  date  cause  all  funds in the
Certificate Account not distributed in final distribution to  Certificateholders
to be withdrawn  therefrom and credited to the remaining  Certificateholders  by
depositing  such  funds in a separate  escrow  account  for the  benefit of such
Certificateholders,  and the  Master  Servicer  (if it  exercised  its  right to
purchase the assets of the Trust Fund), or the Trustee (in any other case) shall
give a second  written notice to the remaining  Certificateholders  to surrender
their  Certificates  for cancellation  and receive the final  distribution  with
respect  thereto.  If within six months after the second notice any  Certificate
shall not have  been  surrendered  for  cancellation,  the  Trustee  shall  take
appropriate  steps as directed by the Master  Servicer to contact the  remaining
Certificateholders  concerning  surrender of their  Certificates.  The costs and
expenses of maintaining the escrow account and of contacting  Certificateholders
shall be paid out of the assets  which remain in the escrow  account.  If within
nine  months  after  the  second  notice  any  Certificates  shall not have been
surrendered for  cancellation,  the Trustee shall pay to the Master Servicer all
amounts  distributable  to the  holders  thereof and the Master  Servicer  shall
thereafter hold such amounts until distributed

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<PAGE>

to such holders. No interest shall accrue or be payable to any Certificateholder
on any amount held in the escrow  account or by the Master  Servicer as a result
of such  Certificateholder's  failure to surrender its  Certificate(s) for final
payment thereof in accordance with this Section 9.01 and the  Certificateholders
shall look only to the Master Servicer for such payment.

        Section  9.02 Additional Termination Requirements.
                      -----------------------------------

        (a) Any of (i) REMIC I, (ii) REMIC II or (iii) REMIC I, REMIC II,  REMIC
III and REMIC IV, as the case may be, shall be terminated in accordance with the
following  additional  requirements,  unless the Trustee and the Master Servicer
have  received an Opinion of Counsel  (which  Opinion of Counsel shall not be an
expense of the  Trustee) to the effect that the failure of any of REMIC I, REMIC
II, REMIC III and REMIC IV, as the case may be, to comply with the  requirements
of this Section 9.02 will not (i) result in the  imposition on the Trust Fund of
taxes on "prohibited transactions," as described in Section 860F of the Code, or
(ii) cause any of REMIC I, REMIC II, REMIC III or REMIC IV to fail to qualify as
a REMIC at any time that any Certificate is outstanding:

               (i) The Master  Servicer  shall  establish  a 90-day  liquidation
        period  for each of (i) REMIC I, (ii)  REMIC II or (iii)  REMIC I, REMIC
        II,  REMIC III and REMIC IV, and specify the first day of such period in
        a statement  attached to the Trust Fund's  final Tax Return  pursuant to
        Treasury  regulations  Section 1.860F-1.  The Master Servicer also shall
        satisfy all of the  requirements of a qualified  liquidation for each of
        (i) REMIC I, (ii)  REMIC II or (iii)  REMIC I,  REMIC II,  REMIC III and
        REMIC IV, under Section 860F of the Code and the regulations thereunder;

               (ii)  The  Master  Servicer  shall  notify  the  Trustee  at  the
        commencement of such 90-day  liquidation  period and, at or prior to the
        time of making of the final  payment on the  Certificates,  the  Trustee
        shall sell or otherwise  dispose of all of the  remaining  assets of the
        Trust Fund in accordance with the terms hereof; and

               (iii) If the Master  Servicer is exercising its right to purchase
        the assets of the Trust  Fund,  the Master  Servicer  shall,  during the
        90-day  liquidation  period  and at or prior to the  Final  Distribution
        Date,  purchase all of the assets of the Trust Fund for cash;  provided,
        however,  that in the  event  that a  calendar  quarter  ends  after the
        commencement  of the  90-day  liquidation  period but prior to the Final
        Distribution  Date,  the Master  Servicer  shall not purchase any of the
        assets of the Trust Fund prior to the close of that calendar quarter.

        (b) Each  Holder of a  Certificate  and the Trustee  hereby  irrevocably
approves  and appoints the Master  Servicer as its  attorney-in-fact  to adopt a
plan of  complete  liquidation  for each of (i) REMIC I, (ii)  REMIC II or (iii)
REMIC I,  REMIC II,  REMIC III and REMIC IV at the  expense of the Trust Fund in
accordance with the terms and conditions of this Agreement.

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                                    ARTICLE X

                                REMIC PROVISIONS

        Section  10.01       REMIC Administration.

