Document:

HOMESTAR MORTGAGE ACCEPTANCE CORP.,

                                    Company,

                             WELLS FARGO BANK, N.A.

                  Master Servicer and Securities Administrator,

                                       and

                       HSBC BANK USA, NATIONAL ASSOCIATION

                                     Trustee

                         POOLING AND SERVICING AGREEMENT

                           Dated as of OCtober 1, 2004

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

                     Asset-Backed Pass-Through Certificates

                                  Series 2004-5

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                    ARTICLE I

                                   DEFINITIONS

Section 1.01.        Defined Terms.............................................3
      Accepted Master Servicing Practices......................................3
      Accrual Period...........................................................3
      Accrued Certificate Interest.............................................3
      Adjustable Rate Mortgage Loans...........................................3
      Advance..................................................................3
      Affiliate................................................................4
      Aggregate Stated Principal Balance.......................................4
      Agreement................................................................4
      Allocated Realized Loss Amount...........................................4
      Assignment...............................................................4
      Assignment Agreement.....................................................4
      Available Distribution Amount............................................4
      Balloon Loan.............................................................5
      Balloon Payment..........................................................5
      Bankruptcy Code..........................................................5
      Basic Principal Distribution Amount......................................5
      Basis Risk Shortfall.....................................................5
      Basis Risk Shortfall Carry-Forward Amount................................5
      Basis Risk Shortfall Reserve Fund........................................5
      Book-Entry Certificate...................................................5
      Business Day.............................................................5
      Cash Liquidation.........................................................5
      Cenlar...................................................................6
      Cenlar...................................................................6
      Certificate..............................................................6
      Certificate Account......................................................6
      Certificate Account Deposit Date.........................................6
      Certificateholder........................................................6
      Holder...................................................................6
      Certificate Margin.......................................................6
      Certificate Owner........................................................6
      Certificate Principal Balance............................................7
      Certificate Register.....................................................7
      Class....................................................................7
      Class A Certificate......................................................7
      Class A Corridor Contract Allocation Amount..............................7
      Class A Principal Distribution Amount....................................7
      Class A-1 Certificate....................................................7

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      Class A-2 Certificate....................................................8
      Class A-3 Certificate....................................................8
      Class A-4 Certificate....................................................8
      Class C Certificate......................................................8
      Class M Certificates.....................................................8
      Class M-1 Certificate....................................................8
      Class M-1 Principal Distribution Amount..................................8
      Class M-2 Certificate....................................................9
      Class M-2 Principal Distribution Amount..................................9
      Class M-3 Certificate....................................................9
      Class M-3 Principal Distribution Amount..................................9
      Class M-4 Certificate...................................................10
      Class M-4 Principal Distribution Amount.................................10
      Class M-5 Certificate...................................................10
      Class M-5 Principal Distribution Amount.................................10
      Class M-6 Certificate...................................................11
      Class M-6 Principal Distribution Amount.................................11
      Class M-7 Certificate...................................................11
      Class M-7 Principal Distribution Amount.................................12
      Class P Certificate.....................................................12
      Class R Certificate.....................................................12
      Class R-1 Interest......................................................12
      Class R-2 Interest......................................................12
      Closing Date............................................................12
      Code....................................................................12
      Collateral Value........................................................12
      Commission..............................................................12
      Company.................................................................12
      Compensating Interest...................................................13
      Corridor Contract Counterparty..........................................13
      Corridor Contracts......................................................13
      Corporate Trust Office..................................................13
      Corresponding Certificate...............................................13
      Curtailment.............................................................14
      Custodial Account.......................................................14
      Custodial Agreement.....................................................14
      Custodian...............................................................14
      Cut-off Date............................................................14
      Deficient Valuation.....................................................14
      Definitive Certificate..................................................14
      Deleted Mortgage Loan...................................................14
      Depository..............................................................14
      Depository Participant..................................................14
      Determination Date......................................................14
      Disqualified Organization...............................................14
      Distribution Date.......................................................15

                                       2
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      Due Date................................................................15
      Due Period..............................................................15
      EDGAR...................................................................15
      Eligible Account........................................................15
      Event of Default........................................................16
      Exchange Act............................................................16
      Extra Principal Distribution Amount.....................................16
      Fannie Mae..............................................................16
      FDIC....................................................................16
      Fixed Rate Mortgage Loans...............................................16
      Freddie Mac.............................................................16
      Funding Date............................................................16
      Indenture...............................................................16
      Initial Certificate Principal Balance...................................16
      Initial Notional Amount.................................................16
      Insurance Policy........................................................16
      Insurance Proceeds......................................................17
      Interest Carry Forward Amount...........................................17
      Interest Determination Date.............................................17
      Interest Remittance Amount..............................................17
      Late Collections........................................................17
      Lender..................................................................17
      Lender-Paid PMI Loans...................................................17
      Lender-Paid PMI Rate....................................................17
      LIBOR...................................................................17
      LIBOR Business Day......................................................17
      Liquidated Mortgage Loan................................................17
      Liquidation Proceeds....................................................18
      Loan-to-Value Ratio.....................................................18
      Lost Note Affidavit.....................................................18
      Majority Class C Certificateholder......................................18
      Marker Rate.............................................................18
      Master Servicer.........................................................18
      Master Servicing Fees...................................................18
      Master Servicing Fee Rate...............................................19
      Maximum Uncertificated Accrued Interest Deferral Amount.................19
      MERS....................................................................19
      MERS(R) System..........................................................19
      MIN.....................................................................19
      MOM Loan................................................................19
      Monthly Payment.........................................................19
      Moody's.................................................................19
      Mortgage................................................................20
      Mortgage File...........................................................20
      Mortgage Loan...........................................................20
      Mortgage Loan Purchase Agreement........................................20

                                       3
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      Mortgage Loan Schedule..................................................20
      Mortgage Note...........................................................21
      Mortgage Rate...........................................................22
      Mortgaged Property......................................................22
      Mortgagor...............................................................22
      Net Liquidation Proceeds................................................22
      Net Monthly Excess Cashflow.............................................22
      Net Mortgage Rate.......................................................22
      Net Prepayment Interest Shortfall.......................................22
      Net WAC Rate............................................................22
      NIMS Insurer............................................................22
      Nonrecoverable Advance..................................................22
      Non-United States Person................................................23
      Notional Amount.........................................................23
      Offered Certificates....................................................23
      Officers' Certificate...................................................23
      Opinion of Counsel......................................................23
      Option One..............................................................23
      Option One..............................................................23
      Optional Termination Date...............................................23
      OTS.....................................................................23
      Outstanding Mortgage Loan...............................................23
      Overcollateralization Deficiency Amount.................................23
      Overcollateralization Target Amount.....................................24
      Overcollateralized Amount...............................................24
      Ownership Interest......................................................24
      Pass-Through Rate.......................................................24
      Percentage Interest.....................................................26
      Permitted Investment....................................................26
      Permitted Transferee....................................................27
      Person..................................................................27
      Prepayment Assumption...................................................27
      Prepayment Charge.......................................................27
      Prepayment Interest Shortfall...........................................27
      Prepayment Period.......................................................28
      Primary Hazard Insurance Policy.........................................28
      Primary Insurance Policy................................................28
      Principal Distribution Amount...........................................28
      Principal Prepayment....................................................28
      Principal Prepayment in Full............................................28
      Principal Remittance Amount.............................................28
      Prospectus Supplement...................................................28
      Protected Account.......................................................28
      Purchase Price..........................................................28
      Qualified Insurer.......................................................29
      Qualified Substitute Mortgage Loan......................................29

                                       4
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      Rating Agency...........................................................29
      Realized Loss...........................................................30
      Record Date.............................................................30
      Regular Certificate.....................................................30
      Relief Act..............................................................30
      Relief Act Interest Shortfall...........................................30
      REMIC...................................................................30
      REMIC 1.................................................................30
      REMIC 1 Interest Loss Allocation Amount.................................31
      REMIC 1 Overcollateralized Amount.......................................31
      REMIC 1 Principal Loss Allocation Amount................................31
      REMIC 1 Overcollateralization Target Amount.............................32
      REMIC 1 Regular Interest LT-AA..........................................32
      REMIC 1 Regular Interest LT-A2..........................................32
      REMIC 1 Regular Interest LT-A3..........................................32
      REMIC 1 Regular Interest LT-A3..........................................32
      REMIC 1 Regular Interest LT-M1..........................................32
      REMIC 1 Regular Interest LT-M2..........................................32
      REMIC 1 Regular Interest LT-M3..........................................33
      REMIC 1 Regular Interest LT-M4..........................................33
      REMIC 1 Regular Interest LT-M5..........................................33
      REMIC 1 Regular Interest LT-M6..........................................33
      REMIC 1 Regular Interest LT-M7..........................................33
      REMIC 1 Regular Interest LT-P...........................................33
      REMIC 1 Regular Interest LT-ZZ..........................................34
      REMIC 1 Regular Interests...............................................34
      REMIC 2.................................................................34
      REMIC Provisions........................................................34
      REMIC Regular Interest..................................................34
      Remittance Report.......................................................34
      REO Acquisition.........................................................34
      REO Disposition.........................................................34
      REO Imputed Interest....................................................34
      REO Proceeds............................................................34
      REO Property............................................................35
      Request for Release.....................................................35
      Residual Interest.......................................................35
      Responsible Officer.....................................................35
      Securities Administrator................................................35
      Seller..................................................................35
      Senior Enhancement Percentage...........................................35
      Servicer................................................................35
      Servicer Remittance Date................................................35
      Servicing Advances......................................................35
      Servicing Agreements....................................................36
      Servicing Fee...........................................................36

                                       5
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      Servicing Fee Rate......................................................36
      Servicing Officer.......................................................36
      Single Certificate......................................................36
      Standard & Poor's.......................................................36
      Startup Day.............................................................36
      Stated Principal Balance................................................36
      Step-Up Date............................................................37
      Stepdown Date...........................................................37
      Subservicer.............................................................37
      Subservicer Remittance Date.............................................37
      Subservicing Agreement..................................................37
      Subsequent Recoveries...................................................37
      Substitution Adjustment.................................................37
      Tax Returns.............................................................37
      Transfer................................................................38
      Transferor..............................................................38
      Trigger Event...........................................................38
      Trust Fund..............................................................38
      Trust REMIC.............................................................38
      Trustee.................................................................38
      Uncertificated Accrued Interest.........................................38
      Uncertificated Principal Balance........................................38
      Uncertificated Pass-Through Rate........................................39
      Uncertificated REMIC 1 Pass-Through Rate................................39
      Underwriter.............................................................39
      Uninsured Cause.........................................................39
      United States Person....................................................39
      Voting Rights...........................................................39
      Weighted Average Net Mortgage Rate......................................40

Section 1.02.   Determination of LIBOR........................................40

Section 1.03.   Allocation of Certain Interest Shortfalls.....................41

                                   ARTICLE II

         CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01.   Conveyance of Mortgage Loans..................................43

Section 2.02.   Acceptance of the Trust Fund by the Trustee...................47

Section 2.03.   Representations, Warranties and Covenants of the Master
                Servicer and the Company......................................48

Section 2.04.   Assignment of Interest in the Mortgage Loan Purchase
                Agreement.....................................................51

Section 2.05.   Issuance of  Certificates; Conveyance of REMIC Regular
                Interests and Acceptance of REMIC 1 and REMIC 2
                by the Trustee................................................53

                                       6
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                                   ARTICLE III

                 ADMINISTRATION AND SERVICING OF THE TRUST FUND

Section 3.01.   Administration and Servicing of Mortgage Loans................55

Section 3.02.   REMIC-Related Covenants.......................................57

Section 3.03.   Monitoring of Servicer........................................57

Section 3.04.   Fidelity Bond.................................................58

Section 3.05.   Power to Act; Procedures......................................58

Section 3.06.   Due-on-Sale Clauses; Assumption Agreements....................59

Section 3.07.   Release of Mortgage Files.....................................59

Section 3.08.   Documents, Records and Funds in Possession of Master
                Servicer To Be Held for Trustee...............................60

Section 3.09.   Standard Hazard Insurance and Flood Insurance Policies........61

Section 3.10.   Presentment of Claims and Collection of Proceeds..............61

Section 3.11.   Maintenance of the Primary Mortgage Insurance Policies........62

Section 3.12.   Trustee to Retain Possession of Certain Insurance
                Policies and Documents........................................62

Section 3.13.   Realization Upon Defaulted Mortgage Loans.....................63

Section 3.14.   Compensation for the Master Servicer..........................63

Section 3.15.   REO Property..................................................63

Section 3.16.   Protected Accounts............................................64

Section 3.17.   Custodial Account.............................................65

Section 3.18.   Permitted Withdrawals and Transfers from the Custodial
                Account.......................................................66

Section 3.19.   Certificate Account...........................................67

Section 3.20.   Permitted Withdrawals and Transfers from the Certificate
                Account.......................................................68

Section 3.21.   Annual Officer's Certificate as to Compliance.................70

Section 3.22.   Annual Independent Accountant's Servicing Report..............70

Section 3.23.   Reports Filed with Securities and Exchange Commission.........71

Section 3.24.   UCC...........................................................71

Section 3.25.   Optional Purchase of Defaulted Mortgage Loans.................72

Section 3.26.   The Corridor Contracts........................................72

                                       7
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                              ARTICLE IV

                    PAYMENTS TO CERTIFICATEHOLDERS

Section 4.01.   Distributions.................................................74

Section 4.02.   Statements to Certificateholders..............................79

Section 4.03.   Remittance Reports; Advances by the Master Servicer...........81

Section 4.04.   Distributions on the REMIC Regular Interests..................82

Section 4.05.   Allocation of Realized Losses.................................84

Section 4.06.   Information Reports to Be Filed by the Servicer...............85

Section 4.07.   Compliance with Withholding Requirements......................85

Section 4.08.   Basis Risk Shortfall Reserve Fund.............................86

                               ARTICLE V

                           THE CERTIFICATES

Section 5.01.   The Certificates..............................................87

Section 5.02.   Registration of Transfer and Exchange of Certificates.........88

Section 5.03.   Mutilated, Destroyed, Lost or Stolen Certificates.............93

Section 5.04.   Persons Deemed Owners.........................................94

Section 5.05.   Rule 144A Information.........................................94

                              ARTICLE VI

                  THE COMPANY AND THE MASTER SERVICER

Section 6.01.   Liability of the Company and the Master Servicer..............95

Section 6.02.   Merger, Consolidation or Conversion of the Company
                or the Master Servicer........................................95

Section 6.03.   Limitation  on  Liability  of  the Company, the Master
                Servicer, the Securities Administrator and Others.............95

Section 6.04.   Limitation on Resignation of the Master Servicer..............96

Section 6.05.   Sale and Assignment of Master Servicing.......................96

                              ARTICLE VII

                                DEFAULT

Section 7.01.   Events of Default.............................................98

Section 7.02.   Trustee to Act; Appointment of Successor......................99

Section 7.03.   Notification to Certificateholders...........................101

Section 7.04.   Waiver of Events of Default..................................101

                                       8
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Section 7.05.   List of Certificateholders...................................101

                                  ARTICLE VIII

               CONCERNING THE TRUSTEE AND SECURITIES ADMINISTRATOR

Section 8.01.   Duties of Trustee and the Securities Administrator...........102

Section 8.02.   Certain Matters Affecting the Trustee and the
                Securities Administrator.....................................103

Section 8.03.   Trustee and Securities Administrator Not Liable for
                Certificates or Mortgage Loans...............................105

Section 8.04.   Trustee and Securities Administrator May Own Certificates....105

Section 8.05.   Trustee's and Securities Administrator's Fees................105

Section 8.06.   Eligibility Requirements for Trustee and the
                Securities Administrator.....................................106

Section 8.07.   Resignation and Removal of the Trustee and the
                Securities Administrator.....................................106

Section 8.08.   Successor Trustee and Successor Securities Administrator.....108

Section 8.09.   Merger or Consolidation of Trustee or Securities
                Administrator................................................108

Section 8.10.   Appointment of Co-Trustee or Separate Trustee................109

                              ARTICLE IX

                              TERMINATION

Section 9.01.   Termination  Upon  Repurchase or  Liquidation of All
                Mortgage Loans or upon Purchase of Certificates..............111

Section 9.02.   Termination of REMIC 2.......................................113

Section 9.03.   Additional Termination Requirements..........................113

                               ARTICLE X

                           REMIC PROVISIONS

Section 10.01.  REMIC Administration.........................................115

Section 10.02.  Prohibited Transactions and Activities.......................118

Section 10.03.  Master Servicer, Securities Administrator and Trustee
                Indemnification..............................................118

                              ARTICLE XI

                       MISCELLANEOUS PROVISIONS

Section 11.01.  Amendment....................................................120

Section 11.02.  Recordation of Agreement; Counterparts.......................121

Section 11.03.  Limitation on Rights of Certificateholders...................121

Section 11.04.  Governing Law................................................122

Section 11.05.  Notices......................................................122

                                       9
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Section 11.06.  Severability of Provisions...................................123

Section 11.07.  Successors and Assigns.......................................123

Section 11.08.  Article and Section Headings.................................123

Section 11.09.  Notice to Rating Agencies and the NIMS Insurer...............123

Section 11.10.  Third Party Rights...........................................124

Signatures
Acknowledgments

Exhibit A      Form of Class A Certificate
Exhibit B-1    Form of Class M Certificate
Exhibit B-2    Form of Class C Certificate
Exhibit B-3    Form of Class P Certificate
Exhibit B-4    Form of Class R Certificate
Exhibit C      Form of Trustee Initial Certification
Exhibit D      Form of Trustee Final Certification
Exhibit E      Form of Remittance Report
Exhibit F      Request for Release
Exhibit G-1    Form of Investor Representation Letter
Exhibit G-2    Form of Transferor Representation Letter
Exhibit G-3    Form of Rule 144A Investment Representation
Exhibit G-4    Transferor Certificate for Transfers of Residual Certificates
Exhibit G-5    Transfer Affidavit and Agreement for Transfers of Residual
               Certificates
Exhibit H      Mortgage Loan Schedule
Exhibit I      [Reserved]
Exhibit J      [Reserved]
Exhibit K      Assignment Agreement
Exhibit L-1    Form 10-K Certification
Exhibit L-2    Form 10-K Back-up Certification (Master Servicer)
Exhibit L-3    Form 10-K Back-up Certification (Trustee)
Exhibit M-1    Cenlar Servicing Agreement
Exhibit M-2    Option One Servicing Agreement
Exhibit N      Form of Custodial Agreement
Exhibit O      [Reserved]
Exhibit P      Form of Mortgage Loan Purchase Agreement

                                       10
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         This Pooling and Servicing Agreement, dated and effective as of October
1, 2004, is entered into among Homestar Mortgage Acceptance Corp., as company
(the "Company"),Wells Fargo Bank, N.A., as master servicer (in such capacity,
the "Master Servicer") and as securities administrator (in such capacity, the
"Securities Administrator"), and HSBC Bank USA, National Association, as trustee
(the "Trustee").

                             PRELIMINARY STATEMENT:

         The Company intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of fourteen classes of
certificates, designated as (i) the Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates, (ii) the Class M-1, Class M-2, Class M-3, Class M-4, Class
M-5, Class M-6 and Class M-7 Certificates, (iii) the Class C Certificates, (iv)
the Class P Certificates and (v) the Class R Certificates.

                                     REMIC 1

         As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Trust Fund (exclusive of the Basis
Risk Shortfall Reserve Fund and the Corridor Contracts) as a REMIC for federal
income tax purposes, and such segregated pool of assets will be designated as
"REMIC 1". The Class R-1 Interest will represent the sole class of "residual
interests" in REMIC 1 for purposes of the REMIC Provisions.

         The following table irrevocably sets forth the designation, the
Uncertificated REMIC 1 Pass-Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC 1
Regular Interests. None of the REMIC 1 Regular Interests will be certificated.

             Uncertificated REMIC 1   Initial Uncertificated      Assumed Final
Designation    Pass-through Rate        Principal Balance       Maturity Date(1)
-----------    -----------------        -----------------       ----------------
   LT-AA              (2)                 $405,597,358.80       October 25, 2034
   LT-A1              (2)                 $  2,813,000.00       October 25, 2034
   LT-A2              (2)                 $    261,200.00       October 25, 2034
   LT-A3              (2)                 $    393,100.00       October 25, 2034
   LT-A4              (2)                 $    267,910.00       October 25, 2034
   LT-M1              (2)                 $     76,570.00       October 25, 2034
   LT-M2              (2)                 $     68,290.00       October 25, 2034
   LT-M3              (2)                 $     84,840.00       October 25, 2034
   LT-M4              (2)                 $     31,050.00       October 25, 2034
   LT-M5              (2)                 $     35,180.00       October 25, 2034
   LT-M6              (2)                 $     31,040.00       October 25, 2034
   LT-M7              (2)                 $     47,590.00       October 25, 2034

                                       1
<PAGE>

   LT-ZZ              (2)                 $  4,167,727.12       October 25, 2034
   LT-P               (2)                 $        100.00       October 25, 2034

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

                                     REMIC 2
                                     -------

         As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC 1 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 2". The Class R-2 Interest will represent the sole class of
"residual interests" in REMIC 2 for purposes of the REMIC Provisions.

         The following table irrevocably sets forth the Class designation,
Pass-Through Rate and Initial Certificate Principal Balance for each Class of
Certificates that represents one or more of the "regular interests" in REMIC 2
created hereunder:

                    Initial Certificate                          Assumed Final
Class Designation    Principal Balance    Pass-through Rate     Maturity Date(1)
-----------------    -----------------    -----------------    -----------------
       A-1           $    281,300,000        Adjustable(2)     October 25, 2034
       A-2           $     26,120,000        Adjustable(2)     October 25, 2034
       A-3           $     39,310,000        Adjustable(2)     October 25, 2034
       A-4           $     26,791,000        Adjustable(2)     October 25, 2034
       M-1           $      7,657,000        Adjustable(2)     October 25, 2034
       M-2           $      6,829,000        Adjustable(2)     October 25, 2034
       M-3           $      8,484,000        Adjustable(2)     October 25, 2034
       M-4           $      3,105,000        Adjustable(2)     October 25, 2034
       M-5           $      3,518,000        Adjustable(2)     October 25, 2034
       M-6           $      3,104,000        Adjustable(2)     October 25, 2034
       M-7           $      4,759,000        Adjustable(2)     October 25, 2034
        C            $   2,897,855.92         Variable(3)      October 25, 2034
        P            $         100.00             (4)          October 25, 2034

(1)      Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
         regulations, the Distribution Date in the month following the maturity
         date for the Mortgage Loan with the latest possible maturity date has
         been designated as the "latest possible maturity date" for each REMIC 1
         Regular Interest.
(2)      Calculated in accordance with the definition of "Pass-Through Rate"
         herein.
(3)      The Class C Certificates will accrue interest at their variable
         Pass-Through Rate on the Notional Amount of the Class C Certificates
         outstanding from time to time which shall equal the aggregate of the
         Uncertificated Principal Balances of the REMIC 1 Regular Interests
         (other than REMIC 1 Regular Interest LT-P). The Class C Certificates
         will not accrue interest on its Certificate Principal Balance.
(4)      The Class P does not accrue interest.

                                       2
<PAGE>

                                   ARTICLE I
                                   DEFINITIONS

         Section 1.01. Defined Terms.

         Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article. Unless otherwise specified, all calculations in respect of interest on
the Class A Certificates, the Class M Certificates, the Class C Certificates and
the REMIC 1 Regular Interests shall be made on the basis of a 360-day year
consisting of the actual number of days in the related Accrual Period. The Class
P Certificates and the Class R Certificates do not accrue interest.

         "Accepted Master Servicing Practices": With respect to any Mortgage
Loan, as applicable, either (x) those customary mortgage master servicing
practices of prudent mortgage master servicing institutions that master service
mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, to the extent
applicable to the Trustee or the Master Servicer (except in its capacity as
successor to the Servicer), or (y) as provided in this Agreement, to the extent
applicable to the Master Servicer, but in no event below the standard set forth
in clause (x).

         "Accrual Period": With respect to any Distribution Date and the Offered
Certificates, the period commencing on the immediately preceding Distribution
Date (or, in the case of the first Distribution Date, the Closing Date) and
ending on the day immediately preceding the current Distribution Date. With
respect to any Distribution Date and the Class C Certificates, the calendar
month preceding the month in which such Distribution Date occurs. The Class R
Certificates and Class P Certificates will not accrue any interest and therefore
have no Accrual Period.

         "Accrued Certificate Interest": With respect to the Class A, Class M
and Class C Certificates and any Distribution Date, the amount of interest
accrued during the related Accrual Period at the related Pass-Through Rate on
the Certificate Principal Balance (or Notional Amount in the case of the Class C
Certificates) of such Class immediately prior to such Distribution Date, in each
case, reduced by any Net Prepayment Interest Shortfalls and Relief Act Interest
Shortfalls (allocated to such Certificate as set forth in Section 1.03). The
Accrued Certificate Interest on the Class A Certificates and Class M
Certificates will be calculated on the basis of a 360-day year and the actual
number of days in the related Accrual Period. The Accrued Certificate Interest
on the Class C Certificates will be calculated on the basis of a 360-day year
consisting of twelve 30-days months.

         "Adjustable Rate Mortgage Loans": The Mortgage Loans identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is adjustable at any
point during the life of the related Mortgage, including any Mortgage Loans
delivered in replacement thereof.

         "Advance": As to any Mortgage Loan, any advance made by the Servicer or
the Master Servicer on any Distribution Date pursuant to Section 4.03.

                                       3
<PAGE>

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

         "Aggregate Stated Principal Balance": As of any date of determination,
the aggregate Stated Principal Balance of the Mortgage Loans.