        (a) The REMIC  Administrator  shall  make an  election  to treat each of
REMIC I,  REMIC II,  REMIC III and  REMIC IV as a REMIC  under the Code and,  if
necessary,  under  applicable state law. Such election will be made on Form 1066
or other appropriate  federal tax or information return (including Form 8811) or
any appropriate  state return for the taxable year ending on the last day of the
calendar  year in  which  the  Certificates  are  issued.  The  REMIC I  Regular
Interests  shall be  designated  as the  "regular  interests"  and the Class R-I
Certificates  shall be designated  as the sole class of "residual  interests" in
the REMIC I. The REMIC II Regular  Interests shall be designated as the "regular
interests" and the Class R-II Certificates shall be designated as the sole class
of "residual  interests" in REMIC II. The REMIC III Regular  Interests  shall be
designated as the "regular  interests" and the Class R-III Certificates shall be
designated  as the sole class of  "residual  interests"  in REMIC III. The Class
A-I-1,  Class A-I-2,  Class A-I-3,  Class A-I-4, Class A-I-5, Class A-I-6, Class
A-I-7,  Class A-I-8,  Class A-I-9,  Class A-I-10,  Class AP-I, Class AV-I, Class
A-II,  Class AP-II,  Class AV-II,  Class M-1,  Class M-2,  Class M-3, Class B-1,
Class B-2, Class B-3, Class A-III,  Class AP-III,  Class AV-III,  Class M-III-1,
Class M-III-2,  Class  M-III-3,  Class  B-III-1,  Class  B-III-2,  Class B-III-3
Certificates shall be designated as the "regular  interests" in REMIC IV and the
Class  R-IV  Certificates  shall  be  designated  the sole  class  of  "residual
interests" in REMIC IV. The REMIC Administrator and the Trustee shall not permit
the creation of any "interests" (within the meaning of Section 860G of the Code)
in the REMIC other than the Certificates.

        (b) The Closing Date is hereby  designated  as the "startup day" of each
of REMIC I,  REMIC II,  REMIC III and REMIC IV within  the  meaning  of  Section
860G(a)(9) of the Code.

        (c) The REMIC  Administrator  shall hold a Class R  Certificate  in each
REMIC  representing a 0.01%  Percentage  Interest of the Class R Certificates in
each REMIC and shall be designated  as the "tax matters  person" with respect to
each of REMIC I, REMIC II, REMIC III and REMIC IV in the manner  provided  under
Treasury  regulations  section  1.860F-4(d)  and  Treasury  regulations  section
301.6231(a)(7)-1.  The REMIC Administrator, as tax matters person, shall (i) act
on behalf of each of REMIC I, REMIC II,  REMIC III and REMIC IV in  relation  to
any tax matter or  controversy  involving the Trust Fund and (ii)  represent the
Trust  Fund  in  any  administrative  or  judicial  proceeding  relating  to  an
examination or audit by any governmental  taxing authority with respect thereto.
The legal  expenses,  including  without  limitation  attorneys' or accountants'
fees,  and costs of any such  proceeding and any liability  resulting  therefrom
shall be  expenses  of the  Trust  Fund  and the  REMIC  Administrator  shall be
entitled to reimbursement  therefor out of amounts  attributable to the Mortgage
Loans on deposit in the  Custodial  Account as provided  by Section  3.10 unless
such  legal   expenses   and  costs  are   incurred   by  reason  of  the  REMIC
Administrator's willful misfeasance, bad faith or gross negligence. If the REMIC
Administrator  is no longer the  Master  Servicer  hereunder,  at its option the
REMIC Administrator may continue its duties as REMIC

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<PAGE>

Administrator and shall be paid reasonable compensation not to exceed $3,000 per
year by any  successor  Master  Servicer  hereunder  for so  acting as the REMIC
Administrator.

        (d) The REMIC Administrator shall prepare or cause to be prepared all of
the Tax  Returns  that it  determines  are  required  with  respect to the REMIC
created hereunder and deliver such Tax Returns in a timely manner to the Trustee
and the  Trustee  shall sign and file such Tax Returns in a timely  manner.  The
expenses of  preparing  such returns  shall be borne by the REMIC  Administrator
without any right of reimbursement  therefor.  The REMIC Administrator agrees to
indemnify  and hold  harmless  the Trustee  with respect to any tax or liability
arising  from the  Trustee's  signing  of Tax  Returns  that  contain  errors or
omissions.  The Trustee and Master  Servicer  shall  promptly  provide the REMIC
Administrator with such information as the REMIC  Administrator may from time to
time request for the purpose of enabling the REMIC  Administrator to prepare Tax
Returns.

        (e) The REMIC  Administrator  shall  provide (i) to any  Transferor of a
Class R Certificate  such information as is necessary for the application of any
tax relating to the transfer of a Class R Certificate to any Person who is not a
Permitted  Transferee,  (ii) to the Trustee and the Trustee shall forward to the
Certificateholders  such  information  or reports as are required by the Code or
the REMIC  Provisions  including  reports  relating to interest,  original issue
discount,  if  any,  and  market  discount  or  premium  (using  the  Prepayment
Assumption) and (iii) to the Internal Revenue Service the name,  title,  address
and telephone number of the person who will serve as the  representative of each
REMIC created hereunder.

        (f) The  Master  Servicer  and the REMIC  Administrator  shall take such
actions and shall cause each REMIC created hereunder to take such actions as are
reasonably within the Master Servicer's or the REMIC Administrator's control and
the scope of its duties more specifically set forth herein as shall be necessary
or  desirable  to  maintain  the  status  thereof  as a REMIC  under  the  REMIC
Provisions  (and the  Trustee  shall  assist the Master  Servicer  and the REMIC
Administrator, to the extent reasonably requested by the Master Servicer and the
REMIC  Administrator to do so). In performing their duties as more  specifically
set forth  herein,  the Master  Servicer and the REMIC  Administrator  shall not
knowingly  or  intentionally  take any action,  cause the Trust Fund to take any
action  or fail to take (or fail to cause to be  taken)  any  action  reasonably
within their  respective  control and the scope of duties more  specifically set
forth herein,  that, under the REMIC  Provisions,  if taken or not taken, as the
case may be,  could (i)  endanger  the status of any of REMIC I, REMIC II, REMIC
III or REMIC IV as a REMIC or (ii) result in the imposition of a tax upon any of
REMIC I, REMIC II, REMIC III or REMIC IV  (including  but not limited to the tax
on prohibited  transactions as defined in Section 860F(a)(2) of the Code (except
as  provided in Section  3.22(d))  and the tax on  contributions  to a REMIC set
forth in Section  860G(d) of the Code) (either such event,  in the absence of an
Opinion of Counsel  or the  indemnification  referred  to in this  sentence,  an
"Adverse REMIC Event") unless the Master Servicer or the REMIC Administrator, as
applicable,  has  received  an Opinion of Counsel  (at the  expense of the party
seeking to take such action or, if such party fails to pay such expense, and the
Master  Servicer or the REMIC  Administrator,  as  applicable,  determines  that
taking such action is in the best interest of the Trust Fund and the

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Certificateholders,  at the  expense of the Trust  Fund,  but in no event at the
expense of the Master Servicer,  the REMIC  Administrator or the Trustee) to the
effect that the  contemplated  action will not,  with  respect to the Trust Fund
created  hereunder,  endanger such status or, unless the Master  Servicer or the
REMIC  Administrator  or both,  as  applicable,  determine  in its or their sole
discretion  to indemnify  the Trust Fund against the  imposition  of such a tax,
result  in  the  imposition  of  such  a  tax.  Wherever  in  this  Agreement  a
contemplated  action may not be taken  because the timing of such  action  might
result  in the  imposition  of a tax on the  Trust  Fund,  or may  only be taken
pursuant to an Opinion of Counsel that such action would not impose a tax on the
Trust Fund,  such action may  nonetheless  be taken  provided that the indemnity
given in the preceding  sentence with respect to any taxes that might be imposed
on the Trust Fund has been given and that all other  preconditions to the taking
of such action have been  satisfied.  The Trustee shall not take or fail to take
any action (whether or not authorized hereunder) as to which the Master Servicer
or the REMIC Administrator, as applicable, has advised it in writing that it has
received an Opinion of Counsel to the effect  that an Adverse  REMIC Event could
occur with respect to such action. In addition,  prior to taking any action with
respect to the Trust Fund or its  assets,  or causing the Trust Fund to take any
action, which is not expressly permitted under the terms of this Agreement,  the
Trustee  will consult with the Master  Servicer or the REMIC  Administrator,  as
applicable,  or its  designee,  in writing,  with respect to whether such action
could cause an Adverse  REMIC Event to occur with  respect to the Trust Fund and
the  Trustee  shall not take any such action or cause the Trust Fund to take any
such  action as to which the  Master  Servicer  or the REMIC  Administrator,  as
applicable,  has advised it in writing that an Adverse  REMIC Event could occur.
The Master Servicer or the REMIC Administrator,  as applicable, may consult with
counsel to make such written advice,  and the cost of same shall be borne by the
party seeking to take the action not expressly permitted by this Agreement,  but
in no event at the expense of the Master Servicer or the REMIC Administrator. At
all times as may be  required  by the Code,  the  Master  Servicer  or the REMIC
Administrator,  as  applicable,  will to the extent  within its  control and the
scope of its duties more specifically set forth herein,  maintain  substantially
all of the assets of the REMIC as  "qualified  mortgages"  as defined in Section
860G(a)(3)  of the  Code and  "permitted  investments"  as  defined  in  Section
860G(a)(5) of the Code.

        (g) In the event that any tax is imposed on "prohibited transactions" of
any REMIC  created  hereunder as defined in Section  860F(a)(2)  of the Code, on
"net  income  from  foreclosure  property"  of any REMIC as  defined  in Section
860G(c) of the Code,  on any  contributions  to any REMIC  after the startup day
therefor  pursuant to Section  860G(d) of the Code,  or any other tax imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Master Servicer, if such tax arises out of or results from
a breach by the Master Servicer of any of its  obligations  under this Agreement
or the Master  Servicer has in its sole  discretion  determined to indemnify the
Trust Fund against such tax,  (ii) to the Trustee,  if such tax arises out of or
results  from a breach  by the  Trustee  of any of its  obligations  under  this
Article X, or (iii)  otherwise  against  amounts  on  deposit  in the  Custodial
Account as provided by Section 3.10 and on the  Distribution  Date(s)  following
such  reimbursement  the aggregate of such taxes shall be allocated in reduction
of the Accrued  Certificate  Interest on each Class entitled thereto in the same
manner as if such taxes constituted a Prepayment Interest Shortfall.

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        (h) The Trustee and the Master  Servicer  shall,  for federal income tax
purposes,  maintain  books and records  with respect to each REMIC on a calendar
year and on an  accrual  basis or as  otherwise  may be  required  by the  REMIC
Provisions.

        (i)  Following  the startup  day,  neither the Master  Servicer  nor the
Trustee shall accept any contributions of assets to any REMIC unless (subject to
Section  10.01(f))  the Master  Servicer and the Trustee  shall have received an
Opinion  of  Counsel  (at  the  expense  of  the  party  seeking  to  make  such
contribution)  to the effect that the inclusion of such assets in any REMIC will
not cause any of REMIC I, REMIC II,  REMIC III or REMIC IV to fail to qualify as
a REMIC at any time that any  Certificates  are  outstanding or subject any such
REMIC to any tax under the REMIC  Provisions or other  applicable  provisions of
federal, state and local law or ordinances.