         "Agreement": This Pooling and Servicing Agreement and all amendments
hereof.

         "Allocated Realized Loss Amount": With respect to any Distribution Date
and any Class of Class M Certificates, an amount equal to the sum of any
Realized Loss allocated to that class of Certificates on that Distribution Date
and any Allocated Realized Loss Amount for that class remaining unpaid from any
previous Distribution Date.

         "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect a
record the sale of the Mortgage.

         "Assignment Agreement": The Assignment, Assumption and Recognition
Agreement, dated as of the Closing Date, among the Company, the Trustee and the
Seller, whereby the Servicing Agreements are being assigned to the Trust, and
attached hereto as Exhibit K.

         "Available Distribution Amount": With respect to any Distribution Date,
an amount equal to the aggregate of the following amounts with respect to the
Mortgage Loans: (a) all previously undistributed payments on account of
principal and all previously undistributed payments on account of interest
received after the Cut-off Date and on or prior to the related Determination
Date, (b) any Advances and Compensating Interest paid by the Servicers or the
Master Servicer with respect to such Distribution Date and (c) any reimbursed
amount in connection with losses on investments of deposits in an account,
except: (i) all payments that were due on or before the Cut-off Date; (ii) all
Principal Prepayments, Liquidation Proceeds and Subsequent Recoveries received
after the applicable Prepayment Period; (iii) all payments, other than Principal
Prepayments, that represent early receipt of scheduled payments due on a date or
dates subsequent to the related Due Date; (iv) amounts received on particular
Mortgage Loans as late payments of principal or interest and respecting which,
and to the extent that, there are any unreimbursed Advances; (v) any investment
earnings on amounts on deposit in the Custodial Account and the Certificate
Account and amounts permitted to be withdrawn from the Custodial Account and the
Certificate Account pursuant to this Agreement; (vi) amounts needed to pay the
Servicing Fees and Master Servicing Fees or to reimburse the Servicer or the
Master Servicer for amounts due under the applicable Servicing Agreement and the
Agreement to the extent such amounts have not been retained by, or paid
previously to, the Servicer or the Master Servicer; (vii) to pay any fees with
respect to the Lender-Paid PMI Policy and (viii) any amounts reimbursable to the
Trustee, the Securities Administrator and the Custodian pursuant to this
Agreement.

                                       4
<PAGE>

         "Balloon Loan": Each of the Mortgage Loans identified in the Mortgage
Loan Schedule as having an original term to maturity that is shorter than the
related amortization term.

         "Balloon Payment": With respect to any Balloon Loan, the payment due on
the stated maturity date of such Balloon Loan.

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

         "Basic Principal Distribution Amount": With respect to any Distribution
Date, the excess, if any, of (x) the Principal Remittance Amount for such
Distribution Date, over (y) the Overcollateralization Release Amount.

         "Basis Risk Shortfall": With respect to any Class of Offered
Certificates, on each Distribution Date where clause (ii) of the definition of
"Pass-Through Rate" is less than clause (i) of the definition of "Pass-Through
Rate", the excess, if any, of (x) the aggregate Accrued Certificate Interest
thereon for such Distribution Date calculated pursuant to the lesser of clause
(i) of the definition of "Pass-Through Rate" over (y) interest accrued on the
Mortgage Loans at the Net WAC Rate.

         "Basis Risk Shortfall Carry-Forward Amount": With respect to each Class
of Offered Certificates and any Distribution Date, as determined separately for
each such Class of Offered Certificates, an amount equal to the aggregate amount
of Basis Risk Shortfall for such Certificates on such Distribution Date, plus
any unpaid Basis Risk Shortfall for such Class of Certificates from prior
Distribution Dates, plus interest thereon at the Pass-Through Rate for such
Distribution Date, to the extent previously unreimbursed by the Net Monthly
Excess Cashflow or the Corridor Contracts.

         "Basis Risk Shortfall Reserve Fund": A reserve fund established by the
Securities Administrator on behalf of the Trustee for the benefit of the Holders
of the Offered Certificates. The Basis Risk Shortfall Reserve Fund is an
"outside reserve fund" within the meaning of Treasury regulation Section
1.860G-2(h), which is not an asset of any REMIC, ownership of which is evidenced
by the Class C Certificates, and which is established and maintained pursuant to
Section 4.08.

         "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 the New York Stock Exchange or Federal Reserve is closed or on
which banking institutions in the jurisdiction in which the Trustee, the Master
Servicer, the Servicer, any Subservicer or the Securities Administrator is
located are authorized or obligated by law or executive order to be closed.

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

                                       5
<PAGE>

         "Cenlar": Cenlar FSB.

         "Cenlar Servicing Agreement": The Servicing Agreement dated March 5,
2004, between Wells Fargo Bank, N.A. as master servicer and Home Star Mortgage
Services LLC as seller and servicer.

         "Certificate": Any Class A, Class M, Class C, Class P or Class R
Certificate.

         "Certificate Account": The trust account or accounts created and
maintained pursuant to Section 3.19, which shall be entitled "HSBC Bank USA,
National Association, in trust for registered holders of Homestar Mortgage
Acceptance Corp., Asset-Backed Pass-Through Certificates, Series 2004-5", and
which account or accounts must each be an Eligible Account.

         "Certificate Account Deposit Date": With respect to any Distribution
Date, the Business Day immediately preceding such Distribution Date.

         "Certificateholder" or "Holder": The Person in whose name a Certificate
is registered in the Certificate Register, except that only a Permitted
Transferee shall be a holder of a Residual Certificate for any purposes hereof
and, solely for the purposes of giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Company or the Master Servicer or
any affiliate thereof shall be deemed not to be outstanding and the Voting
Rights to which such Certificate is entitled shall not be taken into account in
determining whether the requisite percentage of Voting Rights necessary to
effect any such consent has been obtained, except as otherwise provided in
Section 11.01. The Trustee, the Securities Administrator and the NIMS Insurer
shall be entitled to rely upon a certification of the Company or the Master
Servicer in determining if any Certificates are registered in the name of the
respective affiliate. 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, the Securities
Administrator and the NIMS Insurer shall be required to recognize as a "Holder"
or "Certificateholder" only the Person in whose name a Certificate is registered
in the Certificate Register.

         "Certificate Margin": With respect to the Class A-1, Class A-2, Class
A-3, Class A-4, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6
and Class M-7 Certificates and solely for the purposes of the definition of
Marker Rate and Maximum Uncertificated Accrued Interest Deferral Amount, the
REMIC I Regular Interests (other than REMIC I Regular Interests LT-AA, LT-ZZ and
LT-P), on any Distribution Date prior to the Optional Termination Date, 0.450%,
0.200%, 0.380%, 0.570%, 0.630%, 0.670%, 1.150%, 1.350%, 1.550%, 2.000% and
2.250% per annum, respectively, and on any Distribution Date on and after the
Step-Up Date, 0.900%, 0.400%, 0.760%, 1.140%, 0.945%, 1.005%, 1.725%, 2.025%,
2.325%, 3.000% and 3.375% per annum, respectively.

         "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.

                                       6
<PAGE>

         "Certificate Principal Balance": With respect to any Class of Class A
Certificates or Class M Certificates immediately prior to any Distribution Date,
the Initial Certificate Principal Balance thereof, plus any Subsequent
Recoveries added to the Certificate Principal Balance of such Certificate,
reduced by the sum of (a) all amounts actually distributed in respect of
principal of such Class and, (b) in the case of a Class M Certificate, Realized
Losses allocated thereto on all prior Distribution Dates. With respect to the
Class C Certificates as of any date of determination, an amount equal to the
excess, if any, of (A) the then aggregate Uncertificated Principal Balances of
the REMIC 1 Regular Interests over (B) the then aggregate Certificate Principal
Balances of the Class A Certificates, the Class M Certificates and the Class P
Certificates then outstanding.

         "Certificate Register": The register maintained pursuant to Section
5.02.

         "Class": Collectively, all of the Certificates bearing the same
designation.

         "Class A Certificate": Class A-1, Class A-2, Class A-3 or Class A-4
Certificates.

         "Class A Corridor Contract Allocation Amount": With respect to each
Class of Class A Certificates and any Distribution Date, the amount received
with respect to the Corridor Contract for the Class A Certificates for such
Distribution Date times a fraction, the numerator of which is the Certificate
Principal Balance of such Class of Certificates immediately prior to such
Distribution Date, and the denominator of which is the aggregate Certificate
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date.

         "Class A Principal Distribution Amount": For any applicable
Distribution Date on or after the Stepdown Date as long as a Trigger Event has
not occurred with respect to such Distribution Date, an amount equal to the
excess (if any) of (x) the aggregate Certificate Principal Balance of the Class
A Certificates immediately prior to such Distribution Date over (y) the lesser
of (a) the Aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period, and after reduction for Realized Losses incurred during the related
Prepayment Period) multiplied by 80.50% and (b) the amount, if any, by which (i)
the Aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period, and after reduction for Realized Losses incurred during the related
Prepayment Period) exceeds (ii) the Overcollateralization Floor Amount.

         "Class A-1 Certificate": Any one of the Class A-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

                                       7
<PAGE>

         "Class A-2 Certificate": Any one of the Class A-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

         "Class A-3 Certificate": Any one of the Class A-3 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

         "Class A-4 Certificate": Any one of the Class A-4 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

         "Class C Certificate": Any one of the Class C Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-2, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing a REMIC Regular
Interest in REMIC 2.

         "Class M Certificates": The Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6 and Class M-7 Certificates.

         "Class M-1 Certificate": Any one of the Class M-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

         "Class M-1 Principal Distribution Amount": For any applicable
Distribution Date on or after the Stepdown Date as long as a Trigger Event has
not occurred with respect to such Distribution Date, an amount equal to the
excess (if any) of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates (after taking into account the distribution
of the Class A Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class M-1 Certificates immediately
prior to such Distribution Date over (y) the lesser of (a) the Aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period, and
after reduction for

                                       8
<PAGE>

Realized Losses incurred during the related Prepayment Period) multiplied by
84.20% and (b) the amount, if any, by which (i) the Aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period, and after reduction for
Realized Losses incurred during the related Prepayment Period) exceeds (ii) the
Overcollateralization Floor Amount.

         "Class M-2 Certificate": Any one of the Class M-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

         "Class M-2 Principal Distribution Amount": For any applicable
Distribution Date on or after the Stepdown Date as long as a Trigger Event has
not occurred with respect to such Distribution Date, an amount equal to the
excess (if any) of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates and Class M-1 Certificates (after taking
into account the distribution of the Class A and Class M-1 Principal
Distribution Amounts on such Distribution Date) and (ii) the Certificate
Principal Balance of the Class M-2 Certificates immediately prior to such
Distribution Date over (y) the lesser of (a) the Aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period, and after reduction for
Realized Losses incurred during the related Prepayment Period) multiplied by
87.50% and (b) the amount, if any, by which (i) the Aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period, and after reduction for
Realized Losses incurred during the related Prepayment Period) exceeds (ii) the
Overcollateralization Floor Amount.

         "Class M-3 Certificate": Any one of the Class M-3 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

         "Class M-3 Principal Distribution Amount": For any applicable
Distribution Date on or after the Stepdown Date as long as a Trigger Event has
not occurred with respect to such Distribution Date, an amount equal to the
excess (if any) of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A, Class M-1 and Class M-2 Certificates (after taking into
account the distributions of the Class A, Class M-1 and Class M-2 Principal
Distribution Amounts on such Distribution Date) and (ii) the Certificate
Principal Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (y) the lesser of (a) the Aggregate

                                       9
<PAGE>

Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period, and
after reduction for Realized Losses incurred during the related Prepayment
Period) multiplied by 91.60% and (a) the amount, if any, by which (i) the
Aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period (after giving effect to scheduled payments of principal
due during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period, and after reduction for Realized Losses incurred during the related
Prepayment Period) exceeds (ii) the Overcollateralization Floor Amount.

         "Class M-4 Certificate": Any one of the Class M-4 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

         "Class M-4 Principal Distribution Amount": For any applicable
Distribution Date on or after the Stepdown Date as long as a Trigger Event has
not occurred with respect to such Distribution Date, an amount equal to the
excess (if any) of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A, Class M-1, Class M-2 and Class M-3 Certificates (after
taking into account the distribution of the Class A, Class M-1, Class M-2 and
Class M-3 Principal Distribution Amounts on such Distribution Date) and (ii) the
Certificate Principal Balance of the Class M-4 Certificates immediately prior to
such Distribution Date over (y) the lesser of (a) the Aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period, and after reduction for
Realized Losses incurred during the related Prepayment Period) multiplied by
93.10% and (b) the amount, if any, by which (i) the Aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period, and after reduction for
Realized Losses incurred during the related Prepayment Period) exceeds (ii) the
Overcollateralization Floor Amount.

         "Class M-5 Certificate": Any one of the Class M-5 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

         "Class M-5 Principal Distribution Amount": For any applicable
Distribution Date on or after the Stepdown Date as long as a Trigger Event has
not occurred with respect to such Distribution Date, an amount equal to the
excess (if any) of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A, Class M-1, Class M-2, Class M-3 and Class M-4

                                       10
<PAGE>

Certificates (after taking into account the distribution of the Class A, Class
M-1, Class M-2, Class M-3 and Class M-4 Principal Distribution Amount on such
Distribution Date) and (ii) the Certificate Principal Balance of the Class M-5
Certificates immediately prior to such Distribution Date over (y) the lesser of
(a) the Aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period, and after reduction for Realized Losses incurred during the related
Prepayment Period) multiplied by 94.80% and (b) the amount, if any, by which (i)
the Aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period, and after reduction for Realized Losses incurred during the related
Prepayment Period) exceeds (ii) the Overcollateralization Floor Amount.

         "Class M-6 Certificate": Any one of the Class M-6 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

         "Class M-6 Principal Distribution Amount": For any applicable
Distribution Date on or after the Stepdown Date as long as a Trigger Event has
not occurred with respect to such Distribution Date, an amount equal to the
excess (if any) of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5
Certificates (after taking into account the distribution of the Class A, Class
M-1, Class M-2, Class M-3, Class M-4 and Class M-5 Principal Distribution Amount
on such Distribution Date) and (ii) the Certificate Principal Balance of the
Class M-6 Certificates immediately prior to such Distribution Date over (y) the
lesser of (a) the Aggregate Stated Principal Balance of the Mortgage Loans as of
the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period, and after reduction for Realized Losses incurred
during the related Prepayment Period) multiplied by 96.30% and (b) the amount,
if any, by which (i) the Aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period, and after reduction for Realized Losses incurred
during the related Prepayment Period) exceeds (ii) the Overcollateralization
Floor Amount.

         "Class M-7 Certificate": Any one of the Class M-7 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing (i) a REMIC Regular
Interest in REMIC 2 and (ii) the right to receive the related Basis Risk
Shortfall Carry-Forward Amount from the Basis Risk Shortfall Reserve Fund.

                                       11
<PAGE>

         "Class M-7 Principal Distribution Amount": For any applicable
Distribution Date on or after the Stepdown Date as long as a Trigger Event has
not occurred with respect to such Distribution Date, an amount equal to the
excess (if any) of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5
and Class M-6 Certificates (after taking into account the distribution of the
Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5 and Class M-6
Principal Distribution Amount on such Distribution Date) and (ii) the
Certificate Principal Balance of the Class M-7 Certificates immediately prior to
such Distribution Date over (y) the lesser of (a) the Aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period, and after reduction for
Realized Losses incurred during the related Prepayment Period) multiplied by
98.60% and (b) the amount, if any, by which (i) the Aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period, and after reduction for
Realized Losses incurred during the related Prepayment Period) exceeds (ii) the
Overcollateralization Floor Amount.

         "Class P Certificate": Any one of the Class P Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-3, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, representing the right to
distributions as set forth herein and therein and evidencing a REMIC Regular
Interest in REMIC 2.

         "Class R Certificate": Any one of the Class R Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-4, executed by the Securities Administrator and authenticated and
delivered by the Securities Administrator, evidencing the ownership of the Class
R-1 Interest and Class R-2 Interest.

         "Class R-1 Interest": The uncertificated Residual Interest in REMIC 1.

         "Class R-2 Interest": The uncertificated Residual Interest in REMIC 2.

          "Closing Date": October 1, 2004.

         "Code":  The Internal Revenue Code of 1986, as amended.

         "Collateral Value": The appraised value of a Mortgaged Property based
upon the lesser of (i) the appraisal made at the time of the origination of the
related Mortgage Loan, or (ii) the sales price of such Mortgaged Property at
such time of origination. With respect to a Mortgage Loan the proceeds of which
were used to refinance an existing mortgage loan, the appraised value of the
Mortgaged Property based upon the appraisal obtained at the time of refinancing.

         "Commission":  The Securities and Exchange Commission.

         "Company": Homestar Mortgage Acceptance Corp., or its successor in
interest.

                                       12
<PAGE>

         "Compensating Interest": With respect to any Distribution Date, an
amount equal to Prepayment Interest Shortfalls resulting from Principal
Prepayments during the related Prepayment Period, but not more than the
Servicing Fees for the immediately preceding Due Period.

         "Corridor Contract Counterparty": The Bank of New York.

         "Corridor Contracts": The corridor contracts between the Trustee and
the Corridor Contract Counterparty for the benefit of the Offered Certificates
and the Class C Certificates.

         "Corporate Trust Office": With respect to the Trustee, the principal
corporate trust office of the Trustee at which at any particular time its
corporate trust business related to this Agreement shall be administered, which
office at the date of the execution of this Agreement is located at 452 Fifth
Avenue, New York, New York 10018, Attention: Corporate Trust Services -
Homestar, and with respect to the Securities Administrator, for Certificate
transfer purposes, Wells Fargo Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479, Attn: Corporate Trust Services - Homestar 2004-5,
and for all other purposes, 9062 Old Annapolis Road, Columbia, Maryland, 21045,
Attn: Corporate Trust Services - Homestar 2004-5.

         "Corresponding Certificate": With respect to:

         (i) REMIC 1 Regular Interest LT-A1, the Class A-1 Certificates,

         (ii) REMIC 1 Regular Interest LT-A2, the Class A-2 Certificates,

         (iii) REMIC 1 Regular Interest LT-A3, the Class A-3 Certificates,

         (iv) REMIC 1 Regular Interest LT-A4, the Class A-4 Certificates,

         (iv) REMIC 1 Regular Interest LT-M1, the Class M-1 Certificates,

         (v) REMIC 1 Regular Interest LT-M2, the Class M-2 Certificates,

         (vi) REMIC 1 Regular Interest LT-M3, the Class M-3 Certificates,

         (vii) REMIC 1 Regular Interest LT-M4, the Class M-4 Certificates,

         (viii) REMIC 1 Regular Interest LT-M5, the Class M-5 Certificates,

         (ix) REMIC 1 Regular Interest LT-M6, the Class M-6 Certificates,

         (x) REMIC 1 Regular Interest LT-M7, the Class M-7 Certificates, and

         (xi) REMIC 1 Regular Interest LT-P, the Class P Certificates.

         "Cumulative Loss Percentage": On any Distribution Date, the percentage
equivalent of a fraction, (x) the numerator of which is the aggregate principal
portion of Realized Losses on the Mortgage Loans from the Cut-off Date to the
end of the related Prepayment Period and (y) the

                                       13
<PAGE>

denominator of which is the Aggregate Stated Principal Balance of the Mortgage
Loans as of the Cut-off Date.

         "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 by the Master Servicer pursuant to Section 3.17 in the name of a
depository institution, as custodian for the Holders of the Certificates. Any
such account or accounts shall be an Eligible Account.

         "Custodial Agreement": An agreement, dated as of the Closing Date among
the Company, the Master Servicer, the Trustee and the Custodian in substantially
the form of Exhibit N hereto.

         "Custodian": Wells Fargo Bank, N.A., or any successor custodian
appointed pursuant to the provisions hereof and of the Custodial Agreement.

         "Cut-off Date": October 1, 2004.

         "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.

         "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(5) 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
institutions or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.

         "Determination Date": The 15th day (or if such 15th day is not a
Business Day, the Business Day immediately preceding such 15th day) of the month
of the related Distribution Date.

         "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

                                       14
<PAGE>

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 the 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), (iv) rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code and (v) any other Person so designated by the
Securities Administrator based upon an Opinion of Counsel that the holding of an
Ownership Interest in a Residual Certificate by such Person 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 Residual 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, or if such 25th day is
not a Business Day, the Business Day immediately following such 25th day,
commencing in November 2004.

         "Due Date": With respect to approximately 98.86% of the Mortgage Loans,
the first day of the month of the related Distribution Date. Approximately 0.14%
of the Mortgage Loans have Due Dates which do not occur on the first day of the
month.

         "Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of such
Distribution Date (or, with respect to the first Due Period, the day following
the Cut-off Date) and ending on the first day of the month of the related
Distribution Date.

         "EDGAR": The Electronic Data Gathering and Retrieval System of the
Commission.

         "Eligible Account": Any of (i) a segregated account maintained with a
federal or state chartered depository institution (A) the short-term obligations
of which are rated A-1+ or better by Standard & Poor's and P-1 by Moody's at the
time of any deposit therein or (B) insured by the FDIC (to the limits
established by such Corporation), the uninsured deposits in which account are
otherwise secured such that, as evidenced by an Opinion of Counsel (obtained by
the Person requesting that the account be held pursuant to this clause (ii))
delivered to the Trustee and NIMS Insurer prior to the establishment of such
account, the Certificateholders will have a claim with respect to the funds in
such account and a perfected first priority security interest against any
collateral (which shall be limited to Permitted Investments, each of which shall
mature not later than the Business Day immediately preceding the Distribution
Date next following the date of investment in such collateral or the
Distribution Date if such Permitted Investment is an obligation of the
institution that maintains the Certificate Account or Custodial Account)
securing such funds that is superior to claims of any other depositors or
general creditors of the depository institution with which such account is
maintained, (ii) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company subject to
regulations regarding fiduciary funds on deposit similar to Title 12 of the Code
of Federal Regulations Section 9.10(b), which, in either case, has corporate
trust

                                       15
<PAGE>

powers, acting in its fiduciary capacity or (iii) a segregated account or
accounts of a depository institution acceptable to the Rating Agencies (as
evidenced in writing by a letter from the Rating Agencies to the Trustee and
NIMS Insurer that use of any such account as the Custodial Account or the
Certificate Account will not have an adverse effect on the then-current ratings
assigned to the Classes of the Certificates then rated by the Rating Agencies)
and NIMS Insurer. Eligible Accounts may bear interest.

         "Event of Default": One or more of the events described in Section
7.01.

         "Exchange Act": The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

         "Extra Principal Distribution Amount": With respect to any Distribution
Date, is the lesser of (x) the Overcollateralization Deficiency Amount for such
Distribution Date and (y) the Net Monthly Excess Cashflow Amount for such
Distribution Date.

         "Fannie Mae":  Federal National Mortgage Association or any successor.

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

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

         "Fixed Rate Mortgage Loans": The Mortgage Loans identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is fixed for the life of
the related Mortgage, including any Mortgage Loans delivered in replacement
thereof.

         "Freddie Mac": Federal Home Loan Mortgage Corporation or any successor.

         "Funding Date": With respect to each Mortgage Loan, the date on which
funds were advanced by or on behalf of the Seller and interest began to accrue
thereunder.

         "Indenture": An indenture relating to the issuance of notes secured by
the Class C Certificates and Class P Certificates (or any portion thereof) which
may or may not be guaranteed by the NIMS Insurer.

         "Initial Certificate Principal Balance": With respect to each Class of
Regular Certificates, the Initial Certificate Principal Balance of such Class of
Certificates as set forth in the Preliminary Statement hereto, or with respect
to any single Certificate, the Initial Certificate Principal Balance as stated
on the face thereof.

         "Initial Notional Amount": With respect to the Class C Certificate, the
aggregate of the initial Uncertificated Principal Balance of the REMIC 1 Regular
Interests (other than REMIC 1 Regular Interest LT-P).

         "Insurance Policy": With respect to any Mortgage Loan, any insurance
policy (including the Lender-Paid PMI Policy) which is required to be maintained
from time to time under this Agreement in respect of such Mortgage Loan.

                                       16
<PAGE>

         "Insurance Proceeds": Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Hazard Insurance Policy, any title insurance policy or
any other insurance policy covering a Mortgage Loan, to the extent such proceeds
are not applied to the restoration of the related Mortgaged Property or released
to the Mortgagor in accordance with the procedures that the Servicer would
follow in servicing mortgage loans held for its own account.

         "Interest Carry Forward Amount": With respect to each Class of Offered
Certificates and each Distribution Date, the excess of (a) the Accrued
Certificate Interest for such Class with respect to prior Distribution Dates,
over (b) the amount actually distributed to such Class with respect to interest
on such prior Distribution Dates, with interest on such excess at the related
Pass-Through Rate.

         "Interest Determination Date": With respect to the first Accrual
Period, the second LIBOR Business Day preceding the Closing Date, and with
respect to each Accrual Period thereafter, the second LIBOR Business Day
preceding the related Payment Date on which such Accrual Period commences.

         "Interest Remittance Amount": With respect to any Distribution Date,
that portion of the Available Distribution Amount for such Distribution Date
allocable to interest received or advanced on the Mortgage Loans.

         "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.

         "Lender":  PMI Mortgage Insurance Co.

         "Lender-Paid PMI Loans": The Mortgage Loans included in the Trust Fund
covered by a Lender-Paid PMI Policy, as indicated on the Mortgage Loan Schedule.

         "Lender-Paid PMI Policy": The lender-paid Primary Insurance Policy
issued by PMI Mortgage Insurance Co., as assigned to the Trust on the Closing
Date, or any replacement policy therefor.

         "Lender-Paid PMI Rate": With respect to any Lender-Paid PMI Loan, the
rate per annum at which the related premium on the Lender-Paid PMI Policy
accrues.

         "LIBOR": With respect to any Distribution Date and the Pass-Through
Rates on the Offered Certificates, the arithmetic mean of the Loan interbank
offered rate quotations of reference banks (which will be selected by the
Securities Administrator) for one-month U.S. dollar deposits, expressed on a per
annum basis, determined in accordance with Section 1.02.

         "LIBOR Business Day": A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.

         "Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage
Loan in respect of which the Servicer has determined, in accordance with the
servicing procedures specified in

                                       17
<PAGE>

the Servicing Agreement, as of the end of the related Prepayment Period, that
all Liquidation Proceeds which it expects to recover with respect to the
liquidation of the Mortgage Loan or disposition of the related REO Property have
been recovered.

         "Liquidation Proceeds": Amounts (other than Insurance Proceeds)
received by the Servicer or 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 and any Subsequent
Recoveries, other than amounts received in respect of any REO Property.

         "Loan-to-Value Ratio": As of any date of determination, 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 Collateral Value of the related Mortgaged Property.

         "Lost Note Affidavit": With respect to any Mortgage Loan as to which
the original Mortgage Note has been permanently lost, misplaced or destroyed and
has not been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost, misplaced or destroyed (together with a copy of the
related Mortgage Note) and indemnifying the Trust Fund against any loss, cost or
liability resulting from the failure to deliver the original Mortgage Note in
the form of Exhibit J hereto.

         "Majority Class C Certificateholder": With respect to the Class C
Certificates and any Distribution Date, the Holder of a 50.01% or greater
Percentage Interest of the Class C Certificates.

         "Marker Rate": With respect to the Class C Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the Uncertificated REMIC 1 Pass-Through Rates for each REMIC 1 Regular
Interest (other than REMIC 1 Regular Interest LT-AA and REMIC I Regular Interest
LT-P) subject to a cap (for each such REMIC 1 Regular Interest other than REMIC
1 Regular Interest LT-ZZ) equal to the lesser of (x) One-Month LIBOR plus the
related Certificate Margin of the Corresponding Certificate and (y) the Net WAC
Rate for the purpose of this calculation; with the rate on REMIC 1 Regular
Interest LT-ZZ subject to a cap of zero for the purpose of this calculation;
provided, however, that solely for this purpose, calculations of the
Uncertificated REMIC 1 Pass-Through Rate and the related caps with respect to
REMIC 1 Regular Interest LT-A1, REMIC 1 Regular Interest LT-A2, REMIC 1 Regular
Interest LT-A3, REMIC 1 Regular Interest LT-A4, REMIC 1 Regular Interest LT-M1,
REMIC 1, Regular Interest LT-M2, REMIC 1 Regular Interest LT-M3, REMIC 1 Regular
Interest LT-M4, REMIC 1 Regular Interest LT-M5, REMIC 1 Regular Interest LT-M6
and REMIC 1 Regular Interest LT-M7 shall be multiplied by a fraction, the
numerator of which is the actual number of days in the Interest Accrual Period
and the denominator of which is 30.

         "Master Servicer": Wells Fargo Bank, N.A., or any successor master
servicer appointed as herein provided.

         "Master Servicing Fees": As to each Mortgage Loan, an amount, equal to
interest at the Master Servicing Fee Rate on the Stated Principal Balance of
such Mortgage Loan as of the Due

                                       18
<PAGE>

Date in the calendar month preceding the month in which the payment of the
Master Servicing Fee is due.

         "Master Servicing Fee Rate": With respect to each Mortgage Loan, the
per annum rate of 0.0125%.

         "Maximum Uncertificated Accrued Interest Deferral Amount": With respect
to any Distribution Date, the excess of (a) accrued interest at the
Uncertificated REMIC 1 Pass-Through Rate applicable to REMIC 1 Regular Interest
LT-ZZ for such Distribution Date on a balance equal to the excess of (i) the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-ZZ over (ii) the
REMIC 1 Overcollateralized Amount, in each case for such Distribution Date over
(b) the sum of (I) Uncertificated Accrued Interest on REMIC 1 Regular Interest
LT-A1, REMIC 1 Regular Interest LT-A2, REMIC 1 Regular Interest LT-A3, REMIC 1
Regular Interest LT-A4, REMIC 1 Regular Interest LT-M1, REMIC 1 Regular Interest
LT-M2, REMIC 1 Regular Interest LT-M3, REMIC 1 Regular Interest LT-M4, REMIC 1
Regular Interest LT-M5, REMIC 1 Regular Interest LT-M6, REMIC 1 Regular Interest
LT-M7 with the rate on each such REMIC 1 Regular Interest subject to a cap equal
to the lesser of (x) One-Month LIBOR plus the related Certificate Margin and (y)
the Net WAC Rate; provided, however, that solely for this purpose, calculations
of the Uncertificated REMIC 1 Pass-Through Rate and the related caps with
respect to REMIC 1 Regular Interest LT-A1, REMIC 1 Regular Interest LT-A2, REMIC
1 Regular Interest LT-A3, REMIC 1 Regular Interest LT-A4, REMIC 1 Regular
Interest LT-M1, REMIC 1 Regular Interest LT-M2, REMIC 1 Regular Interest LT-M3,
REMIC 1 Regular Interest LT-M4, REMIC 1 Regular Interest LT-M5, REMIC 1 Regular
Interest LT-M6 and REMIC 1 Regular Interest LT-M7 shall be multiplied by a
fraction, the numerator of which is the actual number of days in the Interest
Accrual Period and the denominator of which is 30.

         "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.

         "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.

         "Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by a Mortgagor from time to time under the related Mortgage Note as originally
executed (after adjustment, if any, for Deficient Valuations occurring prior to
such Due Date, and after any adjustment by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period), and other than
any Balloon Payment.

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

                                       19
<PAGE>

         "Mortgage": The mortgage, deed of trust or any other instrument
securing the Mortgage Loan.

         "Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement; provided, that
whenever the term "Mortgage File" is used to refer to documents actually
received by the Custodian as agent for the Trustee, such term shall not be
deemed to include such additional documents required to be added unless they are
actually so added.

         "Mortgage Loan": Each of the mortgage loans, transferred and assigned
to the Trustee pursuant to Section 2.01, 2.04 or 2.06 and from time to time held
in the Trust Fund (including any Qualified Substitute Mortgage Loans), the
Mortgage Loans so transferred, assigned and held being identified in the
Mortgage Loan Schedule. As used herein, the term "Mortgage Loan" includes the
related Mortgage Note and Mortgage.

         "Mortgage Loan Purchase Agreement": The Mortgage Loan Purchase
Agreement dated as the Cut-off Date, between Home Star Mortgage Services, LLC as
seller and the Company as purchaser, and all amendments thereof and supplements
thereto, attached hereto as Exhibit P.

         "Mortgage Loan Schedule": As of any date of determination, the schedule
of Mortgage Loans included in the Trust Fund. The initial schedule of Mortgage
Loans with accompanying information transferred on the Closing Date to the
Trustee as part of the Trust Fund for the Certificates, attached hereto as
Exhibit H (as amended from time to time to reflect the addition of Qualified
Substitute Mortgage Loans) (and, for purposes of the Trustee pursuant to Section
2.02, in computer-readable form as delivered to the Trustee), which list shall
set forth the following information with respect to each Mortgage Loan:

         (i) the loan number;

         (ii) the city, state and zip code of the Mortgaged Property;

         (iii) (A) the original term to maturity and (B) if such Mortgage Loan
is a Balloon Loan, the amortization term thereof;

         (iv) the original principal balance and the original Mortgage Rate;

         (v) the first Distribution Date;

         (vi) whether the Mortgage Loan is a Balloon Mortgage Loan or a Mortgage
Loan the terms of which do not provide for a Balloon Payment;

         (vii) the type of Mortgaged Property;

         (viii) the Monthly Payment in effect as of the Cut-off Date;

         (ix) the principal balance as of the Cut-off Date;

                                       20
<PAGE>

         (x) the Mortgage Rate as of the Cut-off Date;

         (xi) the occupancy status;

         (xii) the purpose of the Mortgage Loan;

         (xiii) the Collateral Value of the Mortgaged Property;

         (xiv) the original term to maturity;

         (xv) the paid-through date of the Mortgage Loan;

         (xvi) the Master Servicing Fee Rate;

         (xvii) the Servicing Fee Rate;

         (xviii) the Net Mortgage Rate for such Mortgage Loan;

         (xix) whether the Mortgage Loan is covered by a private mortgage
insurance policy or an original certificate of private mortgage insurance;

         (xx) the documentation type;

         (xxi) the type and term of the related Prepayment Charge, if any;

         (xxii) whether such Mortgage Loan is a Lender-Paid PMI Loan and, if so,
the related Lender-Paid PMI Rate;

         (xxiii) with respect to each Adjustable Rate Mortgage Loan; (a) the
frequency of each Adjustment Date;

         (b) the next Adjustment Date;

         (c) the Maximum Mortgage Rate;

         (d) the Minimum Mortgage Rate;

         (e) the Mortgage Rate as of the Cut-off Date;

         (f) the related Periodic Rate Cap;

         (g) the Gross Margin; and

         (h) the purpose of the Mortgage Loan.

         "Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.

                                       21
<PAGE>

         "Mortgage Rate": With respect to any Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan, as adjusted from time to time in
accordance with the provisions of the Mortgage Note.

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

         "Mortgagor":  The obligor or obligors on a Mortgage Note.

         "Net Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan or any other disposition of related Mortgaged Property (including REO
Property) the related Liquidation Proceeds net of Advances, Servicing Advances,
Servicing Fees and any other accrued and unpaid servicing fees received and
retained in connection with the liquidation of such Mortgage Loan or Mortgaged
Property.

         "Net Monthly Excess Cashflow": For any Distribution Date, the sum of
(a) the Overcollateralization Release Amount and (b) the excess of (x) the
Available Distribution Amount for such distribution date over (y) the sum for
such Distribution Date of (A) the aggregate Accrued Certificate Interest for the
Offered Certificates, (B) the aggregate Interest Carry Forward Amount for the
Class A Certificates and (C) the Principal Remittance Amount.

         "Net Mortgage Rate": With respect to each Mortgage Loan Due Date, a per
annum rate of interest equal to the then-applicable Mortgage Rate on such
Mortgage Loan less the sum of (i) the Master Servicing Fee Rate, (ii) the
Servicing Fee Rate and (iii) with respect to the Lender-Paid PMI Loans, the
Lender-Paid PMI Rate, calculated on the basis of a 360-day year and the number
of days in the related Accrual Period.

         "Net Prepayment Interest Shortfall": With respect to any Distribution
Date, the excess, if any, of any Prepayment Interest Shortfalls for such date
over the related Compensating Interest.

         "Net WAC Rate": With respect to the Offered Certificates, the weighted
average of the Net Mortgage Rates of the Mortgage Loans, weighted on the basis
of the Stated Principal Balances thereof as of the close of business on the
first day of the calendar month preceding the month in which such Distribution
Date occurs. For federal income tax purposes, the equivalent of the foregoing
shall be expressed as the weighted average of the Uncertificated REMIC 1
Pass-Through Rate on each REMIC 1 Regular Interest, weighted on the basis of the
Uncertificated Principal Balance of each such REMIC 1 Regular Interest.

         "NIMS Insurer ": Any insurer that is guaranteeing certain payments
under notes secured by collateral which includes all or a portion of the Class C
Certificates and Class P Certificates.

         "Nonrecoverable Advance": Any Advance or Servicing Advance previously
made or proposed to be made in respect of a Mortgage Loan which, in the good
faith judgment of the Servicer or the Master Servicer, will not or, in the case
of a proposed Advance or Servicing Advance, would not be ultimately recoverable
from related Late Collections, Insurance Proceeds, Liquidation Proceeds or REO
Proceeds. The determination by the Servicer or the Master Servicer that it has
made a Nonrecoverable Advance or that any proposed Advance or Servicing Advance
would constitute a Nonrecoverable Advance, shall be evidenced by a certificate
of a

                                       22
<PAGE>

Servicing Officer delivered, in the case of the Servicer, to the Company and the
Master Servicer, and in the case of the Master Servicer, to the Company and the
Trustee.

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

         "Notional Amount": With respect to the Class C Certificates,
immediately prior to any Distribution Date, the aggregate of the Uncertificated
Principal Balances of the REMIC 1 Regular Interests, other than REMIC 1 Regular
Interest LT-P.

         "Offered Certificates": The Class A Certificates and Class M
Certificates.

         "Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president and by
the Treasurer, the Secretary, or one of the assistant treasurers or assistant
secretaries of the Company, the Seller, the Master Servicer or of any
Subservicer and delivered to the Company and Trustee.

         "Opinion of Counsel": A written opinion of counsel, who may be counsel
for the Company, the Seller, or the Master Servicer, reasonably acceptable to
the Trustee and Securities Administrator; except that any opinion of counsel
relating to (a) the qualification of any account required to be maintained
pursuant to this Agreement as an Eligible Account, (b) the qualification of each
REMIC as a REMICs, (c) compliance with the REMIC Provisions or (d) resignation
of the Master Servicer pursuant to Section 6.04 must be an opinion of counsel
who (i) is in fact independent of the Company and the Master Servicer, (ii) does
not have any direct financial interest or any material indirect financial
interest in the Company or the Master Servicer or in an affiliate of either and
(iii) is not connected with the Company or the Master Servicer as an officer,
employee, director or person performing similar functions.

         "Option One": Option One Mortgage Corporation.

         "Option One Servicing Agreement": The Servicing Agreement dated March
5, 2004, between the Company as owner and Home Star Mortgage Services LLC as
servicer.

         "Optional Termination Date": The first Distribution Date following the
first Distribution Date after the aggregate Stated Principal Balance of the
Mortgage Loans, and properties acquired in respect thereof, remaining in the
Trust Fund has been reduced to less than or equal to 10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.

         "OTS":  Office of Thrift Supervision or any successor.

         "Outstanding Mortgage Loan": As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in Full, Cash Liquidation or REO Disposition and which was not purchased prior
to such Due Date pursuant to Sections 2.02, 2.04 or 3.14.

         "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization Target
Amount exceeds the Overcollateralized Amount (calculated for the purpose of this
definition only, solely after giving

                                       23
<PAGE>

effect to distributions in respect of the Principal Remittance Amount on such
Distribution Date) on such Distribution Date.

         "Overcollateralization Floor Amount": An amount equal to 0.50% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

         "Overcollateralization Release Amount": With respect to any
Distribution Date, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the excess, if any, of (i) the Overcollateralized
Amount (after giving effect to distributions in respect of the Principal
Remittance Amount to be made on such Distribution Date) for such Distribution
Date over (ii) the Overcollateralization Target Amount for such Distribution
Date.

         "Overcollateralization Target Amount": With respect to any Distribution
Date, (a) prior to the Stepdown Date, 0.70% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date, (b) on or after the
Stepdown Date and if a Trigger Event is not in effect, the greater of (i) 1.40%
of the then current aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (ii) the Overcollateralization
Floor Amount or (c) on or after the Stepdown Date and if a Trigger Event is in
effect, the Overcollateralization Target Amount for the immediately preceding
Distribution Date. Notwithstanding the foregoing, on and after any Distribution
Date following the reduction of the aggregate Certificate Principal Balance of
the Class A Certificates and the Class M Certificates to zero, the
Overcollateralization Target Amount shall be zero.

         "Overcollateralized Amount": With respect to any Distribution Date, the
amount, if any, by which (i) the aggregate Stated Principal Balance of the
Mortgage Loans (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period and any Realized Losses on the Mortgage Loans) exceeds (ii) the aggregate
Certificate Principal Balance of the Offered Certificates as of such
Distribution Date (after giving effect to distributions on such Distribution
Date.

         "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.

         "Pass-Through Rate": With respect to each Distribution Date and each
Class of Offered Certificates, a floating rate equal to the lesser of (i)
One-Month LIBOR plus the related Certificate Margin and (ii) the Net WAC Rate
with respect to such Distribution Date.

         With respect to any Distribution Date and the Class C Certificates, a
per annum rate equal to the percentage equivalent of a fraction, the numerator
of which is (x) the sum of the amounts calculated pursuant to clauses (A)
through (N) below, and the denominator of which is (y) the aggregate of the
Uncertificated Principal Balances of the REMIC 1 Regular Interests (other than
REMIC 1 Regular Interests LT-P). For purposes of calculating the Pass-Through
Rate for the Class C Certificates, the numerator is equal to the sum of the
following components:

                                       24
<PAGE>

         (A) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-AA minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-AA;

         (B) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-A1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-A1;

         (C) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-A2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-A2;

         (D) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-A3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-A3;

         (E) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-A4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-A4;

         (F) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-M1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-M1;

         (G) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-M2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-M2;

         (H) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-M3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-M3;

         (I) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-M4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-M4;

         (J) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-M5 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-M5;

         (K) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-M6 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-M6;

         (L) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-M7 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-M7;

                                       25
<PAGE>

         (M) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT-ZZ minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-ZZ; and

         (N)      100% of the interest on REMIC 1 Regular Interest LT-P.

         The Class P Certificates and the Class R Certificates will not accrue
interest and therefore will not have a Pass-Through Rate.

         "Percentage Interest": With respect to any Certificate (other than a
Class R 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 or Initial
Notional Amount, as applicable, thereof divided by the aggregate Initial
Certificate Principal Balance or Initial Notional Amount, as applicable, of all
of the Certificates of the same Class. With respect to any Class R Certificate,
the interest in distributions to be made with respect to such Class evidenced
thereby, expressed as a percentage, as stated on the face of each such
Certificate.

         "Permitted Investment": 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 the Rating Agency;

                                       26
<PAGE>

         (iv) commercial paper (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 Moody's and
Standard & Poor's in their highest short-term ratings available; provided that
such commercial paper shall have a remaining maturity of not more than 30 days;

         (v) a money market fund or a qualified investment fund rated by Moody's
in its highest long-term ratings available and rated AAAm or AAAm-G by Standard
& Poor's, including any such funds for which Wells Fargo Bank, N.A. or any
affiliate thereof serves as an investment advisor, manager, administrator,
shareholder, servicing agent, and/or custodian or sub-custodian; 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.

         "Permitted Transferee": Any transferee of a Residual Certificate other
than a Disqualified Organization, a Non-United States Person or an "electing
large partnership" (as defined in Section 775 of the Code).

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

         "Prepayment Assumption": As defined in the Prospectus Supplement.

         "Prepayment Charge": With respect to any Mortgage Loan, the charges,
penalties or premiums, if any, due in connection with a full or partial
prepayment of such Mortgage Loan in accordance with the terms of the related
Mortgage Note (or any rider or annex thereto), or any amounts in respect thereof
paid by the Seller in accordance with the Mortgage Loan Purchase Agreement or
the Servicer in accordance with the Servicing Agreements.

         "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 Net
Mortgage Rate on the Stated Principal Balance of such Mortgage Loan over the
amount of interest (adjusted to the Net Mortgage Rate) paid by the Mortgagor for
such Prepayment Period to the date of such Principal Prepayment in Full or (b) a
Curtailment

                                       27
<PAGE>

during the prior calendar month, an amount equal to one month's interest at the
Mortgage Rate on the amount of such Curtailment.

         "Prepayment Period": As to any Distribution Date, the calendar month
preceding the month in which such Distribution Date occurs.

         "Primary Hazard Insurance Policy": Each primary hazard insurance policy
required to be maintained pursuant to Section 3.13.

         "Primary Insurance Policy": Any primary policy of mortgage guaranty
insurance including the Lender-Paid PMI Policy, or any replacement policy
therefor.

         "Principal Distribution Amount": With respect to any Distribution Date,
an amount equal to the sum of the Basic Principal Distribution Amount plus the
Extra Principal Distribution Amount.

         "Principal Prepayment": Any payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of prepayment.

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

         "Principal Remittance Amount": With respect to any Distribution Date,
the sum of (i) each scheduled payment of principal collected or advanced on the
Mortgage Loans by the Servicer or Master Servicer that was due during the
related Due Period, (ii) the principal portion of all partial and full Principal
Prepayments of the Mortgage Loans applied by the Servicer or Master Servicer
during the related Prepayment Period, (iii) the principal portion of all Net
Liquidation Proceeds, REO Proceeds, Insurance Proceeds and Subsequent Recoveries
received during the related Prepayment Period, (iv) the principal portion of
proceeds of Mortgage Loan purchases made pursuant to Section 2.02, 2.04 or 3.06,
in each case received or made during the related Prepayment Period, (v) the
principal portion of any related Substitution Adjustments deposited in the
Custodial Account during the related Prepayment Period and (vi) on the
Distribution Date on which the Trust Fund is to be terminated pursuant to
Section 9.01, the principal portion of the termination price received from the
Servicer, the NIMS Insurer or the Master Servicer, as applicable, in connection
with a termination of the Trust Fund to occur on such Distribution Date.

         "Prospectus Supplement": That certain Prospectus Supplement dated
September 28, 2004 relating to the public offering of the Offered Certificates.

         "Protected Account": An account established and maintained for the
benefit of Certificateholders by the Servicer with respect to the related
Mortgage Loans and with respect to REO Property pursuant to the respective
Servicing Agreements.

         "Purchase Price": With respect to any Mortgage Loan (or REO Property)
required to be purchased pursuant to Section 2.02, 2.04 or 3.06, an amount equal
to the sum of (i) 100% of the

                                       28
<PAGE>

Stated Principal Balance thereof, (ii) unpaid accrued interest (or REO Imputed
Interest) at the applicable Net Mortgage Rate on the Stated Principal Balance
thereof outstanding during each Due Period that such interest was not paid or
advanced, from the date through which interest was last paid by the Mortgagor or
advanced and distributed to Certificateholders together with unpaid Master
Servicing Fees and Servicing Fees and, if such Mortgage Loan is a Lender-Paid
PMI Loan, fees due the Lender at the Lender-Paid PMI Rate, from the date through
which interest was last paid by the Mortgagor, in each case to the first day of
the month in which such Purchase Price is to be distributed, plus (iii) the
aggregate of all Advances and Servicing Advances made in respect thereof that
were not previously reimbursed and (iv) costs and damages incurred by the Trust
Fund and the NIMS Insurer in connection with a repurchase pursuant to Section
2.04 hereof that arises out of a violation of any predatory lending law which
also constitutes an actual breach of representation (xxxii), (xxxiii), (xxxiv),
(xxxv), (xxxvi) or representation (xxxvii) of Section 3.01(b) of the Mortgage
Loan Purchase Agreement.

         "Qualified Insurer": Any insurance company duly qualified as such under
the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as the claims
paying ability of which is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.

         "Qualified Substitute Mortgage Loan": A Mortgage Loan substituted by
the Company for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate of the Seller 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 paid to the Master Servicer for
deposit 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
Section 2.04 hereof; and, (vi) comply with each non-statistical representation
and warranty set forth in the Mortgage Loan Purchase Agreement.

         "Rating Agency": Standard & Poor's and Moody's and each of their
successors. If such agencies and their successors are no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating agency,
or other comparable Person, designated by the Company, notice of which
designation shall be given to the Trustee, the Securities Administrator, the
NIMS Insurer and Master Servicer. References herein to the two highest long term
debt ratings of a Rating Agency shall mean "AA" or better in the case of
Standard & Poor's and "Aa2" or better in the case of Moody's and references
herein to the two highest short-term debt ratings of a Rating Agency shall mean
"A-1+" in the case of Standard & Poor's and "P-1"

                                       29
<PAGE>

in the case of Moody's, and in the case of any other Rating Agency such
references shall mean such rating categories without regard to any plus or
minus.

         "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 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 date of the
Cash Liquidation or REO Disposition on the Stated Principal Balance of such
Mortgage Loan 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
the Servicer with respect to related Advances or Servicing Advances not
previously reimbursed. 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. In addition, to the extent the Servicer or Master Servicer receives
Subsequent Recoveries with respect to any Mortgage Loan, the amount of the
Realized Loss with respect to that Mortgage Loan will be reduced to the extent
such recoveries are applied to reduce the Certificate Principal Balance of any
Class of Certificates on any Distribution Date.

         "Record Date": With respect to any Book-Entry Certificates and any
Distribution Date, the close of business on the Business Day immediately
preceding such distribution date. With respect to any Certificates that are not
Book-Entry Certificates, the close of business on the last Business Day of the
calendar month preceding such Distribution Date.

         "Regular Certificate": Any of the Certificates other than a Residual
Certificate.

         "Relief Act": The Servicemembers Civil Relief Act, f/k/a Soldiers' and
Sailors' Civil Relief Act of 1940, as amended.

         "Relief Act Interest Shortfall": With respect to any Distribution Date,
for any Mortgage Loan with respect to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Due Period as
a result of the application of the Relief Act, the amount by which (i) interest
collectible on such Mortgage Loan during such Due Period is less than (ii) one
month's interest on the Principal Balance of such Mortgage Loan at the Loan Rate
for such Mortgage Loan before giving effect to the application of the Relief
Act.

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

         "REMIC 1": The segregated pool of assets subject hereto (exclusive of
the Basis Risk Shortfall Reserve Fund and the Corridor Contracts) with respect
to which a REMIC election is to be made, conveyed in trust to the Trustee, for
the benefit of the Holders of the REMIC 1 Regular Interests and the Holders of
the Class R Certificates (as holders of the Class R-1 Interest), consisting of:
(i) each Mortgage Loan (exclusive of payments of principal and interest due on
or

                                       30
<PAGE>

before the Cut-off Date, if any, received by the Master Servicer which shall
not constitute an asset of the Trust Fund) as from time to time are subject to
this Agreement and all payments under and proceeds of such Mortgage Loans
(exclusive of any prepayment fees and late payment charges received on the
Mortgage Loans), together with all documents included in the related Mortgage
File, subject to Section 2.01; (ii) such funds or assets as from time to time
are deposited in the Custodial Account or the Certificate Account and belonging
to the Trust Fund; (iii) any REO Property; (iv) the Primary Hazard Insurance
Policies, if any, the Primary Insurance Policies, if any, and all other
Insurance Policies with respect to the Mortgage Loans; (v) [reserved]; and (vi)
the Company's interest in respect of the representations and warranties made by
the Seller in the Mortgage Loan Purchase Agreement as assigned to the Trustee
pursuant to Section 2.04 hereof. REMIC 1 specifically does not include the Basis
Risk Shortfall Reserve Fund and the Corridor Contracts.