        (j)  Neither  the Master  Servicer  nor the  Trustee  shall  (subject to
Section  10.01(f)) enter into any arrangement by which any of REMIC I, REMIC II,
REMIC III or REMIC IV will receive a fee or other  compensation for services nor
permit  any of REMIC I, REMIC II,  REMIC III or REMIC IV to  receive  any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or  "permitted  investments"  as defined in Section  860G(a)(5)  of the
Code.

        (k)  Solely  for the  purposes  of  Section  1.860G-1(a)(4)(iii)  of the
Treasury  Regulations,   the  "latest  possible  maturity  date"  by  which  the
Certificate  Principal  Balance of each Class of  Certificates  (other  than the
Class A-I-2, Class AV-I, Class AV-II and Class AV-III Certificates) representing
a regular  interest in the  applicable  REMIC and the  Uncertificated  Principal
Balance of each  Uncertificated  Regular  Interest is the Maturity Date for each
such Certificate and Interest.

        (l) Within 30 days after the Closing Date, the REMIC Administrator shall
prepare  and file with the  Internal  Revenue  Service  Form 8811,  "Information
Return for Real  Estate  Mortgage  Investment  Conduits  (REMIC)  and Issuers of
Collateralized Debt Obligations" for the Trust Fund.

        (m) Neither the Trustee nor the Master  Servicer shall sell,  dispose of
or substitute for any of the Mortgage  Loans (except in connection  with (i) the
default,  imminent default or foreclosure of a Mortgage Loan,  including but not
limited to, the acquisition or sale of a Mortgaged  Property acquired by deed in
lieu  of  foreclosure,  (ii)  the  bankruptcy  of  the  Trust  Fund,  (iii)  the
termination  of any REMIC  pursuant  to Article IX of this  Agreement  or (iv) a
purchase of Mortgage Loans  pursuant to Article II or III of this  Agreement) or
acquire  any assets for any REMIC or sell or dispose of any  investments  in the
Custodial   Account  or  the  Certificate   Account  for  gain,  or  accept  any
contributions  to any REMIC  after the Closing  Date  unless it has  received an
Opinion of Counsel that such sale, disposition, substitution or acquisition will
not (a) affect  adversely  the status of any of REMIC I, REMIC II,  REMIC III or
REMIC IV as a REMIC or (b) unless the Master Servicer has determined in its sole
discretion to indemnify  the Trust Fund against such tax,  cause any REMIC to be
subject to a tax on "prohibited transactions" or "contributions" pursuant to the
REMIC Provisions.

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Section 10.02 Master Servicer, REMIC Administrator and Trustee Indemnification.

        (a) The Trustee agrees to indemnify the Trust Fund,  the Depositor,  the
REMIC  Administrator  and the Master Servicer for any taxes and costs including,
without limitation,  any reasonable attorneys fees imposed on or incurred by the
Trust Fund, the Depositor or the Master Servicer, as a result of a breach of the
Trustee's  covenants  set forth in Article  VIII or this Article X. In the event
that  Residential  Funding is no longer the Master  Servicer,  the Trustee shall
indemnify  Residential  Funding  for any  taxes  and  costs  including,  without
limitation,  any reasonable attorneys fees imposed on or incurred by Residential
Funding as a result of a breach of the Trustee's  covenants set forth in Article
VIII or this Article X.

        (b) The REMIC  Administrator  agrees to  indemnify  the Trust Fund,  the
Depositor,  the  Master  Servicer  and the  Trustee  for  any  taxes  and  costs
(including,  without limitation,  any reasonable  attorneys' fees) imposed on or
incurred by the Trust Fund, the Depositor,  the Master  Servicer or the Trustee,
as a result of a breach of the REMIC Administrator's covenants set forth in this
Article  X with  respect  to  compliance  with the REMIC  Provisions,  including
without  limitation,  any penalties arising from the Trustee's  execution of Tax
Returns  prepared by the REMIC  Administrator  that contain errors or omissions;
provided,  however,  that such  liability will not be imposed to the extent such
breach is a result of an error or omission in information  provided to the REMIC
Administrator by the Master Servicer in which case Section 10.02(c) will apply.

        (c) The  Master  Servicer  agrees  to  indemnify  the  Trust  Fund,  the
Depositor,  the  REMIC  Administrator  and the  Trustee  for any taxes and costs
(including,  without limitation,  any reasonable  attorneys' fees) imposed on or
incurred by the Trust  Fund,  the  Depositor  or the  Trustee,  as a result of a
breach of the  Master  Servicer's  covenants  set forth in this  Article X or in
Article III with  respect to  compliance  with the REMIC  Provisions,  including
without  limitation,  any penalties arising from the Trustee's  execution of Tax
Returns prepared by the Master Servicer that contain errors or omissions.

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                                          ARTICLE XI

                                   MISCELLANEOUS PROVISIONS

        Section  11.01       Amendment.