         "REMIC 1 Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the mortgage loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1
Regular Interest LT-AA minus the Marker Rate, divided by (b) 12.

         "REMIC 1 Overcollateralized Amount": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of
REMIC 1 Regular Interest LT-A1, REMIC 1 Regular Interest LT-A2, REMIC 1 Regular
Interest LT-A3, REMIC 1 Regular Interest LT-A4, REMIC 1 Regular Interest LT-M1,
REMIC 1 Regular Interest LT-M2, REMIC 1 Regular Interest LT-M3, REMIC 1 Regular
Interest LT-M4, REMIC 1 Regular Interest LT-M5, REMIC 1 Regular Interest LT-M6,
REMIC 1 Regular Interest LT-M7, REMIC 1 Regular Interest LT-ZZ and REMIC 1
Regular Interest LT-P, minus (ii) the aggregate of the Uncertificated Principal
Balances of REMIC 1 Regular Interest LT-A1, REMIC 1 Regular Interest LT-A2,
REMIC 1 Regular Interest LT-A3, REMIC 1 Regular Interest LT-A4, REMIC 1 Regular
Interest LT-M1, REMIC 1 Regular Interest LT-M2, REMIC 1 Regular Interest LT-M3,
REMIC 1 Regular Interest LT-M4, REMIC 1 Regular Interest LT-M5, REMIC 1 Regular
Interest LT-M6, REMIC 1 Regular Interest LT-M7 and REMIC 1 Regular Interest
LT-P, in each case as of such date of determination.

         "REMIC 1 Principal Loss Allocation Amount": With respect to any
Distribution Date and the mortgage loans, an amount equal to (a) the product of
(i) the aggregate Principal Balance of the mortgage loans and related REO
Properties then outstanding and (ii) 1 minus a fraction, the numerator of which
is two times the aggregate of the Uncertificated Principal Balances of REMIC 1
Regular Interest LT-A1, REMIC 1 Regular Interest LT-A2, REMIC 1 Regular Interest
LT-A3, REMIC 1 Regular Interest LT-A4, REMIC 1 Regular Interest LT-M1, REMIC 1
Regular Interest LT-M2, REMIC 1 Regular Interest LT-M3, REMIC 1 Regular Interest
LT-M4, REMIC 1 Regular Interest LT-M5, REMIC 1 Regular Interest LT-M6, REMIC 1
Regular Interest LT-M7 and the denominator of which is the aggregate of the
Uncertificated Principal Balances of REMIC 1 Regular Interest LT-A1, REMIC 1
Regular Interest LT-A2, REMIC 1 Regular Interest LT-A3, REMIC 1 Regular Interest
LT-A4, REMIC 1 Regular Interest LT-M1, REMIC 1 Regular Interest LT-M2, REMIC 1
Regular Interest LT-M3, REMIC 1 Regular Interest LT-M4, REMIC 1 Regular Interest
LT-M5, REMIC 1 Regular Interest LT-M6, REMIC 1 Regular Interest LT-M7 and REMIC
1 Regular Interest LT-ZZ.

                                       31
<PAGE>

         "REMIC 1 Overcollateralization Target Amount": 1% of the
Overcollateralization Target Amount.

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

         "REMIC 1 Regular Interest LT-A1": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
regular interest in REMIC 1. REMIC 1 Regular Interest LT-A1 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-A2": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
regular interest in REMIC 1. REMIC 1 Regular Interest LT-A2 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-A3": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
regular interest in REMIC 1. REMIC 1 Regular Interest LT-A3 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-A4": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
regular interest in REMIC 1. REMIC 1 Regular Interest LT-A4 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-M1": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
"regular interest" in REMIC 1. REMIC 1 Regular Interest LT-M1 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-M2": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
"regular interest" in

                                       32
<PAGE>

REMIC 1. REMIC 1 Regular Interest LT-M2 shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto.

         "REMIC 1 Regular Interest LT-M3": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
"regular interest" in REMIC 1. REMIC 1 Regular Interest LT-M3 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-M4": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
"regular interest" in REMIC 1. REMIC 1 Regular Interest LT-M4 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-M5": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
"regular interest" in REMIC 1. REMIC 1 Regular Interest LT-M5 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-M6": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
"regular interest" in REMIC 1. REMIC 1 Regular Interest LT-M6 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-M7": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
"regular interest" in REMIC 1. REMIC 1 Regular Interest LT-M7 shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.

         "REMIC 1 Regular Interest LT-P": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
"regular interest" in REMIC 1. REMIC 1 Regular Interest LT-P shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to any amounts distributed to REMIC 1
Regular Interest LT-P (including Prepayment Charges).

                                       33
<PAGE>

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

         "REMIC 1 Regular Interests": REMIC 1 Regular Interest LT-AA, REMIC 1
Regular Interest LT-A1, REMIC 1 Regular Interest LT-A2, REMIC 1 Regular Interest
LT-A3, REMIC 1 Regular Interest LT-A4, REMIC 1 Regular Interest LT-M1, REMIC 1
Regular Interest LT-M2, REMIC 1 Regular Interest LT-M3, REMIC 1 Regular Interest
LT-M4, REMIC 1 Regular Interest LT-M5, REMIC 1 Regular Interest LT-M6, REMIC 1
Regular Interest LT-M7, REMIC 1 Regular Interest LT-ZZ and REMIC 1 Regular
Interest LT-P.

         "REMIC 2": The segregated pool of assets consisting of all of the REMIC
1 Regular Interests conveyed in trust to the Trustee, for the benefit of the
Holders of the Regular Certificates and the Holders of the Class R Certificates
(as holders of the Class R-2 Interest), pursuant to Article II hereunder, and
all amounts deposited therein, with respect to which a separate REMIC election
is to be made.

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

         "REMIC Regular Interest": A REMIC 1 Regular Interest or Regular
Certificate.

         "Remittance Report": A report prepared by the Master Servicer (and
delivered to the Securities Administrator and NIMS Insurer) providing the
information set forth in Exhibit E attached hereto.

         "REO Acquisition": The acquisition by the Servicer on behalf of the
Trust Fund for the benefit of the Certificateholders of any REO Property
pursuant to Section 3.15.

         "REO Disposition": The receipt by the Servicer of Insurance Proceeds,
Liquidation Proceeds, Subsequent Recoveries and other payments and recoveries
(including proceeds of a final sale) which the 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 the 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 (as
such balance is reduced pursuant to Section 3.15 by any income from the REO
Property treated as a recovery of principal).

         "REO Proceeds": Proceeds, net of directly related expenses, received in
respect of any REO Property (including, without limitation, proceeds from the
rental of the related Mortgaged

                                       34
<PAGE>

Property and of any REO Disposition), which proceeds are required to be
deposited into the Custodial Account as and when received.

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

         "Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit F attached hereto.

         "Residual Certificate": A Class R Certificate.

         "Residual Interest": The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.

         "Responsible Officer": When used with respect to the Trustee shall mean
any officer within the Corporate Trust Office of the Trustee with direct
responsibility for the administration of this Agreement and also, with respect
to a particular matter, any other officer of the Trustee to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Securities Administrator shall
mean any officer assigned with direct responsibility for the administration of
this Agreement and also, with respect to a particular matter, any other officer
of the Securities Administrator to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.

         "Securities Administrator": Wells Fargo Bank, N.A., or its successor in
interest, or any successor securities administrator appointed as herein
provided.

         "Seller": Home Star Mortgage Services, LLC, or its successor in
interest.

         "Senior Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class M Certificates and (ii) the related
Overcollateralization Amount, in each case prior to the distribution of the
Principal Distribution Amount on such Distribution Date, by (y) the Aggregate
Stated Principal Balance of the Mortgage Loans after giving effect to
distributions to be made on that Distribution Date.

         "Servicer": Home Star Mortgage Services, LLC, or its successor in
interest.

         "Servicer Remittance Date": The 18th day of any month, or if such 18th
day is not a Business Day, the first Business Day immediately preceding such
18th day. The first Remittance Date shall occur on November 18, 2004.

         "Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency or
other unanticipated event in the performance by the Master Servicer, the
Servicer or any Subservicer 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

                                       35
<PAGE>

the Mortgage Loan being registered on the MERS System, (iii) the management and
liquidation of any REO Property, including reasonable fees paid to any
independent contractor in connection therewith, and (iv) compliance with the
obligations under the second paragraph of Section 3.01, Section 3.09 and Section
3.13 (other than any deductible described in the last paragraph thereof).

         "Servicing Agreements": The Cenlar Servicing Agreement and the Option
One Servicing Agreement, attached hereto as Exhibits M-1 and M-2, respectively.

         "Servicing Fee": With respect to each Mortgage Loan, accrued interest
at the Servicing Fee Rate with respect to the Mortgage Loan on the same
principal balance on which interest on the Mortgage Loan accrues for the
calendar month. The Servicing Fee consists of servicing and other related
compensation payable to the Servicer or to the Master Servicer if the Master
Servicer is directly servicing the loan, and includes any amount payable to any
Subservicer by the Servicer.

         "Servicing Fee Rate": With respect to each mortgage loan, the servicing
fee rate set forth in the mortgage loan schedule. With respect to each fixed
rate mortgage loan, the Servicing Fee Rate ranges from 0.25% to 0.50% per annum.
With respect to each adjustable rate mortgage loan, the Servicing Fee Rate
ranges from 0.375% to 0.50% per annum; provided that, if any adjustable rate
mortgage loan has an initial fixed rate interest period, that rate will range
from 0.25% to 0.50% per annum during such initial period. The weighted average
Servicing Fee Rate for the fixed rate mortgage loans is 0.3138% per annum. The
weighted average Servicing Fee Rate for the adjustable rate mortgage loans is
0.2720% per annum; provided that, if any adjustable rate mortgage loan has an
initial fixed rate interest period, the weighted average Servicing Fee Rate
during such initial period will be 0.3860% per annum.

         "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.

         "Single Certificate": A Regular Certificate of any Class (other than a
Class P Certificate) evidencing an Initial Certificate Principal Balance or
Initial Notional Amount, as applicable, of $1,000, or, in the case of a Class P
Certificate, a Certificate of such Class evidencing an Initial Certificate
Principal Balance of $100.

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

         "Startup Day": 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 principal balance of the
Mortgage Loan outstanding as of the Cut-off Date, after application of principal
payments due on or before such date, whether or not received, minus (ii) the sum
of (a) the principal portion of the Monthly Payments due with respect to such
Mortgage Loan or REO Property during each Due Period ending prior to the most
recent Distribution Date which were received or with respect to which an Advance
was made, and (b)

                                       36
<PAGE>

all Principal Prepayments with respect to such Mortgage Loan or REO Property,
and all Insurance Proceeds, Liquidation Proceeds, Subsequent Recoveries and REO
Proceeds to the extent applied by the Master Servicer as recoveries of principal
in accordance with Section 3.15 with respect to such Mortgage Loan or REO
Property, which were distributed pursuant to Section 4.01 on any previous
Distribution Date, and (c) any Realized Loss with respect thereto allocated
pursuant to Section 4.07 for any previous Distribution Date.

         "Step-Up Date": The first Distribution Date following the first
Distribution Date on which the aggregate unpaid principal balance of the
Mortgage Loans, and properties acquired in respect thereof, remaining in the
Trust Fund has been reduced to less than or equal to 10% of the Aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.

         "Stepdown Date": The earlier to occur of (i) the Distribution Date on
which the aggregate Certificate Principal Balance of the Class A Certificates
has been reduced to zero and (ii) the later to occur of (x) the Distribution
Date occurring in November 2007 and (y) the first Distribution Date for which
the Senior Enhancement Percentage is greater than or equal to approximately
19.50%.

         "Subservicer": Any Subservicer appointed by the Servicer pursuant to a
Servicing Agreement. Initially, the Subservicers shall be Cenlar and Option One.

         "Subservicer Remittance Date": The 18th day of each month, or if such
day is not a Business Day, the immediately preceding Business Day.

         "Subservicer Termination Trigger": A Subservicer Termination Trigger
will have occurred with respect to the Certificates on a Distribution Date if
either (a) the Three Month Rolling Delinquency Percentage for the Mortgage Loans
exceeds 12.00% or (b) the Cumulative Loss Percentage exceeds 3.00% from November
2007 to October 2008, 5.00% from November 2008 to October 2009, or 7.00%
thereafter.

         "Subservicing Agreement": The written contract between the Servicer and
a Subservicer and any successor Subservicer relating to servicing and
administration of certain Mortgage Loans as provided in the Servicing
Agreements.

         "Subsequent Recoveries": As of any Distribution Date, amounts received
by the Servicer or Master Servicer (net of any related expenses permitted to be
reimbursed pursuant to Section 4.02) or surplus amounts held by the Servicer or
Master Servicer to cover estimated expenses (including, but not limited to,
recoveries in respect of the representations and warranties made by the Seller
pursuant to the Mortgage Loan Purchase Agreement) specifically related to a
Mortgage Loan that was the subject of a liquidation or final disposition of any
REO Property prior to the related Prepayment Period that resulted in a Realized
Loss.

         "Substitution Adjustment":  As defined in Section 2.04 hereof.

         "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 each REMIC due to their

                                       37
<PAGE>

classification as REMICs under the REMIC Provisions, together with any and all
other 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.

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

         "Trigger Event": A Trigger Event is in effect with respect to any
distribution date if:

         (1) the three-month rolling average of the aggregate principal balance
of Mortgage Loans that are 60 or more days delinquent (including for this
purpose any such Mortgage Loans in foreclosure and Mortgage Loans with respect
to which the related mortgaged property has been acquired by the trust) as of
the close of business on the last day of the preceding calendar month equals or
exceeds 40% of the Senior Enhancement Percentage; or

         (2) in the case of any Distribution Date after the 36th Distribution
Date, the cumulative amount of Realized Losses incurred on the Mortgage Loans
from the Cut-off Date through the end of the calendar month immediately
preceding such Distribution Date exceeds the applicable percentage set forth
below of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date:

         Distribution Date                                  Percentage
         -----------------                                  ----------
         November 2004 to October 2008                        1.10%
         November 2008 to October 2009                        1.50%
         November 2009 to October 2010                        1.75%
         November 2010 and thereafter                         1.85%

         "Trust Fund": REMIC 1 or REMIC 2, the Corridor Contracts, the Basis
Risk Shortfall Reserve Fund, the Custodial Account and the Certificate Account.

         "Trust REMIC": Any of REMIC 1 or REMIC 2.

         "Trustee": HSBC Bank USA, National Association, or its successor in
interest, or any successor trustee appointed as herein provided.

         "Uncertificated Accrued Interest": With respect to each REMIC Regular
Interest on each Distribution Date, an amount equal to one month's interest at
the related Uncertificated Pass-Through Rate on the Uncertificated Principal
Balance or Uncertificated Notional Amount, as applicable, of such REMIC Regular
Interest. In each case, Uncertificated Accrued Interest will be reduced by any
Net Prepayment Interest Shortfalls and Relief Act Interest Shortfalls (allocated
to such REMIC Regular Interests as set forth in Section 1.03).

         "Uncertificated Principal Balance": With respect to each REMIC 1
Regular Interest, the principal amount of such REMIC Regular Interest
outstanding as of any date of determination.

                                       38
<PAGE>

As of the Closing Date, the Uncertificated Principal Balance of each REMIC 1
Regular Interest shall equal the amount set forth in the Preliminary Statement
hereto as its initial Uncertificated Principal Balance. On each Distribution
Date, the Uncertificated Principal Balance of each such REMIC 1 Regular Interest
shall be reduced by all distributions of principal made on such REMIC 1 Regular
Interest on such Distribution Date pursuant to Section 4.06 and, if and to the
extent necessary and appropriate, shall be further reduced on such Distribution
Date by Realized Losses as provided in Section 4.07. The Uncertificated
Principal Balance of REMIC 1 Regular Interest LT-ZZ shall be increased by
interest deferrals as provided in Section 4.06. The Uncertificated Principal
Balance of each REMIC Regular Interest shall never be less than zero.

         "Uncertificated Pass-Through Rate": The Uncertificated REMIC 1
Pass-Through Rate.

         "Uncertificated REMIC 1 Pass-Through Rate": With respect to each REMIC
1 Regular Interest and any Distribution Date, a per annum rate equal to the
average of the Net Mortgage Rates of the Mortgage Loans, weighted on the basis
of the Stated Principal Balances thereof as of the close of business on the last
day of the calendar month preceding the month in which such Distribution Date
occurs.

         "Underwriter": Citigroup Global Markets Inc.

         "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 or flood insurance policies
required to be maintained pursuant to Section 3.13.

         "United States Person": A citizen or resident of the United States, a
corporation or a partnership (including an 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 or any State thereof or the District
of Columbia (except, in the case of a partnership, to the extent provided in
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 whose income is subject to
United States federal income tax regardless of its source, or a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more such United States Persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, a trust which was in
existence on August 20, 1996 (other than a trust treated as owned by the grantor
under subpart E of part I of subchapter J of chapter 1 of the Code), and which
was treated as a United States person on August 20, 1996 may elect to continue
to be treated as a United States person notwithstanding the previous sentence.

         "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times during the term
of this Agreement, (i) 97% of all Voting Rights will be allocated among the
Holders of the Offered Certificates in proportion to the then outstanding
Certificate Principal Balances of their respective Certificates, (ii) 1% of all
Voting

                                       39
<PAGE>

Rights will be allocated to the Holders of the Class C Certificates, (iii) 1% of
all Voting Rights will be allocated to the Holders of the Class P Certificates
and (iv) 1% of all Voting Rights will be allocated to the Holders of the Class R
Certificates. The Voting Rights allocated to any Class of Certificates shall be
allocated among all Holders of the Certificates of such Class in proportion to
the outstanding Percentage Interests in such Class represented thereby.

         "Weighted Average Net Mortgage Rate": The weighted average of the Net
Mortgage Rates of the Mortgage Loans, weighted on the basis of the Stated
Principal Balances thereof as of the close of business on the first day of the
calendar month preceding the month in which such Distribution Date occurs.

         Section 1.02. Determination of LIBOR.

         LIBOR applicable to the calculation of the Pass-Through Rate on the
Offered Certificates for any Accrual Period will be determined on each Interest
Determination Date.

         On each Interest Determination Date, LIBOR shall be established by the
Securities Administrator and, as to any 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 Interest Determination 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 Securities Administrator), 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 Securities Administrator after
consultation with the Master Servicer) as of 11:00 a.m., London time, on the
Interest Determination 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 Offered Certificates then outstanding. The Securities
Administrator 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 Securities
Administrator, 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
Offered Certificates then outstanding. If no such quotations can be obtained,
the rate will be LIBOR for the prior Distribution Date; provided however, if,
under the priorities described above, LIBOR for a Distribution Date would be
based on LIBOR for the previous Distribution Date for the third consecutive
Distribution Date, the Securities Administrator shall select an alternative
comparable index (over which the Securities Administrator has no control), used
for determining one-month Eurodollar lending rates that is calculated and
published (or otherwise made available) by an independent party.

                                       40
<PAGE>

         The establishment of LIBOR by the Securities Administrator on any
Interest Determination Date and the Trustee's subsequent calculation of the
Pass-Through Rate applicable to the Offered Certificates for the relevant
Accrual Period, in the absence of manifest error, will be final and binding.

         The Securities Administrator will supply to any Certificateholder so
requesting by telephone the Pass-Through Rate on the Offered Certificates for
the current and the immediately preceding Accrual Period.

         Section 1.03. Allocation of Certain Interest Shortfalls.

         For purposes of calculating the amount of the Accrued Certificate
Interest for the Class A, Class M and Class C Certificates for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to the Class C Certificates to the
extent of one month's interest at the then applicable Pass-Through Rate on the
Notional Amount of each such Certificate and, thereafter, among the Class A
Certificates and Class M Certificates on a PRO RATA basis based on, and to the
extent of, one month's interest at the then applicable respective Pass-Through
Rate on the respective Certificate Principal Balance of each such Certificate.

         For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC 1 Regular Interests for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated (i) with respect to the Mortgage Loans,
among REMIC 1 Regular Interest LT-AA, REMIC 1 Regular Interest LT-A1, REMIC 1
Regular Interest LT-A2, REMIC 1 Regular Interest LT-A3, REMIC 1 Regular Interest
LT-A4, REMIC 1 Regular Interest LT-M1, REMIC 1 Regular Interest LT-M2, REMIC 1
Regular Interest LT-M3, REMIC 1 Regular Interest LT-M4, REMIC 1 Regular Interest
LT-M5, REMIC 1 Regular Interest LT-M6, REMIC 1 Regular Interest LT-M7 and REMIC
1 Regular Interest LT-ZZ, PRO RATA based on, and to the extent of, one month's
interest at the then applicable respective Uncertificated REMIC 1 Pass-Through
Rate on the respective Uncertificated Principal Balance of each such
Uncertificated REMIC 1 Regular Interest.

Section 1.04 Rights of the NIMS Insurer.

                  Each of the rights of the NIMS Insurer set forth in this
Agreement shall exist so long as (i) the NIMS Insurer has undertaken to
guarantee certain payments of notes issued pursuant to an Indenture and (ii) any
series of notes issued pursuant to one or more Indentures remain outstanding or
the NIMS Insurer is owed amounts in respect of its guarantee of payment on such
notes; provided, however, the NIMS Insurer shall not have any rights hereunder
(except pursuant to Section 11.01 in the case of clause (ii) below) so long as
(i) the NIMS Insurer has not undertaken to guarantee certain payments of notes
issued pursuant to the Indenture or (ii) any default has occurred and is
continuing under the insurance policy issued by the NIMS Insurer with respect to
such notes.

                                       41
<PAGE>

                                   ARTICLE II
                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

         Section 2.01. Conveyance of Mortgage Loans.

         The Company, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign, transfer, sell, set over and
otherwise convey to the Trustee without recourse all the right, title and
interest of the Company in and to (1) the Mortgage Loans identified on the
Mortgage Loan Schedule (including any Prepayment Charges but exclusive of any
late payment charges received thereon), (2) the rights with respect to the
Servicing Agreements as assigned to the Trustee on behalf the Certificateholders
by the Assignment Agreement and (3) all other assets included or to be included
in the Trust Fund for the benefit of the Certificateholders. Such assignment
includes all principal and interest due and received by the Servicer on or with
respect to the Mortgage Loans (other than payment of principal and interest due
on or before the Cut-off Date).

         In connection with such transfer and assignment, the Company has caused
the Seller to deliver to, and deposit with the Custodian as agent for the
Trustee, as described in the Mortgage Loan Purchase Agreement, with respect to
each Mortgage Loan, the following documents or instruments:

                  (i) the original Mortgage Note (including all riders thereto)
         bearing all intervening endorsements necessary to show a complete chain
         of endorsements from the original payee, endorsed "Pay to the order of
         _____without recourse", via original signature, and, if previously
         endorsed, signed in the name of the last endorsee by a duly qualified
         officer of the last endorsee or, with respect to any Mortgage Loan as
         to which the original Mortgage Note has been permanently lost or
         destroyed and has not been replaced, a Lost Note Affidavit. If the
         Mortgage Loan was acquired by the last endorsee in a merger, the
         endorsement must be by "[name of last endorsee], successor by merger to
         [name of the predecessor]." If the Mortgage Loan was acquired or
         originated by the last endorsee while doing business under another
         name, the endorsement must be by "[name of last endorsee], formerly
         known as [previous name]." Within 45 days after the Closing Date, the
         Custodian shall endorse the Mortgage Note in the name of "HSBC Bank
         USA, National Association, as trustee under the Pooling and Servicing
         Agreement relating to Homestar Mortgage Acceptance Corp., Asset-Backed
         Pass-Through Certificates, Series 2004-5" for each Mortgage Note;

                  (ii) The original recorded Mortgage, noting the presence of
         the MIN of the Mortgage Loan and either language indicating that the
         Mortgage Loan is a MOM loan or if the Mortgage Loan was not a MOM loan
         at origination, the original Mortgage and the assignment thereof to
         MERS, with evidence of recording indicated thereon; provided that if
         such document is not included because of a delay by the public
         recording office where such document has been delivered for recordation
         or such office as a matter of policy does not return the original of
         such document or if such original Mortgage has been lost,

                                       42
<PAGE>

         the Seller shall include or cause to be included a copy thereof
         certified by the appropriate recording office, if available;

                  (iii) the original Assignment of Mortgage in blank, in form
         and substance acceptable for recordation in the jurisdiction in which
         the related mortgage property is located and signed in the name of the
         Last Endorsee by an authorized officer; unless the Mortgage Loan is
         registered on the MERS system;

                  (iv) The original intervening Assignments, if any, with
         evidence of recording thereon, showing an unbroken chain of title to
         the Mortgage from the originator thereof to Person assigning it to the
         Trustee (or to MERS, if the Mortgage Loan is registered on the MERS(R)
         System); provided that if such document is not included because of a
         delay by the public recording office where such document has been
         delivered for recordation or such office as a matter of policy does not
         return the original of such document, the Seller shall include or cause
         to be included a copy thereof certified by the appropriate recording
         office, if available;

                  (v) The originals of each assumption, modification or
         substitution agreement, if any, relating to the Mortgage Loan; and

                  (vi) the original title insurance policy, or, if such policy
         has not been issued, any one of an original or a copy of the
         preliminary title report, title binder or title commitment on the
         Mortgaged Property with the original policy of the insurance to be
         delivered promptly following the receipt thereof.

         Within 30 days after the Closing Date, the Company shall complete or
cause to be completed the Assignments of Mortgage in the name of "HSBC Bank USA,
National Association, as trustee under the Pooling and Servicing Agreement
relating to Homestar Mortgage Acceptance Corp., Asset-Backed Pass-Through
Certificates, Series 2004-5" (or shall prepare or cause to be prepared new forms
of Assignment of Mortgage so completed in the name of the Trustee) for each
Mortgage Property in a state, if any, which is specifically excluded from the
Opinion of Counsel delivered by the Company to the Trustee and the Custodian,
each such assignment shall be recorded in the appropriate public office for real
property records, and returned to the Custodian, at no expense to the Custodian.

         The Seller is obligated as described in the Mortgage Loan Purchase
Agreement, with respect to the Mortgage Loans, to deliver to the Custodian as
agent for the Trustee: (a) either the original recorded Mortgage, or in the
event such original cannot be delivered by the Seller, a copy of such Mortgage
certified as true and complete by the appropriate recording office, in those
instances where a copy thereof certified by the Seller was delivered to the
Custodian as agent for the Trustee pursuant to clause (ii) above; and (b) either
the original Assignment or Assignments of the Mortgage, with evidence of
recording thereon, showing an unbroken chain of assignment from the originator
to the Seller, or in the event such original cannot be delivered by the Seller,
a copy of such Assignment or Assignments certified as true and complete by the
appropriate recording office, in those instances where copies thereof certified
by the Seller were delivered to the Custodian as agent for the Trustee pursuant
to clause (iv) above. However, pursuant to the Mortgage Loan Purchase Agreement,
the Seller need not cause to be recorded

                                       43
<PAGE>

any assignment in any jurisdiction under the laws of which, as evidenced by an
Opinion of Counsel delivered by the Seller to the Trustee, the Custodian, the
NIMS Insurer and the Rating Agencies, the recordation of such assignment is not
necessary to protect the Trustee's interest in the related Mortgage Loan;
PROVIDED, HOWEVER, notwithstanding the delivery of any Opinion of Counsel, each
assignment shall be submitted for recording by the Seller in the manner
described above, at no expense to the Trust or the Trustee, upon the earliest to
occur of: (i) reasonable direction by the Holders of Certificates evidencing at
least 25% of the Voting Rights or the NIMS Insurer, (ii) the occurrence of an
Event of Default, (iii) the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Seller, (iv) the occurrence of a servicing transfer
as described in Section 7.02 hereof and (v) if the Seller is not the Master
Servicer and with respect to any one assignment, the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgagor under the related Mortgage.

         Notwithstanding anything to the contrary contained in this Section
2.01, in those instances where the public recording office retains the original
Mortgage after it has been recorded, the Seller shall be deemed to have
satisfied its obligations hereunder upon delivery to the Custodian as agent for
the Trustee of a copy of such Mortgage certified by the public recording office
to be a true and complete copy of the recorded original thereof.

         If any Assignment is lost or returned unrecorded to the Custodian as
agent for the Trustee because of any defect therein, the Seller is required, as
described in the Mortgage Loan Purchase Agreement, to prepare a substitute
Assignment or cure such defect, as the case may be, and the Seller shall cause
such Assignment to be recorded in accordance with this section.

         The Seller is required as described in the Mortgage Loan Purchase
Agreement, with respect to the Mortgage Loans, to exercise its best reasonable
efforts to deliver or cause to be delivered to the Custodian as agent for the
Trustee within 120 days of the Closing Date, with respect to the Mortgage Loans,
the original or a photocopy of the title insurance policy with respect to each
such Mortgage Loan assigned to the Trustee pursuant to this Section 2.01.

         In connection with the assignment of any Mortgage Loan registered on
the MERS(R) System, the Seller further agrees that it will cause, at the
Seller's own expense, as of the Closing Date, the MERS(R) System to indicate
that such Mortgage Loans have been assigned by the Seller 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 Company further agrees that it will not, and will not permit
the Servicer to alter the codes referenced in this paragraph with respect to any
Mortgage Loan during the term of this Agreement unless and until such Mortgage
Loan is repurchased in accordance with the terms of this Agreement.

         All original documents relating to the Mortgage Loans which are not
delivered to the Custodian as agent for the Trustee are and shall be held by the
Seller in trust for the benefit of the Trustee on behalf of the
Certificateholders.

                                       44
<PAGE>

         Except as may otherwise expressly be provided herein, none of the
Company, the Custodian, the Master Servicer, or the Trustee shall (and the
Master Servicer shall ensure that no Servicer shall) assign, sell, dispose of or
transfer any interest in the Trust Fund or any portion thereof, or cause the
Trust Fund or any portion thereof to be subject to any lien, claim, mortgage,
security interest, pledge or other encumbrance.

         It is intended that the conveyance of the Mortgage Loans by the Company
to the Trustee as provided in this Section be, and be construed as, a sale of
the Mortgage Loans as provided for in this Section 2.01 by the Company to the
Trustee for the benefit of the Certificateholders. It is, further, not intended
that such conveyance be deemed a pledge of the Mortgage Loans by the Company to
the Trustee to secure a debt or other obligation of the Company. However, in the
event that the Mortgage Loans are held to be property of the Company, 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 conveyance provided for in this Section shall
be deemed to be (1) a grant by the Company to the Trustee of a security interest
in all of the Company'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 Mortgage Notes, the Mortgages, any related
Insurance Policies and all other documents in the related Mortgage Files, (B)
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and (C) 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 Company
to the Trustee of any security interest in any and all of the Seller'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) through (C); (c) the possession by the Custodian as agent for the
Trustee or any other agent of the Trustee of Mortgage Notes and 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 New York Uniform Commercial
Code and the Uniform Commercial Code of any other applicable jurisdiction
(including, without limitation, Sections 9-115, 9-305, 8-102, 8-301, 8-501 and
8-503 thereof); 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
Company and the Trustee shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans and the REMIC 1
Regular Interests, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of the Agreement.

                                       45
<PAGE>

         Section 2.02. Acceptance of the Trust Fund by the Trustee.

         The Trustee acknowledges receipt (subject to any exceptions noted in
the Initial Certification described below), of the documents referred to in
Section 2.01 above and all other assets included in the definition of "Trust
Fund" and declares that it (or the Custodian on its behalf) holds and will hold
such documents and the other documents delivered to Custodian as agent for the
Trustee constituting the Mortgage Files, and that it holds or will hold such
other assets included in the definition of "Trust Fund" (to the extent delivered
or assigned to the Custodian as agent for the Trustee), in trust for the
exclusive use and benefit of all present and future Certificateholders.

         The Trustee agrees that, for the benefit of the Certificateholders, the
Custodian as agent for the Trustee will review each Mortgage File on or before
the Closing Date to ascertain that all documents required to be delivered to it
are in its possession, and the Custodian as agent for the Trustee agrees to
execute and deliver, or cause to be executed and delivered, to the Company and
the NIMS Insurer on the Closing Date, with respect to each Mortgage Loan, an
Initial Certification in the form annexed hereto as Exhibit C to the effect
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification), (i) all documents
required to be delivered to it pursuant to this Agreement with respect to such
Mortgage Loan are in its possession, and (ii) such documents have been reviewed
by it and appear regular on their face and relate to such Mortgage Loan. Neither
the Custodian, the Trustee, the NIMS Insurer or the Master Servicer shall be
under any duty to determine whether any Mortgage File should include any of the
documents specified in clauses (v) or (vi) of Section 2.01. Neither the
Custodian, the Trustee, the NIMS Insurer or the Master Servicer shall be under
any duty or obligation to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded, or they are in recordable form or that they are
other than what they purport to be on their face.

         Within 180 days of the Closing Date, with respect to the Mortgage
Loans, the Custodian as agent for the Trustee shall deliver to the Company and
the NIMS Insurer a Final Certification in the form annexed hereto as Exhibit D
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon.

         If in the process of reviewing the Mortgage Files and preparing the
certifications referred to above the Custodian as agent for the Trustee or the
Master Servicer finds any document or documents constituting a part of a
Mortgage File to be missing or defective in any material respect, the Custodian
as agent for the Trustee shall promptly notify the Trustee, the Seller, the NIMS
Insurer and the Company. The Custodian as agent for the Trustee shall promptly
notify the Seller, the NIMS Insurer and the Securities Administrator of such
defect and request that the Seller cure any such defect within 60 days from the
date on which the Seller was notified of such defect, and if the Seller does not
cure such defect in all material respects during such period, request on behalf
of the Certificateholders that the Seller purchase such Mortgage Loan from the
Trust Fund at the Purchase Price within 90 days after the date on which the
Seller was notified of such defect; provided that if such 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

                                       46
<PAGE>

must occur within 90 days from the date such breach was discovered. It is
understood and agreed that the obligation of the Seller to cure a material
defect in, or purchase any Mortgage Loan as to which a material defect in a
constituent document exists shall constitute the sole remedy respecting such
defect available to Certificateholders or the Trustee on behalf of
Certificateholders. The Purchase Price for the purchased Mortgage Loan shall be
deposited or caused to be deposited upon receipt by the Master Servicer in the
Custodial Account and, upon receipt by the Custodian as agent for the Trustee
and the Securities Administrator of written notification of such deposit signed
by a Servicing Officer, the Custodian as agent for the Trustee shall release or
cause to be released to the Seller the related Mortgage File and shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as the Seller shall require as necessary to vest in the Seller
ownership of any Mortgage Loan released pursuant hereto and at such time the
Custodian as agent for the Trustee shall have no further responsibility with
respect to the related Mortgage File. In furtherance of the foregoing, if the
Seller is not a member of MERS and the Mortgage is registered on the MERS(R)
System, the Trustee, at the Seller's expense, shall cause MERS to execute and
deliver an assignment of the Mortgage in recordable form to transfer the
Mortgage from MERS to the Seller and shall cause such Mortgage to be removed
from registration on the MERS(R) System in accordance with MERS' rules and
regulations.

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

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

                  (i) The Master Servicer is, and throughout the term hereof
         shall remain, a corporation duly organized, validly existing and in
         good standing under the laws of the state of its incorporation, the
         Master Servicer is, and shall remain, in compliance with the laws of
         each state in which any Mortgaged Property is located to the extent
         necessary to perform its obligations under this Agreement, and the
         Master Servicer or an affiliate is, and shall remain, approved to
         service mortgage loans for Fannie Mae and Freddie Mac;

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

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

                  (iv) This Agreement, assuming due authorization, execution and
         delivery by the Company and the Trustee, constitutes a valid, legal and
         binding obligation of the Master Servicer, enforceable against the
         Master Servicer in accordance with the terms

                                       47
<PAGE>

         hereof, subject to (A) applicable bankruptcy, insolvency,
         reorganization, moratorium and other laws affecting the enforcement of
         creditors' rights generally, and (B) general principles of equity,
         regardless of whether such enforcement is considered in a proceeding in
         equity or at law;

                  (v) The Master Servicer is not in violation of, and its
         execution and delivery of this Agreement and its performance and
         compliance with the terms of this Agreement will not constitute a
         violation of, any law, any order or decree of any court or arbiter, or
         any order, regulation or demand of any federal, state or local
         governmental or regulatory authority, which violation is likely to
         affect materially and adversely either the ability of the Master
         Servicer to perform its obligations under this Agreement or the
         financial condition of the Master Servicer;

                  (vi) No litigation is pending (other than litigation with
         respect to which pleadings or documents have been filed with a court,
         but not served on the Master Servicer) 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 or is likely to affect materially and
         adversely either the ability of the Master Servicer to perform its
         obligations under this Agreement or the financial condition of the
         Master Servicer;

                  (vii) 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 Insurance Policy;

                  (viii) The execution of this Agreement and the performance of
         the Master Servicer's obligations hereunder do not require any license,
         consent or approval of any state or federal court, agency, regulatory
         authority or other governmental body having jurisdiction over the
         Master Servicer, other than such as have been obtained; and

                  (ix) No information, certificate of an officer, statement
         furnished in writing or report delivered to the Company, any affiliate
         of the Company or the Trustee by the Master Servicer in its capacity as
         Master Servicer, will, to the knowledge of the Master Servicer, contain
         any untrue statement of a material fact.

         It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.03(a) shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Company, the
Trustee and the Certificateholders. Upon discovery by any of the Company, the
Trustee, the Securities Administrator, the NIMS Insurer or the Master Servicer
of a breach of any of the foregoing representations, warranties and covenants
that materially and adversely affects the interests of the Company or the
Trustee or the value of any Mortgage Loan or Prepayment Charge, the party
discovering such breach shall give prompt written notice to the other parties.

         (b) The Company hereby represents and warrants to the Master Servicer,
the Securities Administrator and the Trustee for the benefit of
Certificateholders that as of the Closing Date

                                       48
<PAGE>

                  (i) the Company (a) is a corporation duly organized, validly
         existing and in good standing under the laws of the State of Delaware
         and (b) is qualified and in good standing as a foreign corporation to
         do business in each jurisdiction where such qualification is necessary,
         except where the failure so to qualify would not reasonably be expected
         to have a material adverse effect on the Company's business as
         presently conducted or on the Company's ability to enter into this
         Agreement and to consummate the transactions contemplated hereby;

                  (ii) the Company has full corporate power to own its property,
         to carry on its business as presently conducted and to enter into and
         perform its obligations under this Agreement;

                  (iii) the execution and delivery by the Company of this
         Agreement have been duly authorized by all necessary corporate action
         on the part of the Company; and neither the execution and delivery of
         this Agreement, nor the consummation of the transactions herein
         contemplated, nor compliance with the provisions hereof, will conflict
         with or result in a breach of, or constitute a default under, any of
         the provisions of any law, governmental rule, regulation, judgment,
         decree or order binding on the Company or its properties or the
         articles of incorporation or by-laws of the Company, except those
         conflicts, breaches or defaults which would not reasonably be expected
         to have a material adverse effect on the Company's ability to enter
         into this Agreement and to consummate the transactions contemplated
         hereby;

                  (iv) the execution, delivery and performance by the Company of
         this Agreement and the consummation of the transactions contemplated
         hereby do not require the consent or approval of, the giving of notice
         to, the registration with, or the taking of any other action in respect
         of, any state, federal or other governmental authority or agency,
         except those consents, approvals, notices, registrations or other
         actions as have already been obtained, given or made;

                  (v) this Agreement has been duly executed and delivered by the
         Company and, assuming due authorization, execution and delivery by the
         other parties hereto, constitutes a valid and binding obligation of the
         Company enforceable against it in accordance with its terms (subject to
         applicable bankruptcy and insolvency laws and other similar laws
         affecting the enforcement of the rights of creditors generally);

                  (vi) there are no actions, suits or proceedings pending or, to
         the knowledge of the Company, threatened against the Company, before or
         by any court, administrative agency, arbitrator or governmental body
         (i) with respect to any of the transactions contemplated by this
         Agreement or (ii) with respect to any other matter which in the
         judgment of the Company will be determined adversely to the Company and
         will if determined adversely to the Company materially and adversely
         affect the Company's ability to enter into this Agreement or perform
         its obligations under this Agreement; and the Company is not in default
         with respect to any order of any court, administrative agency,
         arbitrator or governmental body so as to materially and adversely
         affect the transactions contemplated by this Agreement; and

                                       49
<PAGE>

                  (vii) immediately prior to the transfer and assignment to the
         Trustee, each Mortgage Note and each Mortgage were not subject to an
         assignment or pledge, and the Company had good and marketable title to
         and was the sole owner thereof and had full right to transfer and sell
         such Mortgage Loan to the Trustee free and clear of any encumbrance,
         equity, lien, pledge, charge, claim or security interest.

         Upon discovery by either the Company, the Master Servicer, the
Securities Administrator, the Custodian, the NIMS Insurer or the Trustee of a
breach of any representation or warranty set forth in this Section 2.03 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.

         Section 2.04. Assignment of Interest in the Mortgage Loan Purchase
Agreement.

         The Company hereby assigns to the Trustee for the benefit of
Certificateholders all of its rights (but none of its obligations) in, to and
under the Mortgage Loan Purchase Agreement. Insofar as the Mortgage Loan
Purchase Agreement relates to such representations and warranties and any
remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Trustee on
behalf of the Certificateholders. Upon the discovery by the Company, the Master
Servicer, the Securities Administrator, NIMS Insurer or the Trustee of a breach
of any of the representations and warranties made in the Mortgage Loan Purchase
Agreement in respect of any Mortgage Loan which materially and adversely affects
the value of a Mortgage Loan or the interests of the Certificateholders in such
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties. The Trustee shall promptly notify the Seller of
such breach and request that the Seller shall, within 90 days from the date that
the Seller was notified or otherwise obtained knowledge of such breach, 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 if such 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 repurchase must occur within 90 days from the date such breach
was discovered. However, in the case of a breach under the Mortgage Loan
Purchase Agreement, subject to the approval of the Company the Seller 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, except 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
substitution must occur within 90 days from the date the breach was discovered
if such 90 day period expires before two years following the Closing Date. In
the event that the Seller elects to substitute a Qualified Substitute Mortgage
Loan or Loans for a Deleted Mortgage Loan pursuant to this Section 2.04, the
Trustee shall enforce the obligation of the Seller under the Mortgage Loan
Purchase Agreement to deliver to the Custodian as agent for the Trustee and the
Master Servicer, as appropriate, 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, to the extent
received by the Master Servicer or any Subservicer, shall not be part of

                                       50
<PAGE>

the Trust Fund and will be retained by the Master Servicer and remitted by the
Master Servicer to the Seller on the next succeeding Distribution Date. For the
month of substitution, distributions to Certificateholders will include the
Monthly Payment due on a Deleted Mortgage Loan for such month and thereafter the
Seller shall be entitled to retain all amounts received in respect of such
Deleted Mortgage Loan. The Company shall amend or cause to be amended the
Mortgage Loan Schedule 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 Company shall deliver the amended
Mortgage Loan Schedule to the Custodian as agent for the Trustee and to the NIMS
Insurer. Upon such substitution, the Qualified Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects, the Seller
shall be deemed to have made the representations and warranties with respect to
the Qualified Substitute Mortgage Loan contained in the Mortgage Loan Purchase
Agreement as of the date of substitution, and the Company shall be deemed to
have made with respect to any Qualified Substitute Mortgage Loan or Loans, as of
the date of substitution, the representations and warranties set forth in the
Mortgage Loan Purchase Agreement (other than any statistical representations set
forth therein).

         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 (the "Substitution Adjustment"), 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 Certificateholders in the month of substitution). The
Trustee shall enforce the obligation of the Seller under the Mortgage Loan
Purchase Agreement to provide the Master Servicer on the day of substitution for
immediate deposit into the Custodial Account the amount of such shortfall,
without any reimbursement therefor. In accordance with the Mortgage Loan
Purchase Agreement, the Seller shall give notice in writing to the Trustee and
the Custodian 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 any Trust REMIC, 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 any Trust REMIC to fail to qualify as a REMIC at any time
that any Certificate is outstanding. The costs of any substitution as described
above, including any related assignments, opinions or other documentation in
connection therewith shall be borne by the Seller.

         Except as expressly set forth herein none of the Trustee, the
Custodian, the Securities Administrator or the Master Servicer is under any
obligation to discover any breach of the above-mentioned representations and
warranties. It is understood and agreed that the obligation of the Seller to
cure such breach, purchase or to substitute for such Mortgage Loan as to which
such a breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to Certificateholders or the Trustee on behalf
of Certificateholders. Notwithstanding the foregoing, within 90 days of the
earlier of discovery by the Seller or receipt of notice by the Seller of the
breach of the representation or covenant of the Seller set forth in Section
3.01(b)(xxxvi) of the Mortgage Loan Purchase Agreement which materially and
adversely affects the interests of the Holders of the Class P Certificates in
any Prepayment Charge or if the Prepayment

                                       51
<PAGE>

Charge is unenforceable due to subsequent changes in law, the Seller shall
remedy such breach as set forth in Section 3.01(b) of the Mortgage Loan Purchase
Agreement.

         Section 2.05. Issuance of Certificates; Conveyance of REMIC Regular
Interests and Acceptance of REMIC 1 and REMIC 2 by the Trustee.

         (a) The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to the Custodian as agent for the Trustee of the Mortgage
Files, subject to the provisions of Sections 2.01 and 2.02, together with the
assignment to it of all other assets included in the Trust Fund, receipt of
which is hereby acknowledged. Concurrently with such assignment and delivery and
in exchange therefor, the Trustee, pursuant to the written request of the
Company executed by an officer of the Company, has executed, authenticated and
delivered to or upon the order of the Company, the Certificates in authorized
denominations. The interests evidenced by the Certificates, constitute the
entire beneficial ownership interest in the Trust Fund.

         (b) The Company, 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 Company in and
to the REMIC 1 Regular Interests for the benefit of the Holders of the REMIC 1
Regular Interests and Holders of the Class R Certificates (as Holders of the
Class R-1 Interest). The Trustee acknowledges receipt of the REMIC 1 Regular
Interests (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
1 Regular Interests and Holders of the Class R Certificates (as Holders of the
Class R-1 Interest). The interests evidenced by the Class R-1 Interest, together
with the REMIC 1 Regular Interests, constitute the entire beneficial ownership
interest in REMIC 1.

         (c) The Company, 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 Company in and
to the REMIC 1 Regular Interests (which are uncertificated) for the benefit of
the Holders of the Regular Certificates and the Class R Certificates (in respect
of the Class R-2 Interest). The Trustee acknowledges receipt of the REMIC 1
Regular Interests and declares that it holds and will hold the same in trust for
the exclusive use and benefit of the Holders of the Regular Certificates and the
Class R Certificates (in respect of the Class R-2 Interest). The interests
evidenced by the Class R-2 Interest, together with the Regular Certificates,
constitute the entire beneficial ownership interest in REMIC 2.

         (d) Concurrently with (i) the assignment and delivery to the Trustee of
REMIC 1 and the acceptance by the Trustee thereof, pursuant to Section 2.01,
Section 2.02 and subsection (a) and (ii) the assignment and delivery to the
Trustee of REMIC 2 (including the Residual Interest therein represented by the
Class R-2 Interest) and the acceptance by the Trustee thereof, pursuant to
subsection (b), the Trustee, pursuant to the written request of the Company
executed by an officer of the Company, has executed, authenticated and delivered
to or upon the order of the Company, (A) the Class R Certificates in authorized
denominations evidencing the Class R-1 Interest and the Class R-2 Interest.

                                       52
<PAGE>

         Section 2.06. Negative Covenants of the Trustee and Master Servicer.

                  Except as otherwise expressly permitted by this Agreement the
Trustee and Master Servicer shall not cause the Trust Fund to:

                  (i) sell, transfer, exchange or otherwise dispose of any of
         the assets of the Trust Fund;

                  (ii) dissolve or liquidate the Trust Fund in whole or in part;

                  (iii) engage, directly or indirectly, in any business other
         than that arising out of the issue of the Certificates, and the actions
         contemplated or required to be performed under this Agreement;

                  (iv) incur, create or assume any indebtedness for borrowed
         money;

                  (v) voluntarily file a petition for bankruptcy,
         reorganization, assignment for the benefit of creditors or similar
         proceeding; or

                  (vi) merge, convert or consolidate with any other Person.

                                       53
<PAGE>

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF THE TRUST FUND

         Section 3.01. Administration and Servicing of Mortgage Loans.

         (a) The Master Servicer shall supervise, monitor and oversee the
obligation of the Servicer to service and administer the Mortgage Loans in
accordance with the terms of the related Servicing Agreement and shall have full
power and authority to do any and all things which it may deem necessary or
desirable in connection with such master servicing and administration. In
performing its obligations hereunder, the Master Servicer shall act in a manner
consistent with Accepted Master Servicing Practices. Furthermore, the Master
Servicer shall oversee and consult with the Servicer as necessary from
time-to-time to carry out the Master Servicer's obligations hereunder, shall
receive, review and evaluate all reports, information and other data provided to
the Master Servicer by the Servicer and shall cause the Servicer to perform and
observe the covenants, obligations and conditions to be performed or observed by
the Servicer under the applicable Servicing Agreement. The Master Servicer shall
independently and separately monitor the Servicer's servicing activities with
respect to each related Mortgage Loan, reconcile the results of such monitoring
with such information provided in the previous sentence on a monthly basis and
coordinate corrective adjustments to the Servicer's and Master Servicer's
records, and based on such reconciled and corrected information, the Master
Servicer shall provide such information to the Securities Administrator as shall
be necessary in order for it to prepare the statements specified in Section
4.03, and prepare any other information and statements required to be forwarded
by the Master Servicer hereunder. The Master Servicer shall reconcile the
results of its Mortgage Loan monitoring with the actual remittances of the
Servicer to the Custodial Account pursuant to the applicable Servicing
Agreement.

         The Trustee shall furnish the Servicer and the Master Servicer with any
powers of attorney and other documents in form as provided to it necessary or
appropriate to enable the Servicer and the Master Servicer to service and
administer the related Mortgage Loans and REO Property.

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

         The Trustee shall execute and deliver to the Servicer and the Master
Servicer any court pleadings, requests for trustee's sale or other documents
necessary or desirable to (i) the foreclosure or trustee's sale with respect to
a Mortgaged Property; (ii) any legal action brought to obtain judgment against
any Mortgagor on the Mortgage Note or Security Instrument; (iii) obtain

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a deficiency judgment against the Mortgagor; or (iv) enforce any other rights or
remedies provided by the Mortgage Note or Security Instrument or otherwise
available at law or equity.