        (a) This  Agreement or any Custodial  Agreement may be amended from time
to time by the Depositor, the Master Servicer and the Trustee:

               (i) to cure any ambiguity,

               (ii) to correct or supplement any  provisions  herein or therein,
        which may be inconsistent with any other provisions herein or therein or
        to correct any error,

               (iii) to modify,  eliminate  or add to any of its  provisions  to
        such  extent  as  shall  be  necessary  or  desirable  to  maintain  the
        qualification  of REMIC I, REMIC II,  REMIC III or REMIC IV as REMICs at
        all times that any  Certificate  is  outstanding or to avoid or minimize
        the risk of the  imposition of any tax on the Trust Fund pursuant to the
        Code that would be a claim  against  the Trust Fund,  provided  that the
        Trustee  has  received an Opinion of Counsel to the effect that (A) such
        action is necessary or desirable to maintain  such  qualification  or to
        avoid or  minimize  the risk of the  imposition  of any such tax and (B)
        such  action  will not  adversely  affect in any  material  respect  the
        interests of any Certificateholder,

               (iv) to change  the timing  and/or  nature of  deposits  into the
        Custodial  Account or the  Certificate  Account or to change the name in
        which  the  Custodial  Account  is  maintained,  provided  that  (A) the
        Certificate  Account  Deposit  Date  shall in no event be later than the
        related Distribution Date, (B) such change shall not, as evidenced by an
        Opinion  of  Counsel,  adversely  affect  in any  material  respect  the
        interests of any  Certificateholder and (C) such change shall not result
        in a reduction of the rating assigned to any Class of Certificates below
        the lower of the  then-current  rating or the  rating  assigned  to such
        Certificates  as of the Closing Date, as evidenced by a letter from each
        Rating Agency to such effect,

               (v) to  modify,  eliminate  or add to the  provisions  of Section
        5.02(f) or any other provision hereof restricting  transfer of the Class
        R Certificates by virtue of their being the "residual  interests" in the
        Trust Fund  provided  that (A) such change shall not result in reduction
        of the rating assigned to any such Class of Certificates below the lower
        of the then- current rating or the rating assigned to such  Certificates
        as of the Closing Date, as evidenced by a letter from each Rating Agency
        to such  effect,  and (B) such  change  shall not,  as  evidenced  by an
        Opinion of Counsel  (at the  expense of the party  seeking so to modify,
        eliminate  or add such  provisions),  cause the Trust Fund or any of the
        Certificateholders  (other  than  the  transferor)  to be  subject  to a
        federal  tax caused by a transfer  to a Person  that is not a  Permitted
        Transferee, or

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<PAGE>

               (vi) to make any other  provisions  with  respect  to  matters or
        questions arising under this Agreement or such Custodial Agreement which
        shall  not be  materially  inconsistent  with  the  provisions  of  this
        Agreement,  provided  that such  action  shall not, as  evidenced  by an
        Opinion  of  Counsel,  adversely  affect  in any  material  respect  the
        interests of any  Certificateholder and is authorized or permitted under
        Section 11.09(d).

        (b) This  Agreement or any Custodial  Agreement may also be amended from
time to time by the Depositor,  the Master Servicer, the Trustee and the Holders
of Certificates  evidencing in the aggregate not less than 66% of the Percentage
Interests  of each Class of  Certificates  affected  thereby  for the purpose of
adding any  provisions  to or changing in any manner or  eliminating  any of the
provisions of this Agreement or such Custodial  Agreement or of modifying in any
manner  the rights of the  Holders  of  Certificates  of such  Class;  provided,
however, that no such amendment shall:

               (i)  reduce in any  manner the amount of, or delay the timing of,
        payments which are required to be distributed on any Certificate without
        the consent of the Holder of such Certificate,

               (ii) adversely affect in any material respect the interest of the
        Holders of Certificates of any Class in a manner other than as described
        in clause (i) hereof without the consent of Holders of  Certificates  of
        such  Class  evidencing,   as  to  such  Class,   Percentage   Interests
        aggregating not less than 66%, or

               (iii) reduce the  aforesaid  percentage  of  Certificates  of any
        Class  the  Holders  of  which  are  required  to  consent  to any  such
        amendment,  in any such case  without  the consent of the Holders of all
        Certificates of such Class then outstanding.

        (c)  Notwithstanding  any  contrary  provision  of this  Agreement,  the
Trustee  shall not consent to any  amendment to this  Agreement  unless it shall
have first  received an Opinion of Counsel (at the expense of the party  seeking
such  amendment) to the effect that such  amendment or the exercise of any power
granted to the Master Servicer,  the Depositor or the Trustee in accordance with
such amendment is permitted hereunder and will not result in the imposition of a
federal tax on the Trust Fund or cause REMIC I, REMIC II,  REMIC III or REMIC IV
to fail to qualify as REMICs at any time that any  Certificate  is  outstanding.
The Trustee may but shall not be obligated to enter into any amendment  pursuant
to this  Section  that  affects  its  rights,  duties  and  immunities  and this
agreement or otherwise; provided however, such consent shall not be unreasonably
withheld.

        (d) Promptly after the execution of any such amendment the Trustee shall
furnish  written  notification  of the  substance  of  such  amendment  to  each
Certificateholder.   It   shall   not  be   necessary   for   the   consent   of
Certificateholders  under this Section 11.01 to approve the  particular  form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance  thereof.  The manner of obtaining such consents and of evidencing
the  authorization  of the  execution  thereof  by  Certificateholders  shall be
subject to such reasonable regulations as the Trustee may prescribe.