         (b) Consistent with the terms of this Agreement, the Master Servicer
may 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 such waiver, modification, postponement or
indulgence is in conformity with the Accepted Servicing Practices; provided
that, that the NIMs Insurer's prior written consent shall be required for any
modification, waiver or amendment by the Master Servicer if the aggregate number
of outstanding Mortgage Loans which have been modified, waived or amended
exceeds 5% of the number of Mortgage Loans subject to the related Servicing
Agreement, provided, however, that:

         (A) the Master Servicer shall not make future advances (except as
provided in Section 4.03);

         (B) the Master Servicer shall not permit any modification with respect
to any Mortgage Loan that would change the Mortgage Rate, defer or forgive the
payment of any principal or interest payments, reduce the outstanding Stated
Principal Balance (except for reductions resulting from actual payments of
principal) or extend the final maturity date on such Mortgage Loan (unless (i)
the Mortgagor is in default with respect to the Mortgage Loan or (ii) such
default is, in the judgment of the Master Servicer, reasonably foreseeable); and

         (C) the Master Servicer shall not consent to (i) partial releases of
Mortgages, (ii) alterations, (iii) removal, demolition or division of properties
subject to Mortgages, (iv) modification or (v) second mortgage subordination
agreements with respect to any Mortgage Loan that would: (i) affect adversely
the status of any REMIC as a REMIC,(ii) cause any REMIC to be subject to a tax
on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions, or (iii) both (x) effect an exchange or reissuance of such Mortgage
Loan under Section 1001 of the Code (or Treasury regulations promulgated
thereunder) and (y) cause any REMIC constituting part of the Trust Fund to fail
to qualify as a REMIC under the Code or the imposition of any tax on "prohibited
transactions" or "contributions" after the Startup Day under the REMIC
Provisions.

The provisions of this Section 3.01(b) shall apply to the exercise of such
waiver, modification, postponement or indulgence rights by the Master Servicer
in its capacity as such and shall not apply to the exercise of any similar
rights by the Servicer, who shall instead by subject to the provisions of the
Servicing Agreement. Such waiver, modification, postponement and indulgence
rights of the Master Servicer set forth in this Section shall not be construed
as a duty.

         (c) In the event of a Subservicer Termination Trigger, the Master
Servicer shall enforce the obligation of the Servicer under the Servicing
Agreements to terminate the related Subservicers and to engage new Subservicers
at the direction of the NIMS Insurer.

         (d) The Master Servicer shall enforce the obligation of the Servicer
under the Servicing Agreements in connection with the waiver of Prepayment
Charges in accordance with the criteria therein and to pay the amount of any
waived Prepayment Charges.

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<PAGE>

         Section 3.02. REMIC-Related Covenants.

         For as long as each REMIC shall exist, the Trustee, the Master Servicer
and the Securities Administrator shall act in accordance herewith to assure
continuing treatment of such REMIC as a REMIC, and the Trustee, the Master
Servicer and the Securities Administrator shall comply with any directions of
the Company, the Servicer or the Master Servicer to assure such continuing
treatment. In particular, the Trustee shall not (a) sell or permit the sale of
all or any portion of the Mortgage Loans or of any investment of deposits in an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion addressed
to the Trustee prepared at the expense of the Trust Fund; and (b) other than
with respect to a substitution pursuant to the Mortgage Loan Purchase Agreement
or Section 2.04 of this Agreement, as applicable, accept any contribution to any
REMIC after the Startup Day without receipt of a REMIC Opinion addressed to the
Trustee.

         Section 3.03. Monitoring of Servicer.

         (a) The Master Servicer shall be responsible for reporting to the
Trustee and the Company the compliance by the Servicer with its duties under the
related Servicing Agreement. In the review of the Servicer's activities, the
Master Servicer may rely upon an officer's certificate of the Servicer (or
similar document signed by an officer of the Servicer) with regard to the
Servicer's compliance with the terms of its Servicing Agreement. In the event
that the Master Servicer, in its judgment, determines that the Servicer should
be terminated in accordance with its Servicing Agreement, or that a notice
should be sent pursuant to such Servicing Agreement with respect to the
occurrence of an event that, unless cured, would constitute grounds for such
termination, the Master Servicer shall notify the Company, the NIMS Insurer and
the Trustee thereof and the Master Servicer shall issue such notice or take such
other action as it deems appropriate.

         (b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Servicer under the
related Servicing Agreement, and shall, in the event that the Servicer fails to
perform its obligations in accordance with the related Servicing Agreement,
subject to the preceding paragraph, terminate the rights and obligations of the
Servicer thereunder and act as servicer of the related Mortgage Loans or to
cause the Trustee to enter in to a new Servicing Agreement with a successor
Servicer selected by the Master Servicer; provided, however, it is understood
and acknowledged by the parties hereto that there will be a period of transition
(not to exceed 90 days) before the actual servicing functions can be fully
transferred to such successor Servicer. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Servicing Agreements
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, in its good faith
business judgment, would require were it the owner of the related Mortgage
Loans. The Master Servicer shall pay the costs of such enforcement at its own
expense, provided that the Master Servicer shall not be required to prosecute or
defend any legal action except to the extent that the Master Servicer shall have
received reasonable indemnity for its costs and expenses in pursuing such
action.

         (c) To the extent that the costs and expenses of the Master Servicer
related to any termination of the Servicer, appointment of a successor Servicer
or the transfer and assumption

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<PAGE>

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

         (d) The Master Servicer shall require the Servicer to comply with the
remittance requirements and other obligations set forth in the related Servicing
Agreement.

         (e) If the Master Servicer acts as Servicer, it will not assume
liability for the representations and warranties of the Servicer, if any, that
it replaces.

         Section 3.04. Fidelity Bond.

         The Master Servicer, at its expense, shall maintain in effect a blanket
fidelity bond and an errors and omissions insurance policy, affording coverage
with respect to all directors, officers, employees and other Persons acting on
such Master Servicer's behalf, and covering errors and omissions in the
performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees. Copies of such policies and fidelity bonds shall be provided to the
NIMS Insurer upon reasonable request.

         Section 3.05. Power to Act; Procedures.

         The Master Servicer shall master service the Mortgage Loans and shall
have full power and authority, subject to the REMIC Provisions and the
provisions of Article X hereof, to do any and all things that it may deem
necessary or desirable in connection with the master servicing and
administration of the Mortgage Loans, including but not limited to the power and
authority (i) to execute and deliver, on behalf of the Certificateholders and
the Trustee, customary consents or waivers and other instruments and documents,
(ii) to consent to transfers of any Mortgaged Property and assumptions of the
Mortgage Notes and related Mortgages, (iii) to collect any Insurance Proceeds,
Liquidation Proceeds and Subsequent Recoveries, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement and the related Servicing Agreement, as applicable; provided,
however, that the Master Servicer shall not (and, consistent with its
responsibilities under Section 3.03, shall not permit the Servicer to) knowingly
or intentionally take any action, or fail to take (or fail to cause to be taken)
any action reasonably within its 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, would cause any REMIC to fail to qualify as a REMIC
or result in the imposition of a tax upon the Trust Fund (including but not
limited to the tax on prohibited transactions as defined in Section 860F(a)(2)
of the Code and the tax on contributions to a REMIC set forth in Section 860G(d)
of the Code) unless the

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<PAGE>

Master Servicer and the NIMS Insurer have received an Opinion of Counsel (but
not at the expense of the Master Servicer) to the effect that the contemplated
action would not cause any REMIC to fail to qualify as a REMIC or result in the
imposition of a tax upon any REMIC. The Trustee shall furnish the Master
Servicer, upon written request from a Servicing Officer, with any powers of
attorney empowering the Master Servicer or the Servicer to execute and deliver
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and to foreclose upon or otherwise liquidate Mortgaged Property, and
to appeal, prosecute or defend in any court action relating to the Mortgage
Loans or the Mortgaged Property, in accordance with the applicable Servicing
Agreement and this Agreement, and the Trustee shall execute and deliver such
other documents, as the Master Servicer may request, to enable the Master
Servicer to master service and administer the Mortgage Loans and carry out its
duties hereunder, in each case in accordance with Accepted Master Servicing
Practices (and the Trustee shall have no liability for misuse of any such powers
of attorney by the Master Servicer or the Servicer). If the Master Servicer or
the Trustee has been advised that it is likely that the laws of the state in
which action is to be taken prohibit such action if taken in the name of the
Trustee or that the Trustee would be adversely affected under the "doing
business" or tax laws of such state if such action is taken in its name, the
Master Servicer shall join with the Trustee in the appointment of a co-trustee
pursuant to Section 8.10 hereof. In the performance of its duties hereunder, the
Master Servicer shall be an independent contractor and shall not, except in
those instances where it is taking action in the name of the Trustee, be deemed
to be the agent of the Trustee.

         Section 3.06. Due-on-Sale Clauses; Assumption Agreements.

         To the extent provided in the applicable Servicing Agreement, to the
extent Mortgage Loans contain enforceable due-on-sale clauses, the Master
Servicer shall cause the Servicer to enforce such clauses in accordance with the
applicable Servicing Agreement. If applicable law prohibits the enforcement of a
due-on-sale clause or such clause is otherwise not enforced in accordance with
the applicable Servicing Agreement, and, as a consequence, a Mortgage Loan is
assumed, the original Mortgagor may be released from liability in accordance
with the applicable Servicing Agreement.

         Section 3.07. Release of Mortgage Files.

         (a) Upon becoming aware of the payment in full of any Mortgage Loan, or
the receipt by the Servicer of a notification that payment in full has been
escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the Servicer will, if required
under the applicable Servicing Agreement (or if the Servicer does not, the
Master Servicer may), promptly furnish to the Custodian, on behalf of the
Trustee, two copies of a certification substantially in the form of Exhibit F
hereto signed by an officer of the Servicer or in a mutually agreeable
electronic format which will, in lieu of a signature on its face, originate from
a Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payment that are required to
be deposited in the Protected Account maintained by the Servicer pursuant to
Section 3.16 or by the Servicer pursuant to its Servicing Agreement have been or
will be so deposited) and shall request that the Custodian, on behalf of the
Trustee, deliver to the Servicer the related Mortgage File. Upon receipt of such
certification and request, the Custodian, on behalf of the Trustee, shall
promptly release the related Mortgage File to the Servicer and the Trustee and
Custodian shall have no

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<PAGE>

further responsibility with regard to such Mortgage File. Upon any such payment
in full, the Servicer is authorized, to give, as agent for the Trustee, as the
mortgagee under the Mortgage that secured the Mortgage Loan, an instrument of
satisfaction (or assignment of mortgage without recourse) regarding the
Mortgaged Property subject to the Mortgage, which instrument of satisfaction or
assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of such payment, it being understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
Protected Account.

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

         Section 3.08. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee.

         (a) The Master Servicer shall transmit and the Servicer (to the extent
required by the related Servicing Agreement) shall transmit to the Trustee or
Custodian such documents and instruments coming into the possession of the
Master Servicer or the Servicer from time to time as are required by the terms
hereof, or in the case of the Servicer, the applicable Servicing Agreement, to
be delivered to the Trustee or Custodian. Any funds received by the Master
Servicer or by the Servicer in respect of any Mortgage Loan or which otherwise
are collected by the Master Servicer or by the Servicer as Liquidation Proceeds,
Insurance Proceeds or Subsequent Recoveries in respect of any Mortgage Loan
shall be held for the benefit of the Trustee and the Certificateholders subject
to the Master Servicer's right to retain or withdraw from the Custodial Account
the Master Servicing Compensation and other amounts provided in this Agreement,
and to the right of the Servicer to retain its Servicing Fee and other amounts
as provided in the applicable Servicing Agreement. The Master Servicer shall,
and (to the extent provided in the applicable Servicing Agreement) shall cause
the Servicer to, provide access to information and documentation regarding the
Mortgage Loans to the Trustee and to the NIMS Insurer, its agents and
accountants at any time upon reasonable request and during normal business
hours, and to Certificateholders that are savings and loan associations, banks
or insurance companies, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners of
any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift

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<PAGE>

Supervision or other regulatory authority, such access to be afforded without
charge but only upon reasonable request in writing and during normal business
hours at the offices of the Master Servicer designated by it. In fulfilling such
a request the Master Servicer shall not be responsible for determining the
sufficiency of such information.

         (b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds,
Insurance Proceeds or Subsequent Recoveries, shall be held by the Master
Servicer for and on behalf of the Trustee and the Certificateholders and shall
be and remain the sole and exclusive property of the Trustee; provided, however,
that the Master Servicer and the Servicer shall be entitled to setoff against,
and deduct from, any such funds any amounts that are properly due and payable to
the Master Servicer or the Servicer under this Agreement or the applicable
Servicing Agreement.

         Section 3.09. Standard Hazard Insurance and Flood Insurance Policies.

         (a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of the Servicer under the related Servicing Agreement to maintain or
cause to be maintained standard fire and casualty insurance and, where
applicable, flood insurance, all in accordance with the provisions of the
related Servicing Agreement. It is understood and agreed that such insurance
shall be with insurers meeting the eligibility requirements set forth in the
applicable Servicing Agreement and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted 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.

         (b) Pursuant to Section 3.16 and 3.17, any amounts collected by the
Servicer or the Master Servicer, or by the Servicer, under any insurance
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or released to the Mortgagor in
accordance with the applicable Servicing Agreement) shall be deposited into the
Custodial Account, subject to withdrawal pursuant to Section 3.17 and 3.18. Any
cost incurred by the Master Servicer or the Servicer in maintaining any such
insurance if the Mortgagor defaults in its obligation to do so shall be added to
the amount owing under the Mortgage Loan where the terms of the Mortgage Loan so
permit; provided, however, that the addition of any such cost shall not be taken
into account for purposes of calculating the distributions to be made to
Certificateholders and shall be recoverable by the Master Servicer or the
Servicer pursuant to Section 3.17 and 3.18.

         Section 3.10. Presentment of Claims and Collection of Proceeds.

         The Master Servicer shall (to the extent provided in the applicable
Servicing Agreement) cause the Servicer to prepare and present on behalf of the
Trustee and the Certificateholders all claims under the Insurance Policies and
take such actions (including the negotiation, settlement, compromise or
enforcement of the insured's claim) as shall be necessary to realize recovery
under such policies. Any proceeds disbursed to the Master Servicer (or disbursed
to the Servicer and remitted to the Master Servicer) in respect of such
policies, bonds or contracts shall be promptly deposited in the Custodial
Account upon receipt, except that any amounts realized that

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<PAGE>

are to be applied to the repair or restoration of the related Mortgaged Property
as a condition precedent to the presentation of claims on the related Mortgage
Loan to the insurer under any applicable Insurance Policy need not be so
deposited (or remitted).

         Section 3.11. Maintenance of the Primary Mortgage Insurance Policies.

         (a) The Master Servicer shall not take, or permit the Servicer (to the
extent such action is prohibited under the applicable Servicing Agreement) to
take, any action that would result in noncoverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of the Master
Servicer or the Servicer, would have been covered thereunder. The Master
Servicer shall use its best reasonable efforts to cause the Servicer (to the
extent required under the related Servicing Agreement) to keep in force and
effect (to the extent that the Mortgage Loan requires the Mortgagor to maintain
such insurance), primary mortgage insurance applicable to each Mortgage Loan in
accordance with the provisions of this Agreement and the related Servicing
Agreement, as applicable. The Master Servicer shall not, and shall not permit
the Servicer (to the extent required under the related Servicing Agreement) to,
cancel or refuse to renew any such Primary Mortgage Insurance Policy that is in
effect at the date of the initial issuance of the Mortgage Note and is required
to be kept in force hereunder except in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable.

         (b) The Master Servicer agrees to present, or to cause the Servicer (to
the extent required under the related Servicing Agreement) to present, on behalf
of the Trustee and the Certificateholders, claims to the insurer under any
Primary Mortgage Insurance Policies and, in this regard, to take such reasonable
action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policies respecting defaulted Mortgage Loans. Pursuant to Section 3.16
and 3.17, any amounts collected by the Master Servicer or the Servicer under any
Primary Mortgage Insurance Policies shall be deposited in the Custodial Account,
subject to withdrawal pursuant to Sections 3.17 and 3.18.

         Section 3.12. Trustee to Retain Possession of Certain Insurance
Policies and Documents.

         The Trustee (or the Custodian, as directed by the Trustee), shall
retain possession and custody of the originals (to the extent available) of any
Primary Mortgage Insurance Policies, or certificate of insurance if applicable,
and any certificates of renewal as to the foregoing as may be issued from time
to time as contemplated by this Agreement. Until all amounts distributable in
respect of the Certificates have been distributed in full and the Master
Servicer otherwise has fulfilled its obligations under this Agreement, the
Trustee (or its Custodian, if any, as directed by the Trustee) shall also retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions of this Agreement. The Master Servicer shall promptly
deliver or cause to be delivered to the Trustee (or the Custodian, as directed
by the Trustee), upon the execution or receipt thereof the originals of any
Primary Mortgage Insurance Policies, any certificates of renewal, and such other
documents or instruments that constitute portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.

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<PAGE>

         Section 3.13. Realization Upon Defaulted Mortgage Loans.

         The Master Servicer shall cause the Servicer (to the extent required
under the related Servicing Agreement) to foreclose upon, repossess or otherwise
comparably convert the ownership of Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments, all
in accordance with the applicable Servicing Agreement.

         Section 3.14. Compensation for the Master Servicer.

         The Master Servicer will be entitled to the Master Servicer Fee and any
all income and gain realized from any investment of funds in the Certificate
Account and the Custodial Account, pursuant to Article IV, for the performance
of its activities hereunder. Servicing compensation in the form of assumption
fees, if any, late payment charges, as collected, if any, or otherwise (but not
including any Prepayment Charge) shall be retained by the Servicer and shall not
be deposited in the Protected Account. The Master Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder and
shall not be entitled to reimbursement therefor except as provided in this
Agreement.

         Section 3.15. REO Property.

         (a) In the event the Trust Fund acquires ownership of any REO Property
in respect of any related Mortgage Loan, the deed or certificate of sale shall
be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall, to the extent provided in the
applicable Servicing Agreement, cause the Servicer to sell any REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable. Pursuant to its
efforts to sell such REO Property, the Master Servicer shall cause the Servicer
to protect and conserve, such REO Property in the manner and to the extent
required by the applicable Servicing Agreement, in accordance with the REMIC
Provisions and in a manner that does not result in a tax on "net income from
foreclosure property" or cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code.

         (b) The Master Servicer shall, to the extent required by the related
Servicing Agreement, cause the Servicer to deposit all funds collected and
received in connection with the operation of any REO Property in the Protected
Account.

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

         (d) To the extent provided in the related Servicing Agreement, the
Liquidation Proceeds from the final disposition of the REO Property, net of any
payment to the Master

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<PAGE>

Servicer and the Servicer as provided above shall be deposited in the Protected
Account on or prior to the Determination Date in the month following receipt
thereof and be remitted by wire transfer in immediately available funds to the
Master Servicer for deposit into the related Custodial Account on the next
succeeding Servicer Remittance Date.

         Section 3.16. Protected Accounts.

         (a) The Master Servicer shall enforce the obligation of the Servicer to
establish and maintain a Protected Account in accordance with the applicable
Servicing Agreement, with records to be kept with respect thereto on a Mortgage
Loan by Mortgage Loan basis, into which accounts shall be deposited within 48
hours (or as of such other time specified in the related Servicing Agreement) of
receipt, all collections of principal and interest on any Mortgage Loan and any
REO Property received by the Servicer, including Principal Prepayments,
Insurance Proceeds, Liquidation Proceeds, and advances made from the Servicer's
own funds (less servicing compensation as permitted by the applicable Servicing
Agreement in the case of the Servicer) and all other amounts to be deposited in
the Protected Account. The Servicer is hereby authorized to make withdrawals
from and deposits to the related Protected Account for purposes required or
permitted by this Agreement. To the extent provided in the related Servicing
Agreement, the Protected Account shall be held by a Designated Depository
Institution and segregated on the books of such institution in the name of the
Trustee for the benefit of Certificateholders.

         (b) To the extent provided in the related Servicing Agreement, amounts
on deposit in a Protected Account may be invested in Permitted Investments in
the name of the Trustee for the benefit of Certificateholders and, except as
provided in the preceding paragraph, not commingled with any other funds. Such
Permitted Investments shall mature, or shall be subject to redemption or
withdrawal, no later than the date on which such funds are required to be
withdrawn for deposit in the Custodial Account, and shall be held until required
for such deposit. The income earned from Permitted Investments made pursuant to
this Section 3.16 shall be paid to the Servicer under the applicable Servicing
Agreement, and the risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Servicer. The Servicer (to the extent provided in the Servicing
Agreement) shall deposit the amount of any such loss in the Protected Account
within two Business Days of receipt of notification of such loss but not later
than the second Business Day prior to the Distribution Date on which the moneys
so invested are required to be distributed to the Certificateholders.

         (c) To the extent provided in the related Servicing Agreement and
subject to this Article III, on or before each Servicer Remittance Date, the
Servicer shall withdraw or shall cause to be withdrawn from its Protected
Accounts and shall immediately deposit or cause to be deposited in the Custodial
Account amounts representing the following collections and payments (other than
with respect to principal of or interest on the Mortgage Loans due on or before
the Cut-off Date):

                           (1) Scheduled payments on the Mortgage Loans received
                           or any related portion thereof advanced by the
                           Servicer pursuant to its Servicing Agreement which
                           were due on or before the related

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                           Due Date, net of the amount thereof comprising its
                           Servicing Fee or any fees with respect to any
                           lender-paid primary mortgage insurance policy;

                           (2) Full Principal Prepayments and any Liquidation
                           Proceeds received by the Servicer with respect to the
                           Mortgage Loans in the related Prepayment Period, with
                           interest to the date of prepayment or liquidation,
                           net of the amount thereof comprising its Servicing
                           Fee;

                           (3) Partial Principal Prepayments received by the
                           Servicer for the Mortgage Loans in the related
                           Prepayment Period; and

                           (4) Any amount to be used as a Monthly Advance.

         (d) Withdrawals may be made from an Account only to make remittances as
provided in the Servicing Agreement; to reimburse the Master Servicer or the
Servicer for Monthly Advances which have been recovered by subsequent
collections from the related Mortgagor; to remove amounts deposited in error; to
remove fees, charges or other such amounts deposited on a temporary basis; or to
clear and terminate the account at the termination of this Agreement in
accordance with Section 10.01. As provided in Sections 3.16(a) and 3.17(b)
certain amounts otherwise due to the Servicer may be retained by them and need
not be deposited in the Custodial Account.

Section 3.17.     Custodial Account.

         (a) The Master Servicer shall establish and maintain in the name of the
Trustee, for the benefit of the Certificateholders, the Custodial Account as a
segregated trust account or accounts. The Custodial Account shall be an Eligible
Account. The Master Servicer will deposit in the Custodial Account as identified
by the Master Servicer and as received by the Master Servicer from the Servicer,
the following amounts:

                           (1) Any amounts withdrawn from a Protected Account;

                           (2) Any Monthly Advance and any payments of
                           Compensating Interest;

                           (3) Any Insurance Proceeds, Net Liquidation Proceeds
                           or Subsequent Recoveries received by or on behalf of
                           the Servicer or Master Servicer or which were not
                           deposited in a Protected Account;

                           (4) The Repurchase Price with respect to any Mortgage
                           Loans purchased by the Seller pursuant to the
                           Mortgage Loan Purchase Agreement or Sections 2.02 or
                           2.03 hereof, any amounts which are to be treated
                           pursuant to Section 2.04 of this Agreement as the
                           payment of a Repurchase Price in connection with the
                           tender of a Substitute Mortgage Loan by the Seller,
                           the Repurchase Price

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                           with respect to any Mortgage Loans purchased by the
                           Company pursuant to Section 2.04, and all proceeds of
                           any Mortgage Loans or property acquired with respect
                           thereto repurchased by the Company or its designee
                           pursuant to Section 10.01;

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

                           (6) Any other amounts received by or on behalf of the
                           Master Servicer and required to be deposited in the
                           Custodial Account pursuant to this Agreement.

         (b) All amounts deposited to the Custodial Account shall be held by the
Master Servicer in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement. The requirements for crediting the Custodial Account or the
Certificate Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of (i)
prepayment or late payment charges or assumption, tax service, statement account
or payoff, substitution, satisfaction, release and other like fees and charges
and (ii) the items enumerated in Subsection 3.20(a) need not be credited by the
Master Servicer or the Servicer to the Certificate Account or the Custodial
Account, as applicable. In the event that the Master Servicer shall deposit or
cause to be deposited to the Custodial Account any amount not required to be
credited thereto, the Securities Administrator, upon receipt of a written
request therefor signed by a Servicing Officer of the Master Servicer, shall
promptly transfer such amount to the Master Servicer, any provision herein to
the contrary notwithstanding.

         (c) The amount at any time credited to the Custodial Account may be
invested, in the name of the Trustee, or its nominee, for the benefit of the
Certificateholders, in Permitted Investments as directed by Master Servicer. All
Permitted Investments shall mature or be subject to redemption or withdrawal on
or before, and shall be held until, the next succeeding Certificate Account
Deposit Date. Any and all investment earnings on amounts on deposit in the
Master Servicer Account from time to time shall be for the account of the Master
Servicer. The Master Servicer from time to time shall be permitted to withdraw
or receive distribution of any and all investment earnings from the Master
Servicer Account. The risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Master Servicer. The Master Servicer shall deposit the amount of any
such loss in the Custodial Account within two Business Days of receipt of
notification of such loss but not later than the second Business Day prior to
the Distribution Date on which the moneys so invested are required to be
distributed to the Certificateholders.

         Section 3.18. Permitted Withdrawals and Transfers from the Custodial
Account.

         (a) The Master Servicer will, from time to time on demand of the
Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Custodial Account as the Master Servicer has
designated for such transfer or withdrawal pursuant to this Agreement and the
related Servicing Agreement. The Master Servicer may clear

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and terminate the Custodial Account pursuant to Section 10.01 and remove amounts
from time to time deposited in error.

         (b) On an ongoing basis, the Master Servicer shall withdraw from the
Custodial Account (i) any expenses recoverable by the Trustee, the Master
Servicer or the Securities Administrator or the Custodian pursuant to Sections
3.03, 7.04 and 9.05 and (ii) any amounts payable to the Master Servicer as set
forth in Section 3.14.

         (c) In addition, on or before each Certificate Account Deposit Date,
the Master Servicer shall deposit in the Certificate Account (or remit to the
Securities Administrator for deposit therein) any Monthly Advances required to
be made by the Master Servicer with respect to the Mortgage Loans.

         (d) No later than 3:00 p.m. New York time on each Certificate Account
Deposit Date, the Master Servicer will transfer all Available Distribution
Amount on deposit in the Custodial Account with respect to the related
Distribution Date to the Securities Administrator for deposit in the Certificate
Account.

         Section 3.19. Certificate Account.

         (a) The Securities Administrator shall establish and maintain in the
name of the Trustee, for the benefit of the Certificateholders, the Certificate
Account as a segregated trust account or accounts and it may be a sub-account of
the Custodial Account.

         (b) All amounts deposited to the Certificate Account shall be held by
the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.

         (c) The Certificate Account shall constitute a trust account of the
Trust Fund segregated on the books of the Securities Administrator on behalf of
the Trustee, and the Certificate Account and the funds deposited therein shall
not be subject to, and shall be protected from, all claims, liens, and
encumbrances of any creditors or depositors of the Trustee, the Securities
Administrator or the Master Servicer (whether made directly, or indirectly
through a liquidator or receiver of the Trustee or the Master Servicer). The
Certificate Account shall be an Eligible Account. The Certificate Account may be
a sub-account of the Custodial Account and in such case any withdrawals from the
Custodial Account and deposits into the Certificate Account shall be deemed to
have been made. The amount at any time credited to the Certificate Account shall
be (i) held in cash and fully insured by the FDIC to the maximum coverage
provided thereby or (ii) invested in the name of the Trustee, in such Permitted
Investments selected by the Securities Administrator or deposited in demand
deposits with such depository institutions as selected by the Securities
Administrator, provided that time deposits of such depository institutions would
be a Permitted Investment. All Permitted Investments shall mature or be subject
to redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Date if the obligor, manager or advisor for such
Permitted Investment is an affiliate of the Securities Administrator or, if such
obligor is any other Person, the Business Day preceding such Distribution Date.
All investment earnings on amounts on deposit in the Certificate Account or
benefit from funds uninvested therein from time to time shall be for the

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account of the Securities Administrator. The Securities Administrator shall be
permitted to withdraw or receive distribution of any and all investment earnings
from the Certificate Account on each Distribution Date. If there is any loss on
a Permitted Investment or demand deposit, the Securities Administrator shall
deposit the amount of the loss to the Certificate Account. With respect to the
Certificate Account and the funds deposited therein, the Master Servicer shall
take such action as may be necessary to ensure that the Certificateholders shall
be entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e),
and applicable regulations pursuant thereto, if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.

         Section 3.20. Permitted Withdrawals and Transfers from the Certificate
Account.

         (a) The Securities Administrator will, from time to time, make or cause
to be made such withdrawals or transfers from the Certificate Account as the
Securities Administrator has designated for such transfer or withdrawal pursuant
to this Agreement and the Servicing Agreements:

                           (1) to reimburse the Master Servicer or the Servicer
                           for any Monthly Advance of its own funds, the right
                           of the Master Servicer or the Servicer to
                           reimbursement pursuant to this subclause (i) being
                           limited to amounts received on a particular Mortgage
                           Loan (including, for this purpose, the Repurchase
                           Price therefor, Insurance Proceeds and Liquidation
                           Proceeds) which represent late payments or recoveries
                           of the principal of or interest on such Mortgage Loan
                           respecting which such Monthly Advance was made;

                           (2) to reimburse the Master Servicer or the Servicer
                           from Insurance Proceeds or Liquidation Proceeds
                           relating to a particular Mortgage Loan for amounts
                           expended by the Master Servicer or the Servicer in
                           good faith in connection with the restoration of the
                           related Mortgaged Property which was damaged by an
                           Uninsured Cause or in connection with the liquidation
                           of such Mortgage Loan;

                           (3) to reimburse the Master Servicer or the Servicer
                           from Insurance Proceeds relating to a particular
                           Mortgage Loan for insured expenses incurred with
                           respect to such Mortgage Loan and to reimburse the
                           Master Servicer or the Servicer from Liquidation
                           Proceeds from a particular Mortgage Loan for
                           Liquidation Expenses incurred with respect to such
                           Mortgage Loan; provided that the Master Servicer
                           shall not be entitled to reimbursement for
                           Liquidation Expenses with respect to a Mortgage Loan
                           to the extent that (i) any amounts with respect to
                           such Mortgage Loan were paid as Excess Liquidation
                           Proceeds pursuant to clause (xi) of this Subsection
                           3.20(a) to the Master

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                           Servicer; and (ii) such Liquidation Expenses were not
                           included in the computation of such Excess
                           Liquidation Proceeds;

                           (4) to reimburse the Master Servicer or the Servicer
                           for advances of funds (other than Monthly Advances)
                           made with respect to the Mortgage Loans, and the
                           right to reimbursement pursuant to this subclause
                           being limited to amounts received on the related
                           Mortgage Loan (including, for this purpose, the
                           Repurchase Price therefor, Insurance Proceeds and
                           Liquidation Proceeds) which represent late recoveries
                           of the payments for which such advances were made;

                           (5) to reimburse the Master Servicer or the Servicer
                           for any Monthly Advance or advance, after a Realized
                           Loss has been allocated with respect to the related
                           Mortgage Loan if the Monthly Advance or advance has
                           not been reimbursed pursuant to clauses (1) and (4);

                           (6) to pay the Master Servicer as set forth in
                           Section 3.14;

                           (7) to reimburse the Master Servicer for expenses,
                           costs and liabilities incurred by and reimbursable to
                           it pursuant to Sections 3.03 and 6.03;

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

                           (9) to reimburse or pay the Servicer any such amounts
                           as are due thereto under the applicable Servicing
                           Agreement and have not been retained by or paid to
                           the Servicer, to the extent provided in the related
                           Servicing Agreement;

                           (10) to reimburse the Trustee, the Securities
                           Administrator or the Custodian for expenses, costs
                           and liabilities incurred by or reimbursable to it
                           pursuant to this Agreement;

                           (11) to remove amounts deposited in error; and

                           (12) to clear and terminate the Certificate Account
                           pursuant to Section 9.01.

         (b) The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Certificate Account pursuant to subclauses (1) through
(4) immediately above or with respect to any such amounts which would have been
covered by such subclauses had the amounts not been retained by the Master
Servicer without being deposited in the Certificate Account under Section
3.18(b).

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         (c) On each Distribution Date, the Securities Administrator shall
distribute the Available Distribution Amount to the extent on deposit in the
Certificate Account to the Holders of the Certificates and determined by the
Securities Administrator.

         Section 3.21. Annual Officer's Certificate as to Compliance.

         (a) The Master Servicer shall deliver to the Trustee, the NIMS Insurer
and the Rating Agencies on or before March 1 of each year, commencing on March
1, 2005, an Officer's Certificate, certifying that with respect to the period
ending December 31 of the prior year: (i) such Servicing Officer has reviewed
the activities of such Master Servicer during the preceding calendar year or
portion thereof and its performance under this Agreement, (ii) to the best of
such Servicing Officer's knowledge, based on such review, such Master Servicer
has performed and fulfilled its duties, responsibilities and obligations under
this Agreement in all material respects throughout such year, or, if there has
been a default in the fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing Officer and
the nature and status thereof, (iii) nothing has come to the attention of such
Servicing Officer to lead such Servicing Officer to believe that the Servicer
has failed to perform any of its duties, responsibilities and obligations under
the related Servicing Agreement in all material respects throughout such year,
or, if there has been a material default in the performance or fulfillment of
any such duties, responsibilities or obligations, specifying each such default
known to such Servicing Officer and the nature and status thereof.

         (b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Securities
Administrator at the Master Servicer's expense if the Master Servicer failed to
provide such copies.

         Section 3.22. Annual Independent Accountant's Servicing Report.

         If the Master Servicer has, during the course of any fiscal year,
directly serviced any of the Mortgage Loans, then the Master Servicer at its
expense shall cause a nationally recognized firm of independent certified public
accountants to furnish a statement to the Trustee, the NIMS Insurer, the Rating
Agencies and the Company on or before March 1 of each year, commencing on March
1, 2005 to the effect that, with respect to the most recently ended fiscal year,
such firm has examined certain records and documents relating to the Master
Servicer's performance of its servicing obligations under this Agreement and
pooling and servicing and trust agreements in material respects similar to this
Agreement and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
Freddie Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by Freddie Mac
requires it to report. Copies of such statements shall be provided to any
Certificateholder upon request by the Master Servicer, or by the Securities
Administrator at the expense of the Master Servicer. If such report discloses
exceptions that are material, the Master Servicer shall advise

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the Trustee whether such exceptions have been or are susceptible of cure, and
will take prompt action to do so.

         Section 3.23. Reports Filed with Securities and Exchange Commission.

         Within 15 days after each Distribution Date, the Securities
Administrator shall, in accordance with industry standards, file with the
Commission via EDGAR, a Form 8-K with a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30 in any year, the Securities Administrator shall, in accordance with
industry standards and unless otherwise instructed by the Company, file a Form
15 Suspension Notice with respect to the Trust Fund, if applicable. Prior to (i)
March 15, 2005 and (ii) unless and until a Form 15 Suspension Notice shall have
been filed, prior to March 15 of each year thereafter, the Master Servicer shall
provide the Securities Administrator with a Master Servicer Certification,
together with a copy of the annual independent accountant's servicing report and
annual statement of compliance of the Servicer, in each case, required to be
delivered pursuant to the related Servicing Agreement, and, if applicable, the
annual statement of compliance, and the annual independent accountant's
servicing report to be delivered by the Master Servicer pursuant to Sections
3.21 and 3.22. Prior to (i) March 31, 2005, or such earlier filing date as may
be required by the Commission, and (ii) unless and until a Form 15 Suspension
Notice shall have been filed, March 31 of each year thereafter, or such earlier
filing date as may be required by the Commission, the Securities Administrator
shall file a Form 10-K, in substance conforming to industry standards, with
respect to the Trust. Such Form 10-K shall include the Master Servicer
Certification and other documentation provided by the Master Servicer pursuant
to the second preceding sentence. The Company hereby grants to the Securities
Administrator a limited power of attorney to execute and file each such document
on behalf of the Company. Such power of attorney shall continue until either the
earlier of (i) receipt by the Securities Administrator from the Company of
written termination of such power of attorney and (ii) the termination of the
Trust Fund. The Company agrees to promptly furnish to the Securities
Administrator, from time to time upon request, such further information, reports
and financial statements within its control related to this Agreement and the
Mortgage Loans as the Securities Administrator reasonably deems appropriate to
prepare and file all necessary reports with the Commission. The Securities
Administrator shall have no responsibility to file any items other than those
specified in this Section 3.23; provided, however, the Securities Administrator
will cooperate with the Company in connection with any additional filings with
respect to the Trust Fund as the Company deems necessary under the Exchange Act.
Fees and expenses incurred by the Securities Administrator in connection with
this Section 3.23 shall not be reimbursable from the Trust Fund.

         Section 3.24. UCC.

         The Company shall inform the Trustee in writing of any Uniform
Commercial Code financing statements that were filed on the Closing Date in
connection with the Trust with stamped recorded copies of such financing
statements to be delivered to the Trustee promptly upon receipt by the Company.
The Trustee agrees to monitor and notify the Company if any continuation
statements for such Uniform Commercial Code financing statements need to be
filed. If directed by the Company in writing, the Trustee will file any such
continuation statements solely at the expense of the Company. The Company shall
file any financing statements or amendments thereto required by any change in
the Uniform Commercial Code.

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         Section 3.25. Optional Purchase of Defaulted Mortgage Loans.

         (a) (i) The NIMS Insurer may, at its option, purchase a Mortgage Loan
which has become 90 or more days delinquent or for which the Servicer has
accepted a deed in lieu of foreclosure. Prior to purchase pursuant to this
Section 3.25(a)(i), the Servicer shall be required to continue to make Advances
pursuant to the related Servicing Agreement. The NIMS Insurer shall not use any
procedure in selecting Mortgage Loans to be repurchased which is materially
adverse to the interests of the Certificateholders. The NIMS Insurer shall
purchase such delinquent Mortgage Loan at a price equal to the Purchase Price of
such Mortgage Loan. Any such purchase of a Mortgage Loan pursuant to this
Section 3.25(a)(i) shall be accomplished by remittance to the Master Servicer
for deposit in the Custodial Account of the amount of the Purchase Price. The
Trustee shall effectuate the conveyance of such delinquent Mortgage Loan to the
NIMS Insurer to the extent necessary, as requested, and the Trustee shall
promptly deliver all documentation to the NIMS Insurer.

         (ii) During the first full calendar month (but excluding the last
Business Day thereof) following a Mortgage Loan or related REO Property becoming
90 days or more delinquent, the Seller shall have the option, but not the
obligation to purchase from the Trust Fund any such Mortgage Loan or related REO
Property that is then still 90 days or more delinquent, which the Seller
determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee prior to purchase), at a price equal to the Purchase Price. The Purchase
Price for any Mortgage Loan or related REO Property purchased hereunder shall be
deposited in the Custodial Account, and the Trustee, upon written certification
of such deposit, shall release or cause to be released to the Seller the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Seller shall
furnish and as shall be necessary to vest in the Seller title to any Mortgage
Loan or related REO Property released pursuant hereto.

         (b) If with respect to any delinquent Mortgage Loan or related REO
Property, the option of the Seller set forth in the preceding paragraph shall
have arisen but the Seller shall have failed to exercise such option on or
before the Business Day preceding the last Business Day of the calendar month
following the calendar month during which such Mortgage Loan or related REO
Property first became 90 days or more delinquent, then such option shall
automatically expire; provided, however, that if any such Mortgage Loan or
related REO Property shall cease to be 90 days or more delinquent but then
subsequently shall again become 90 days or more delinquent, then the Seller
shall be entitled to another repurchase option with respect to such Mortgage
Loan or REO Property as provided in the preceding paragraph.

         Section 3.26. The Corridor Contracts.

         The Trustee on behalf of the Trust Fund, shall enter into two interest
rate cap transactions evidenced by the Corridor Contracts, on the terms and
conditions set forth in the Corridor Contract Assignment Agreements. The
Corridor Contracts will be an asset of the Trust Fund but will not be an asset
of any REMIC. The Securities Administrator, on behalf of the Trustee, shall
deposit any amounts received from time to time with respect to the Corridor
Contracts into the Basis Risk Shortfall Reserve Fund.

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         The Securities Administrator, on behalf of the Trustee, shall prepare
and deliver any notices required to be delivered under the Corridor Contracts.

         The Securities Administrator, on behalf of the Trustee, shall terminate
the Corridor Contracts upon the occurrence of certain events of default or
termination events to the extent specified thereunder.

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                                   ARTICLE IV
                         PAYMENTS TO CERTIFICATEHOLDERS

         Section 4.01. Distributions.

         (a) On each Distribution Date the Securities Administrator shall
distribute to each Certificateholder of record as of the next preceding Record
Date (other than as provided in Section 9.01 respecting the final distribution)
either in immediately available funds (by 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 Securities
Administrator at least 5 Business Days prior to the related Record Date, or
otherwise by check mailed to such Certificateholder at the address of such
Holder appearing in the Certificate Register, such Certificateholder's share
(based on the aggregate of the Percentage Interests represented by Certificates
of the applicable Class held by such Holder) of the amounts required to be
distributed to such Holder pursuant to this Section 4.01.

         On each Distribution Date, the Securities Administrator shall withdraw
from the Certificate Account that portion of Available Distribution Amount for
such Distribution Date consisting of the Interest Remittance Amount for such
Distribution Date, and make the following disbursements and transfers in the
order of priority described below, in each case to the extent of the Interest
Remittance Amount remaining for such Class for such Distribution Date;

                  (i) concurrently, to the Holders of the Class A Certificates,
         the related Accrued Certificate Interest for such Class and any
         Interest Carry Forward Amount for such Class for such Distribution
         Date; and

                  (ii) sequentially, to the Holders of the Class M-1, Class M-2,
         Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7 Certificates,
         in that order, the related Accrued Certificate Interest for such Class
         for such Distribution Date.

         (b) (i) On each Distribution Date (a) prior to the Stepdown Date or (b)
on which a Trigger Event is in effect, the Holders of each Class of Offered
Certificates shall be entitled to receive distributions in respect of principal
from that portion of Available Distribution Amount to the extent of the
Principal Distribution Amount in the following amounts and order of priority:

                           (1) to the Class A Certificates, in the order and
                           priority set forth in clause (d) below, until the
                           Certificate Principal Balances thereof have been
                           reduced to zero; and

                           (2) sequentially, to the Class M-1, Class M-2, Class
                           M-3, Class M-4, Class M-5, Class M-6 and Class M-7
                           Certificates, in that order, until the Certificate
                           Principal Balance of each such Class is reduced to
                           zero.

                  (ii) On each Distribution Date (a) on or after the Stepdown
         Date and (b) on which a Trigger Event is not in effect, the Holders of
         each Class of Offered Certificates shall be entitled to receive
         distributions in respect of principal from that portion of

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<PAGE>

         Available Distribution Amount to the extent of the Principal
         Distribution Amount in the following amounts and order of priority:

                           (1) first, the Class A Principal Distribution Amount
                           shall be distributed to the Holders of the Class A
                           Certificates, in the order and priority set forth in
                           clause (d) below, until the Certificate Principal
                           Balances thereof have been reduced to zero;

                           (2) second, to the Holders of the Class M-1
                           Certificates, the Class M-1 Principal Distribution
                           Amount until the Certificate Principal Balance
                           thereof has been reduced to zero;

                           (3) third, to the Holders of the Class M-2
                           Certificates, the Class M-2 Principal Distribution
                           Amount until the Certificate Principal Balance
                           thereof has been reduced to zero;

                           (4) fourth, to the Holders of the Class M-3
                           Certificates, the Class M-3 Principal Distribution
                           Amount until the Certificate Principal Balance
                           thereof has been reduced to zero;

                           (5) fifth, to the Holders of the Class M-4
                           Certificates, the Class M-4 Principal Distribution
                           Amount until the Certificate Principal Balance
                           thereof has been reduced to zero;

                           (6) sixth, to the Holders of the Class M-5
                           Certificates, the Class M-5 Principal Distribution
                           Amount until the Certificate Principal Balance
                           thereof has been reduced to zero;

                           (7) seventh, to the Holders of the Class M-6
                           Certificates, the Class M-6 Principal Distribution
                           Amount until the Certificate Principal Balance
                           thereof has been reduced to zero; and

                           (8) eighth, to the Holders of the Class M-7
                           Certificates, the Class M-7 Principal Distribution
                           Amount until the Certificate Principal Balance
                           thereof has been reduced to zero.

         (c) On each Distribution Date the Net Monthly Excess Cashflow shall be
distributed in the following order of priority, in each case to the extent of
the Net Monthly Excess Cashflow remaining for such Distribution Date:

                  (i) first, to the Holders of the Offered Certificates then
         entitled to receive distributions in respect of principal, in an amount
         equal to any Extra Principal Distribution Amount, payable to such
         Holders as part of the Principal Distribution Amount as described under
         Section 4.01(b) above;

                  (ii) second, sequentially to the Holders of the Class M-1,
         Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7
         Certificates, in that order, in an amount equal to any Interest Carry
         Forward Amount for such Class or Classes;

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<PAGE>

                  (iii) third, sequentially to the Holders of the Class M-1,
         Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7
         Certificates, in that order, in an amount equal to any Allocated
         Realized Loss Amount for such Class or Classes;

                  (iv) fourth, to the Basis Risk Shortfall Reserve Fund, after
         taking into account amounts, if any, received under the Corridor
         Contracts, to pay the Offered Certificates as follows: first, to the
         Class A Certificates, on a pro rata basis, based on the aggregate
         amount of Basis Risk Shortfall Carry-Forward Amounts for such Classes,
         and second, sequentially to the Class M-1, Class M-2, Class M-3, Class
         M-4, Class M-5, Class M-6 and Class M-7 Certificates, in that order,
         any related Basis Risk Shortfall Carry-Forward Amount for such Class or
         Classes on such Distribution Date, to the extent not covered by the
         Corridor Contracts;

                  (v) fifth, to the Holders of the Class C Certificates, the
         Accrued Certificate Interest for such Class and any Principal
         Remittance Amount not used to make payments pursuant to clauses (b) and
         (c)(i) through (iv) above and any Overcollateralization Release Amount
         for such Distribution Date;

                  (vi) sixth, if such Distribution Date follows the Prepayment
         Period during which a Prepayment Charge may be required to be paid in
         respect of any Mortgage Loans, to the Holders of the Class P
         Certificates, in reduction of the Certificate Principal Balance
         thereof, until the Certificate Principal Balance thereof is reduced to
         zero;

                  (vii) seventh, to the Master Servicer, the Securities
         Administrator and the Trustee any amounts payable pursuant to Sections
         6.03 or 8.05 which were not reimbursed because of the operation of the
         annual cap described in such Sections; and

                  (viii) eighth, any remaining amounts to the Holders of the
         Class R Certificates (in respect of the appropriate Residual Interest).

Without limiting the provisions of Section 9.01, the Class R Certificateholders,
by accepting the Class R Certificates, agree to pledge their rights to receive
any amounts otherwise distributable on the Class R Certificates, and such rights
are hereby assigned and pledged to the holders of the Class C Certificates.

         (d) On each Distribution Date, any Principal Distribution Amount
payable to the Class A Certificates shall be distributed in the following manner
and order of priority:

                  (i) Concurrently on a pro rata basis, as follows:

                           (1) to the Class A-1 Certificates, until the
                           Certificate Principal Balance thereof has been
                           reduced to zero; and

                           (2) sequentially to the Class A-2, Class A-3 and
                           Class A-4 Certificates, in that order, in each case
                           until the Certificate Principal Balance thereof has
                           been reduced to zero.

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         (e) In addition to the foregoing distributions, with respect to any
Subsequent Recoveries, the Master Servicer shall deposit such funds into the
Custodial Account pursuant to Section 3.17. If, after taking into account such
Subsequent Recoveries, the amount of a Realized Loss is reduced, the amount of
such Subsequent Recoveries will be applied to increase the Certificate Principal
Balance of the Class of Certificates with the highest payment priority to which
Realized Losses have been allocated, but not by more than the amount of Realized
Losses previously allocated to that Class of Certificates. The amount of any
remaining Subsequent Recoveries will be applied to increase the Certificate
Principal Balance of the Class of Certificates with the next highest payment
priority, up to the amount of such Realized Losses previously allocated to that
Class of Certificates, and so on. Holders of such Certificates will not be
entitled to any payment in respect of Accrued Certificate Interest on the amount
of such increases for any Accrual Period preceding the Distribution Date on
which such increase occurs. Any such increases shall be applied to the
Certificate Principal Balance of each Certificate of such Class in accordance
with its respective Percentage Interest.

         (f) On each Distribution Date, all amounts representing Prepayment
Charges in respect of the Mortgage Loans received during the related Prepayment
Period will be withdrawn from the Certificate Account and distributed by the
Securities Administrator to the Holders of the Class P Certificates and shall
not be available for distribution to the Holders of any other Class of
Certificates. The payment of the foregoing amounts to the Holders of the Class P
Certificates shall not reduce the Certificate Principal Balances thereof.

         (g) With respect to the Corridor Contracts, on each Distribution Date,
any payments received from the Corridor Contract Counterparty with respect to
such Distribution Date will be allocated to the Offered Certificates and the
Seller in the following order of priority, in each case to the extent of amounts
remaining:

                           (1) the Class A Corridor Contract Allocation Amount
                           shall be paid to the Class A Certificates, on a pro
                           rata basis, in reduction of any related Basis Risk
                           Shortfall Carry-Forward Amount for such Distribution
                           Date and any amounts with respect to the Corridor
                           Contract for the Class M Certificates shall be paid
                           sequentially to the Class M-1, Class M-2, Class M-3,
                           Class M-4, Class M-5, Class M-6 and Class M-7
                           Certificates, in that order, in reduction of any
                           related Basis Risk Shortfall Carry-Forward Amount for
                           such Distribution Date;

                           (2) from any amounts remaining from both Corridor
                           Contracts, concurrently to the Class A Certificates,
                           on a pro rata basis, in reduction of any remaining
                           related Basis Risk Shortfall Carry-Forward Amount for
                           such Distribution Date;

                           (3) from any amounts remaining from both Corridor
                           Contracts, sequentially, to the Class M-1, Class M-2,
                           Class M-3, Class M-4, Class M-5, Class M-6 and Class
                           M-7 Certificates, in that order, any remaining
                           related Basis Risk Shortfall Carry-Forward Amount for
                           such Class or Classes for such Distribution Date; and

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                           (4) any remaining amounts from both Corridor
                           Contracts to the Class C Certificates.