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<PAGE>

        (e) The  Depositor  shall have the option,  in its sole  discretion,  to
obtain and deliver to the Trustee any corporate  guaranty,  payment  obligation,
irrevocable  letter  of  credit,   surety  bond,  insurance  policy  or  similar
instrument or a reserve  fund,  or any  combination  of the  foregoing,  for the
purpose of protecting the Holders of the Class R Certificates against any or all
Realized Losses or other  shortfalls.  Any such instrument or fund shall be held
by the Trustee for the benefit of the Class R Certificateholders,  but shall not
be and shall not be deemed to be under any  circumstances  included  in REMIC I,
REMIC II, REMIC III or REMIC IV. To the extent that any such  instrument or fund
constitutes a reserve fund for federal income tax purposes, (i) any reserve fund
so established  shall be an outside  reserve fund and not an asset of the REMIC,
(ii) any such reserve fund shall be owned by the  Depositor,  and (iii)  amounts
transferred  by the REMIC to any such  reserve  fund shall be treated as amounts
distributed  by the REMIC to the  Depositor  or any  successor,  all  within the
meaning of Treasury  regulations  Section  1.860G-2(h).  In connection  with the
provision of any such  instrument  or fund,  this  Agreement  and any  provision
hereof may be modified,  added to,  deleted or  otherwise  amended in any manner
that is related or incidental to such instrument or fund or the establishment or
administration thereof, such amendment to be made by written instrument executed
or  consented  to by the  Depositor  and such  related  insurer  but without the
consent of any  Certificateholder and without the consent of the Master Servicer
or the  Trustee  being  required  unless  any such  amendment  would  impose any
additional  obligation  on, or otherwise  adversely  affect the interests of the
Certificateholders,  the Master Servicer or the Trustee, as applicable; provided
that the Depositor  obtains an Opinion of Counsel  (which need not be an opinion
of Independent counsel) to the effect that any such amendment will not cause (a)
any federal tax to be imposed on the Trust Fund,  including without  limitation,
any federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of
the Code or on "contributions  after the startup date" under Section  860G(d)(1)
of the Code and (b) any of REMIC I,  REMIC II,  REMIC III or REMIC IV to fail to
qualify as a REMIC at any time that any Certificate is outstanding. In the event
that the  Depositor  elects to provide  such  coverage  in the form of a limited
guaranty  provided by General Motors Acceptance  Corporation,  the Depositor may
elect that the text of such amendment to this Agreement  shall be  substantially
in the form attached  hereto as Exhibit K (in which case  Residential  Funding's
Subordinate  Certificate  Loss  Obligation as described in such exhibit shall be
established by  Residential  Funding's  consent to such  amendment) and that the
limited  guaranty  shall be executed in the form  attached  hereto as Exhibit L,
with such  changes  as the  Depositor  shall  deem to be  appropriate;  it being
understood  that the Trustee has reviewed and approved the content of such forms
and that the Trustee's consent or approval to the use thereof is not required.

        Section  11.02       Recordation of Agreement; Counterparts.
                             --------------------------------------

        (a) To the extent permitted by applicable law, this Agreement is subject
to recordation in all  appropriate  public offices for real property  records in
all the counties or other  comparable  jurisdictions  in which any or all of the
properties  subject to the Mortgages are situated,  and in any other appropriate
public  recording  office or elsewhere,  such  recordation to be effected by the
Master Servicer and at its expense on direction by the Trustee  (pursuant to the
request of the  Holders of  Certificates  entitled to at least 25% of the Voting
Rights), but only upon direction accompanied by

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<PAGE>

an  Opinion  of  Counsel to the  effect  that such  recordation  materially  and
beneficially affects the interests of the Certificateholders.

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

        Section  11.03       Limitation on Rights of Certificateholders.
                             ------------------------------------------

        (a) The death or incapacity of any  Certificateholder  shall not operate
to   terminate   this   Agreement   or  the  Trust  Fund,   nor   entitle   such
Certificateholder's  legal representatives or heirs to claim an accounting or to
take any action or  proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights,  obligations and liabilities of any
of the parties hereto.

        (b) No  Certificateholder  shall  have  any  right  to vote  (except  as
expressly  provided herein) or in any manner otherwise control the operation and
management  of the Trust Fund, or the  obligations  of the parties  hereto,  nor
shall anything herein set forth, or contained in the terms of the  Certificates,
be construed so as to  constitute  the  Certificateholders  from time to time as
partners or members of an association;  nor shall any Certificateholder be under
any  liability  to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.

        (c) No Certificateholder shall have any right by virtue of any provision
of this  Agreement to institute  any suit,  action or proceeding in equity or at
law  upon or  under  or with  respect  to this  Agreement,  unless  such  Holder
previously  shall have given to the  Trustee a written  notice of default and of
the continuance thereof, as hereinbefore  provided,  and unless also the Holders
of  Certificates  of any Class  evidencing in the aggregate not less than 25% of
the related Percentage  Interests of such Class, shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee  hereunder  and  shall  have  offered  to the  Trustee  such  reasonable
indemnity as it may require  against the costs,  expenses and  liabilities to be
incurred  therein  or  thereby,  for 60 days after its  receipt of such  notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action,  suit or proceeding  it being  understood  and intended,  and being
expressly    covenanted   by   each    Certificateholder    with   every   other
Certificateholder  and the Trustee,  that no one or more Holders of Certificates
of any  Class  shall  have any  right in any  manner  whatever  by virtue of any
provision of this  Agreement to affect,  disturb or prejudice  the rights of the
Holders of any other of such  Certificates  of such Class or any other Class, or
to  obtain or seek to  obtain  priority  over or  preference  to any other  such
Holder,  or to  enforce  any right  under this  Agreement,  except in the manner
herein provided and for the common benefit of  Certificateholders  of such Class
or all Classes,  as the case may be. For the protection  and  enforcement of the
provisions  of this  Section  11.03,  each and every  Certificateholder  and the
Trustee  shall be entitled  to such  relief as can be given  either at law or in
equity.

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<PAGE>

        Section  11.04       Governing Law.

        This agreement and the  Certificates  shall be governed by and construed
in accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties  hereunder  shall be determined  in accordance  with
such laws.

        Section  11.05       Notices.
                             -------

        All  demands  and  notices  hereunder  shall be in writing  and shall be
deemed  to have  been  duly  given  if  personally  delivered  at or  mailed  by
registered mail,  postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of the
Depositor,  8400 Normandale Lake Boulevard,  Suite 250,  Minneapolis,  Minnesota
55437,  Attention:  President  (RAMP), or such other address as may hereafter be
furnished to the Master  Servicer  and the Trustee in writing by the  Depositor;
(b) in the case of the Master  Servicer,  2255 North  Ontario  Street,  Burbank,
California 91504-3120,  Attention:  Bond Administration or such other address as
may be  hereafter  furnished  to the  Depositor  and the  Trustee  by the Master
Servicer in writing; (c) in the case of the Trustee, 1761 East St. Andrew Place,
Santa Ana, California 92705, Attention: Residential Asset Mortgage Products Inc.
Series  2003-RM2 or such other  address as may  hereafter  be  furnished  to the
Depositor and the Master Servicer in writing by the Trustee;  (d) in the case of
Fitch, One State Street Plaza, New York, New York 1004,  Attention:  Residential
Mortgage  Backed Group,  or such other address as may be hereafter  furnished to
the Depositor,  the Trustee and the Master Servicer in writing by Fitch; and (e)
in the case of Standard & Poor's,  55 Water  Street,  New York,  New York 10041,
Attention:  Mortgage  Surveillance,  or such other  address as may be  hereafter
furnished to the  Depositor,  the Trustee and the Master  Servicer in writing by
Standard  &  Poor's.  Any  notice  required  or  permitted  to  be  mailed  to a
Certificateholder  shall be given by first class mail,  postage prepaid,  at the
address  of such  holder as shown in the  Certificate  Register.  Any  notice so
mailed  within  the time  prescribed  in this  Agreement  shall be  conclusively
presumed to have been duly given, whether or not the Certificateholder  receives
such notice.

        Section  11.06       Notices to Rating Agencies.

        The Depositor, the Master Servicer or the Trustee, as applicable,  shall
notify each Rating Agency and each  Subservicer  at such time as it is otherwise
required  pursuant to this Agreement to give notice of the occurrence of, any of
the events described in clause (i), (ii), (iii),  (iv), (vii),  (viii),  (ix) or
(x) below or  provide  a copy to each  Rating  Agency at such time as  otherwise
required to be delivered  pursuant to this  Agreement  of any of the  statements
described in clauses (x) and (vi) below:

               (i) a material change or amendment to this Agreement,

               (ii) the occurrence of an Event of Default,

               (iii)  the  termination  or  appointment  of a  successor  Master
Servicer or Trustee or

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<PAGE>

        a change in the majority ownership of the Trustee,

               (iv) the filing of any claim under the Master Servicer's  blanket
        fidelity bond and the errors and omissions  insurance policy required by
        Section 3.12 or the  cancellation  or modification of coverage under any
        such instrument,

               (v) the statement required to be delivered to the Holders of each
        Class of Certificates pursuant to Section 4.03,

               (vi) the statements required to be delivered pursuant to Sections
        3.18 and 3.19,

               (vii) a change in the  location of the  Custodial  Account or the
        Certificate Account,

               (viii) the  occurrence of any monthly cash flow  shortfall to the
        Holders of any Class of  Certificates  resulting from the failure by the
        Master Servicer to make an Advance pursuant to Section 4.04,

               (ix) the occurrence of the Final Distribution Date, and

               (x) the repurchase of or substitution for any Mortgage Loan,

provided,  however,  that with respect to notice of the occurrence of the events
described in clauses (iv),  (vii) or (viii)  above,  the Master  Servicer  shall
provide prompt  written notice to each Rating Agency and the  Subservicer of any
such event known to the Master Servicer.

        Section  11.07       Severability of Provisions.

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

        Section  11.08       Supplemental Provisions for Resecuritization.
                             --------------------------------------------

        (a) This  Agreement  may be  supplemented  by means of the addition of a
separate  Article  hereto  (a   "Supplemental   Article")  for  the  purpose  of
resecuritizing  any of the Certificates  issued  hereunder,  under the following
circumstances.  With  respect  to any Class or Classes  of  Certificates  issued
hereunder, or any portion of any such Class, as to which the Depositor or any of
its  Affiliates  (or  any  designee  thereof)  is  the  registered  Holder  (the
"Resecuritized  Certificates"),  the  Depositor  may deposit such  Resecuritized
Certificates into a new REMIC, grantor trust, FASIT or custodial  arrangement (a
"Restructuring  Vehicle") to be held by the Trustee  pursuant to a  Supplemental
Article.  The instrument adopting such Supplemental Article shall be executed by
the Depositor, the

                                             156

<PAGE>

Master Servicer and the Trustee;  provided, that neither the Master Servicer nor
the Trustee shall withhold their consent thereto if their  respective  interests
would not be materially adversely affected thereby. To the extent that the terms
of the  Supplemental  Article do not in any way affect  any  provisions  of this
Agreement as to any of the Certificates initially issued hereunder, the adoption
of the  Supplemental  Article  shall  not  constitute  an  "amendment"  of  this
Agreement.

        Each  Supplemental  Article  shall set forth  all  necessary  provisions
relating to the holding of the  Resecuritized  Certificates by the Trustee,  the
establishment of the  Restructuring  Vehicle,  the issuing of various classes of
new certificates by the  Restructuring  Vehicle and the distributions to be made
thereon,  and  any  other  provisions  necessary  to the  purposes  thereof.  In
connection with each  Supplemental  Article,  the Depositor shall deliver to the
Trustee an Opinion of Counsel to the effect that (i) the  Restructuring  Vehicle
will  qualify as a REMIC,  grantor  trust,  FASIT or other entity not subject to
taxation  for  federal  income  tax  purposes  and  (ii)  the  adoption  of  the
Supplemental  Article  will not endanger the status of any of REMIC I, REMIC II,
REMIC III or REMIC IV as a REMIC or result in the  imposition  of a tax upon the
Trust Fund  (including  but not limited to the tax on prohibited  transaction as
defined  in Section  860F(a)(2)  of the Code and the tax on  contributions  to a
REMIC as set forth in Section 860G(d) of the Code.

                                             157

<PAGE>

        IN WITNESS WHEREOF,  the Depositor,  the Master Servicer and the Trustee
have  caused  their  names to be  signed  hereto  by their  respective  officers
thereunto  duly  authorized and their  respective  seals,  duly attested,  to be
hereunto affixed, all as of the date and year first above written.

[Seal]                                          RESIDENTIAL    ASSET    MORTGAGE
                                                PRODUCTS, INC.

Attest:                                         By:
        ---------------------------------------
        Name:  Julie Steinhagen                         Name: Michael Mead
        Title:   Vice President                         Title:    Vice President

[Seal] RESIDENTIAL FUNDING CORPORATION

Attest:                                         By:
        ---------------------------------------
        Name:                                           Name: Julie Steinhagen
        Title:                                          Title: Managing Director

[Seal]                                          DEUTSCHE   BANK  TRUST   COMPANY
                                                AMERICAS
                                                                  as Trustee

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

[Seal]

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

<PAGE>

STATE OF MINNESOTA                  )
                                    ) ss.:
COUNTY OF HENNEPIN                  )

        On the 29th day of May, 2003, before me, a notary public in and for said
State,  personally  appeared Michael Mead, known to me to be a Vice President of
Residential Asset Mortgage Products, Inc., one of the corporations that executed
the within instrument,  and also known to me to be the person who executed it on
behalf  of  said  corporation,  and  acknowledged  to me that  such  corporation
executed the within instrument.

        IN WITNESS WHEREOF,  I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                    Notary Public

[Notarial Seal]

<PAGE>

STATE OF MINNESOTA                  )
                                    ) ss.:
COUNTY OF HENNEPIN                  )

        On the 29th day of May, 2003, before me, a notary public in and for said
State,  personally  appeared  Julie  Steinhagen,  known  to me to be a  Managing
Director  of  Residential  Funding  Corporation,  one of the  corporations  that
executed  the  within  instrument,  and also  known to me to be the  person  who
executed  it on behalf of said  corporation,  and  acknowledged  to me that such
corporation executed the within instrument.

        IN WITNESS WHEREOF,  I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                                    Notary Public

[Notarial Seal]

<PAGE>

STATE OF CALIFORNIA                 )
                                    ) ss.:
COUNTY OF ORANGE                    )

        On the 29th day of May, 2003, before me, a notary public in and for said
State,  personally  appeared   __________________,   known  to  me  to  be  a/an
_________________  of  Deutsche  Bank Trust  Company  Americas,  the entity that
executed  the  within  instrument,  and also  known to me to be the  person  who
executed it on behalf of said banking  entity and  acknowledged  to me that such
banking entity executed the within instrument.

               IN WITNESS  WHEREOF,  I have  hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                    Notary Public

<PAGE>

STATE OF CALIFORNIA                 )
                                    ) ss.:
COUNTY OF ORANGE                    )

        On the 29th day of May, 2003, before me, a notary public in and for said
State,  personally  appeared   __________________,   known  to  me  to  be  a/an
_________________  of  Deutsche  Bank Trust  Company  Americas,  the entity that
executed  the  within  instrument,  and also  known to me to be the  person  who
executed it on behalf of said banking  entity and  acknowledged  to me that such
banking entity executed the within instrument.

               IN WITNESS  WHEREOF,  I have  hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                    Notary Public

<PAGE>

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