         (h) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Company, as Holder thereof, and the Company shall be responsible for
crediting the amount of such distribution to the accounts of its Company
Participants in accordance with its normal procedures. Each Company 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 Securities Administrator the
Company or the Master Servicer shall have any responsibility therefor except as
otherwise provided by this Agreement or applicable law.

         (i) Except as otherwise provided in Section 9.01, if the Securities
Administrator anticipates that a final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Securities
Administrator shall, no later than two Business Days after the Determination
Date in the month of such final distribution, mail on such date to each Holder
of such Class of Certificates a notice to the effect that: (i) the Securities
Administrator 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 Securities
Administrator or as otherwise specified therein, and (ii) no interest shall
accrue on such Certificates from and after the end of the prior calendar month.

         (j) Any funds not distributed to any Holder or Holders of Certificates
of such Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 4.01(j) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Securities Administrator
shall mail a second notice to the remaining non-tendering Certificateholders to
surrender their Certificates for cancellation in order to receive the final
distribution with respect thereto. If within six months after the second notice
all such Certificates shall not have been surrendered for cancellation, the
Securities Administrator shall take reasonable steps as directed by the Company,
or appoint an agent to take reasonable steps, to contact the remaining
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the Trust Fund.
If within nine months after the second notice any such Certificates shall not
have been surrendered for cancellation, the Class R Certificateholders shall be
entitled to all unclaimed funds and other assets which remain subject hereto. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.01(j).

         (k) On each Distribution Date, other than the final Distribution Date,
the Securities Administrator shall distribute to each Certificateholder of
record as of the immediately preceding Record Date the Certificateholder's pro
rata share of its Class (based on the aggregate Percentage Interest represented
by such Holder's Certificates) of all amounts required to be distributed on

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such Distribution Date to such Class. The Securities Administrator shall
calculate the amount to be distributed to each Class and, based on such amounts,
the Securities Administrator shall determine the amount to be distributed to
each Certificateholder. All of the Securities Administrator's calculations of
payments shall be based solely on information provided to the Securities
Administrator by the Master Servicer. The Securities Administrator shall not be
required to confirm, verify or recompute any such information but shall be
entitled to rely conclusively on such information.

         Section 4.02. Statements to Certificateholders.

         (a) On each Distribution Date, based, as applicable, on information
provided to it by the Master Servicer, the Securities Administrator shall
prepare and make available on the Securities Administrator's website as set
forth below, to each Holder of the Regular Certificates, the Trustee, the Master
Servicer, the NIMS Insurer and the Rating Agencies, a statement as to the
distributions made on such Distribution Date setting forth:

                  (i) (A) the amount of the distribution made on such
         Distribution Date to the Holders of each Class of Regular Certificates,
         separately identified, allocable to principal and (B) the amount of the
         distribution made on such Distribution Date to the Holders of the Class
         P Certificates allocable to Prepayment Charges;

                  (ii) the amount of the distribution made on such Distribution
         Date to the Holders of each Class of Regular Certificates (other than
         the Class P Certificates) allocable to interest, separately identified;

                  (iii) the Pass-Through Rate on each Class of Regular
         Certificates (other than the Class P Certificates) for such
         Distribution Date;

                  (iv) the aggregate amount of Advances for such Distribution
         Date;

                  (v) the number and aggregate Stated Principal Balance of the
         Mortgage Loans as of the end of the related Due Period;

                  (vi) the Overcollateralized Amount, the Overcollateralization
         Deficiency Amount and the Overcollateralization Target Amount for such
         Distribution Date;

                  (vii) the aggregate Certificate Principal Balance or Notional
         Amount, as applicable, of each Class of Regular Certificates after
         giving effect to the amounts distributed on such Distribution Date (in
         the case of each Class of the Class M Certificates, separately
         identifying any reduction thereof due to the allocation of Realized
         Losses thereto);

                  (viii) the number and aggregate Stated Principal Balance of
         Mortgage Loans (a) delinquent 31 to 60 days, (b) delinquent 61 to 90
         days, (c) delinquent 91 days or more, in each case as of the end of the
         calendar month prior to such Distribution Date;

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                  (ix) the number, aggregate principal balance and book value of
         any REO Properties as of the close of business on the last day of the
         calendar month preceding the month in which such Distribution Date
         occurs;

                  (x) the weighted average remaining term to maturity, weighted
         average Mortgage Rate and weighted average Net Mortgage Rate of the
         Mortgage Loans as of the close of business on the first day of the
         calendar month in which such Distribution Date occurs;

                  (xi) the aggregate amount of Principal Prepayments made during
         the related Prepayment Period;

                  (xii) the aggregate amount of Realized Losses incurred during
         the related Prepayment Period and the cumulative amount of Realized
         Losses;

                  (xiii) the aggregate amount of extraordinary Trust Fund
         expenses withdrawn from the Custodial Account or the Certificate
         Account for such Distribution Date;

                  (xiv) the aggregate amount of any Prepayment Interest
         Shortfalls for such Distribution Date, to the extent not covered by
         payments by the Servicer or Master Servicer pursuant to Section 3.17,
         and the aggregate amount of Relief Act Interest Shortfalls for such
         Distribution Date;

                  (xv) the Accrued Certificate Interest in respect of each Class
         of the Class A Certificates, Class M Certificates and Class C
         Certificates for such Distribution Date and the Unpaid Interest
         Shortfall Amount, if any, with respect to each Class of the Class A
         Certificates and Class M Certificates for such Distribution Date;

                  (xvi) (A) the Overcollateralization Target Amount, (B) the
         Overcollateralized Amount and (C) the amount, if any, by which the
         Overcollateralization Target Amount exceeds the Overcollateralized
         Amount, in each case after giving effect to the distribution made on
         the Regular Certificates on such Distribution Date;

                  (xvii) the aggregate amount of the Master Servicer Fee
         received by the Master Servicer with respect to the related Due Period
         and such other customary information as the Securities Administrator
         deems necessary or desirable, or which a Certificateholder reasonably
         requests, to enable Certificateholders to prepare their tax returns;

                  (xviii) the aggregate of any deposits to and withdrawals from
         the Basis Risk Shortfall Reserve Fund for such Distribution Date and
         the remaining amount on deposit in the Basis Risk Shortfall Reserve
         Fund after such deposits and withdrawals; and

                  (xix) the Available Distribution Amount for such Distribution
         Date.

         In the case of information furnished pursuant to subclauses (i) and
(ii) above, the amounts shall also be expressed as a dollar amount per Single
Certificate.

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         On each Distribution Date the Securities Administrator shall provide
Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP level factors for each
Class of Certificates as of such Distribution Date, using a format and media
mutually acceptable to the Trustee and Bloomberg.

         The information set forth above shall be calculated or reported, as the
case may be, by the Securities Administrator, based solely on, and to the extent
of, information provided to the Securities Administrator by the Master Servicer.
The Securities Administrator may conclusively rely on such information and shall
not be required to confirm, verify or recalculate any such information.

         The Securities Administrator may make available each month, to any
interested party, the monthly statement to Certificateholders and the NIMS
Insurer via the Securities Administrator's website initially located at
"www.ctslink.com." Assistance in using the website can be obtained by calling
the Securities Administrator's customer service desk at (301) 815-6600. Parties
that are unable to use the above distribution option are entitled to have a
paper copy mailed to them via first class mail by calling the Securities
Administrator's customer service desk and indicating such. The Securities
Administrator shall have the right to change the way such reports are
distributed in order to make such distribution more convenient and/or more
accessible to the parties, and the Securities Administrator shall provide timely
and adequate notification to all parties regarding any such change.

         Within a reasonable period of time after the end of each calendar year,
the Securities Administrator shall prepare and forward, to each Person who at
any time during the calendar year was a Holder of a Certificate, a statement
containing the information set forth in subclauses (i) and (ii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Securities
Administrator shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Securities
Administrator pursuant to any requirements of the Code and regulations
thereunder as from time to time are in force.

         Within a reasonable period of time after the end of each calendar year,
the Securities Administrator shall prepare and forward, to each Person who at
any time during the calendar year was a Holder of a Class R Certificate a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Securities
Administrator shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Securities
Administrator pursuant to any requirements of the Code as from time to time are
in force.

         Section 4.03. Remittance Reports; Advances by the Master Servicer.

         (a) On the Business Day following each Determination Date but in no
event later than the earlier of (i) such date which would allow the indenture
trustee to submit a claim to the NIMS Insurer under the Indenture so as to allow
a timely payment by the NIMS Insurer under the insurance policy related to the
notes insured by the NIMS Insurer and (ii) the 20th day of each month (or if
such 20th day is not a Business Day, the preceding Business Day), the Master

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Servicer shall deliver to the Securities Administrator and the NIMS Insurer a
report, prepared as of the close of business on the Determination Date (the
"Remittance Report"), in the form of an electronic format mutually acceptable to
each party. The Remittance Report and any written information supplemental
thereto shall include such information with respect to the Mortgage Loans that
is required by the Securities Administrator for purposes of making the
calculations and preparing the statement described in Sections 4.01 and 4.02, as
set forth in written specifications or guidelines issued by the Securities
Administrator from time to time. The Trustee shall have no obligation to
recompute, recalculate or verify any information provided to it by the Master
Servicer.

         (b) If the scheduled payment on a Mortgage Loan that was due on a
related Due Date is delinquent, other than as a result of application of the
Relief Act, and for which the related Servicer was required to make an advance
pursuant to the related Servicing Agreement exceeds the amount deposited in the
Custodial Account which will be used for an advance with respect to such
Mortgage Loan, the Master Servicer will deposit in the Custodial Account not
later than the Certificate Account Deposit Date immediately preceding the
related Distribution Date an amount equal to such deficiency, net of the
Servicing Fee for such Mortgage Loan except to the extent the Master Servicer
determines any such advance to be a Nonrecoverable Advance. Subject to the
foregoing, the Master Servicer shall continue to make such advances through the
date that the related Servicer is required to do so under its Servicing
Agreement. If the Master Servicer deems an advance to be a Nonrecoverable
Advance, on the Certificate Account Deposit Date, the Master Servicer shall
present an Officer's Certificate to the Trustee and the NIMS Insurer (i) stating
that the Master Servicer elects not to make a Monthly Advance in a stated amount
and (ii) detailing the reason it deems the advance to be a Nonrecoverable
Advance.

         (c) The Master Servicer shall deposit in the Custodial Account not
later than each Certificate Account Deposit Date an amount equal to the lesser
of (i) the sum of the aggregate amounts required to be paid by the Servicers
under the Servicing Agreements with respect to subclauses (a) and (b) of the
definition of Interest Shortfall with respect to the Mortgage Loans for the
related Distribution Date, and not so paid by the related Servicer and (ii) the
Master Servicer Fees for such Distribution Date (such amount, the "Compensating
Interest Payment"). The Master Servicer shall not be entitled to any
reimbursement of any Compensating Interest Payment.

         Section 4.04. Distributions on the REMIC Regular Interests.

         (a) On each Distribution Date, the Securities Administrator shall cause
the Available Distribution Amount, in the following order of priority, to be
distributed by REMIC 1 to REMIC 2 on account of the REMIC 1 Regular Interests or
withdrawn from the Certificate Account and distributed to the Holders of the
Class R Certificates (in respect of the Class R-1 Interest), as the case may be:

                  (i) to Holders of REMIC 1 Regular Interest LT-AA, REMIC 1
         Regular Interest LT-A1, REMIC 1 Regular Interest LT-A2, REMIC 1 Regular
         Interest LT-A3, REMIC 1 Regular Interest LT-A4, REMIC 1 Regular
         Interest LT-M1, REMIC 1 Regular Interest LT-M2, REMIC 1 Regular
         Interest LT-M3, REMIC 1 Regular Interest LT-M4, REMIC 1 Regular
         Interest LT-M5, REMIC 1 Regular Interest LT-M6, REMIC 1 Regular

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         Interest LT-M7 and REMIC 1 Regular Interest LT-ZZ and REMIC 1 Regular
         Interest LT-P, PRO RATA, in an amount equal to

                  (A)      the related Uncertificated Accrued Interest for such
                           Distribution Date, plus

                  (B)      any amounts in respect thereof remaining unpaid from
                           the previous Distribution Dates.

Amounts payable as Uncertificated Accrued Interest in respect of REMIC 1 Regular
Interest LT-ZZ shall be reduced when the REMIC 1 Overcollateralized Amount is
less than the REMIC 1 Overcollateralization Target Amount, by the lesser of (x)
the amount of such difference and (y) the Maximum Uncertificated Accrued
Interest Deferral Amount, and such amount will be payable to the Holders of
REMIC 1 Regular Interest LT-A1, REMIC 1 Regular Interest LT-A2, REMIC 1 Regular
Interest LT-A3, REMIC 1 Regular Interest LT-A4, REMIC 1 Regular Interest LT-M1,
REMIC 1 Regular Interest LT-M2, REMIC 1 Regular Interest LT-M3, REMIC 1 Regular
Interest LT-M4, REMIC 1 Regular Interest LT-M5, REMIC 1 Regular Interest LT-M6
and REMIC 1 Regular Interest LT-M7 in the same proportion as the
Overcollateralization Deficiency Amount is allocated to the Corresponding
Certificates, and the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT-ZZ shall be increased by such amount;

                  (ii) to the Holders of REMIC 1 Regular Interest LT-P, (A) on
         each Distribution Date, 100% of the amount paid in respect of
         Prepayment Charges and (B) on the Distribution Date immediately
         following the expiration of the latest Prepayment Charge as identified
         on the Prepayment Charge Schedule or any Distribution Date thereafter
         until $100 has been distributed pursuant to this clause;

                  (iii) to the Holders of the REMIC 1 Regular Interests, in an
         amount equal to the remainder of the Available Funds for such
         Distribution Date after the distributions made pursuant to clauses (i)
         and (ii) above, allocated as follows:

                  (A)      98% of such remainder to the Holders of REMIC 1
                           Regular Interest LT-AA, until the Uncertificated
                           Principal Balance of such Uncertificated REMIC 1
                           Regular Interest is reduced to zero;

                  (B)      2% of such remainder, first to the REMIC 1 Regular
                           Interest LT-A1, REMIC 1 Regular Interest LT-A2, REMIC
                           1 Regular Interest LT-A3, REMIC 1 Regular Interest
                           LT-A4, REMIC 1 Regular Interest LT-M1, REMIC 1
                           Regular Interest LT-M2, REMIC 1 Regular Interest
                           LT-M3, REMIC 1 Regular Interest LT-M4, REMIC 1
                           Regular Interest LT-M5, REMIC 1 Regular Interest
                           LT-M6 and REMIC 1 Regular Interest LT-M7, 1% of and
                           in the same proportion as principal payments are
                           allocated to the Corresponding Certificates, until
                           the Uncertificated Principal Balances of such REMIC 2
                           Regular Interests are reduced to zero and second, to
                           the Holders of REMIC 1 Regular Interest LT-ZZ, until
                           the Uncertificated Principal Balance of such REMIC 1
                           Regular Interest is reduced to zero; and

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                  (C)      any remaining amount to the Holders of the Class R
                           Certificates (in respect of the Class R-1 Interest);

provided, however, that 98% and 2% of any principal payments shall be allocated
to Holders of REMIC 1 Regular Interest LT-AA and REMIC 1 Regular Interest LT-ZZ,
respectively, once the Uncertificated Principal Balances of REMIC 1 Regular
Interest LT-A1, REMIC 1 Regular Interest LT-A2, REMIC 1 Regular Interest LT-A3,
REMIC 1 Regular Interest LT-A4, REMIC 1 Regular Interest LT-M1, REMIC 1 Regular
Interest LT-M2, REMIC 1 Regular Interest LT-M3, REMIC 1 Regular Interest LT-M4,
REMIC 1 Regular Interest LT-M5, REMIC 1 Regular Interest LT-M6 and REMIC 1
Regular Interest LT-M7 have been reduced to zero.

         Section 4.05. Allocation of Realized Losses.

         All Realized Losses on the Mortgage Loans shall be allocated by the
Securities Administrator on each Distribution Date as follows: first, to Net
Monthly Excess Cashflow, through a distribution of the Extra Principal
Distribution Amount for that Distribution Date; second, to the
Overcollateralized Amount by a reduction of the Certificate Principal Balance of
the Class C Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; third, to the Class M-7 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; fourth, to the
Class M-6 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; fifth, to the Class M-5 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; sixth, to the Class M-4
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; seventh, to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; eighth, to the Class M-2 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; and
ninth, to the Class M-1 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero. All Realized Losses to be allocated to the
Certificate Principal Balances of all Classes on any Distribution Date shall be
so allocated after the actual distributions to be made on such date as provided
above. All references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.

         Any allocation of Realized Losses to a Class M Certificate on any
Distribution Date shall be made by reducing the Certificate Principal Balance
thereof by the amount so allocated. Any allocation of Realized Losses to a Class
C Certificate shall be made by (i) FIRST, reducing the amount otherwise payable
in respect thereof pursuant to Section 4.01(c)(viii), and (ii) SECOND, by
reducing the Certificate Principal Balance thereof by the amount so allocated.
No allocations of any Realized Losses shall be made to the Certificate Principal
Balances of the Class A-1, Class A-2, Class A-3, Class A-4 or the Class P
Certificates.

         All Realized Losses on the Mortgage Loans shall be allocated by the
Securities Administrator on each Distribution Date as follows: first to
Uncertificated Accrued Interest payable to the REMIC 1 Regular Interest LT-AA
and REMIC 1 Regular Interest LT-ZZ up to an aggregate amount equal to the REMIC
1 Interest Loss Allocation Amount, 98% and 2% respectively; second, to the
Uncertificated Principal Balances of REMIC 1 Regular Interest LT-AA and REMIC 1
Regular Interest LT-ZZ up to an aggregate amount equal to the REMIC 1

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Principal Loss Allocation Amount, 98% and 2%, respectively; third, to the
Uncertificated Principal Balances of REMIC 1 Regular Interest LT-AA, REMIC 1
Regular Interest LT-M7 and REMIC 1 Regular Interest LT-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT-M7 has been reduced to zero; fourth, to the Uncertificated Principal
Balances of REMIC 1 Regular Interest LT-AA, REMIC 1 Regular Interest LT-M6 and
REMIC 1 Regular Interest LT-ZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT-M6 has been
reduced to zero; fifth, to the Uncertificated Principal Balances of REMIC 1
Regular Interest LT-AA, REMIC 1 Regular Interest LT-M5 and REMIC 1 Regular
Interest LT-ZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 1 Regular Interest LT-M5 has been reduced to zero; sixth, to
the Uncertificated Principal Balances of REMIC 1 Regular Interest LT-AA, REMIC 1
Regular Interest LT-M4 and REMIC 1 Regular Interest LT-ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT-M4 has been reduced to zero; seventh, to the Uncertificated
Principal Balances of REMIC 1 Regular Interest LT-AA, REMIC 1 Regular Interest
LT-M3 and REMIC 1 Regular Interest LT-ZZ, 98%, 1% and 1%, respectively, until
the Uncertificated Principal Balance of REMIC 1 Regular Interest LT-M3 has been
reduced to zero; eighth, to the Uncertificated Principal Balances of REMIC 1
Regular Interest LT-AA, REMIC 1 Regular Interest LT-M2 and REMIC 1 Regular
Interest LT-ZZ, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 1 Regular Interest LT-M2 has been reduced to zero; and ninth,
to the Uncertificated Principal Balances of REMIC 1 Regular Interest LT-AA,
REMIC 1 Regular Interest LT-M1 and REMIC 1 Regular Interest LT-ZZ, 98%, 1% and
1%, respectively, until the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT-M1 has been reduced to zero.

         Section 4.06. Information Reports to Be Filed by the Servicer.

         The Servicer shall file information reports with respect, to the extent
set forth in the Servicing Agreements, to the receipt of mortgage interest
received in a trade or business, foreclosures and abandonments of any Mortgaged
Property and the information 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 Securities Administrator
an Officers' Certificate 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.

         Section 4.07. Compliance with Withholding Requirements.

         Notwithstanding any other provision of this Agreement the Securities
Administrator shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount on the
Mortgage Loans, that the Securities Administrator reasonably believes are
applicable under the Code. The consent of Certificateholders shall not be
required for such withholding. In the event the Securities Administrator
withholds any amount from interest or original issue discount payments or
advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Securities Administrator shall, together with its monthly
report to such Certificateholders pursuant to Section 4.02 hereof, indicate such
amount withheld.

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         Section 4.08. Basis Risk Shortfall Reserve Fund.

         (a) On the Closing Date, the Securities Administrator shall establish
and maintain in its name, in trust for the benefit of Offered Certificates, the
Basis Risk Shortfall Reserve Fund.

         (b) On each Distribution Date, the Securities Administrator shall
transfer from the Certificate Account to the Basis Risk Shortfall Reserve Fund
the amounts specified pursuant to Sections 4.01(c)(iv) and (g). On each
Distribution Date, to the extent required, the Securities Administrator shall
make withdrawals from the Basis Risk Shortfall Reserve Fund and use the amounts
in the Basis Risk Shortfall Reserve Fund to make distributions to the Offered
Certificates in an amount equal to the amount of any Basis Risk Shortfall
Carry-Forward Amount on such Certificates. Any such amounts from the Corridor
Contracts shall be distributed in the same order of priority set forth in
Section 4.01(f) above. Any such amounts from the Net Monthly Excess Cashflow
shall be distributed first, sequentially to the Class A-1, Class A-2, Class A-3
and Class A-4 Certificates, in that order and second, sequentially to the Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 and Class M-7
Certificates, in that order, in each case until the related Basis Risk Shortfall
Carry-Forward Amount has been reduced to zero. Any such amounts (other than any
amounts paid to the Basis Risk Shortfall Reserve Fund by the Corridor Contracts)
transferred shall be treated for federal tax purposes as amounts distributed by
REMIC 2 to the Holder of the Class C Certificates. On the 30th Distribution
Date, after the distributions described in the preceding sentence, the
Securities Administrator shall withdraw from the Basis Risk Shortfall Reserve
Fund (to the extent of funds available on deposit therein) any remaining amounts
and distribute them to the Holders of the Class C Certificates, not in respect
of any REMIC.

         (c) The Basis Risk Shortfall Reserve Fund shall be an Eligible Account.
Amounts held in the Basis Risk Shortfall Reserve Fund from time to time shall
continue to constitute assets of the Trust Fund, but not of the REMICs, until
released from the Basis Risk Shortfall Reserve Fund pursuant to this Section
4.08. The Basis Risk Shortfall Reserve Fund constitutes an "outside reserve
fund" within the meaning of Treasury Regulation ss. 1.860G-2(h) and is not an
asset of any REMIC. The Holders of the Class C Certificates shall be the owner
of the Basis Risk Shortfall Reserve Fund. The Securities Administrator shall
keep records that accurately reflect the funds on deposit in the Basis Risk
Shortfall Reserve Fund. The Securities Administrator shall, at the written
direction of the holder of the Majority Class C Certificateholder, invest
amounts on deposit in the Basis Risk Shortfall Reserve Fund in Permitted
Investments. In the absence of written direction to the Securities Administrator
from the Majority Class C Certificateholder, all funds in the Basis Risk
Shortfall Reserve Fund shall remain uninvested. On each Distribution Date, the
Securities Administrator shall distribute, not in respect of any REMIC, any
interest earned on the Basis Risk Shortfall Reserve Fund to the Holders of the
Class C Certificates.

         (d) For federal tax return and information reporting, the value of the
right of the Holders of the Offered Certificates to receive payments from the
reserve fund in respect of any Basis Risk Shortfall Carry-Forward Amount will be
$805,000 and $245,000 with respect to the Class A Certificates and Class M
Certificates, respectively. Such information will be provided to the Trustee by
the Underwriter on or prior to the Closing Date.

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                                   ARTICLE V
                                THE CERTIFICATES

         Section 5.01. The Certificates.

         (a) The Certificates will be substantially in the respective forms
annexed hereto as Exhibits A and B-1 through B-4. The Certificates will be
issuable in registered form only. The Certificates (other than the Class P
Certificates, the Class C Certificates and the Residual Certificates) will be
issued in minimum denominations of $25,000 Initial Certificate Principal Balance
and integral multiples of $1 in excess thereof. The Class C Certificates will be
issued in minimum denominations of $1.00 Initial Notional Amount and integral
multiples of $1.00 in excess thereof. The Class P Certificates and the Residual
Certificates will each be issuable in minimum denominations of any Percentage
Interest representing 20.00% and multiples of 0.01% in excess thereof.

         Upon original issue, the Certificates shall, upon the written request
of the Company executed by an officer of the Company, be executed and delivered
by the Securities Administrator, authenticated by the Securities Administrator
and delivered to or upon the order of the Company upon receipt by the Securities
Administrator of the documents specified in Section 2.01. The Certificates shall
be executed by manual or facsimile signature on behalf of the Securities
Administrator by a Responsible Officer. Certificates bearing the manual or
facsimile signatures of individuals who were at the time they signed the proper
officers of the Securities Administrator shall bind the Securities
Administrator, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Certificates 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
Securities Administrator 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 issued on the Closing Date shall be dated the Closing Date and any
Certificates delivered thereafter shall be dated the date of their
authentication.

         (b) The Class A Certificates and the Class M Certificates shall
initially be issued as one or more Certificates registered in the name of the
Company or its nominee and, except as provided below, registration of such
Certificates may not be transferred by the Securities Administrator except to
another Company 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 of such
Book-Entry Certificates through the book-entry facilities of the Company 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 Company Participant or
brokerage firm representing such Certificate Owner. Each Company 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 Company's normal procedures. The Securities

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Administrator shall not be required to monitor, determine or inquire as to
compliance with the transfer restrictions with respect to the Book-Entry
Certificates, and the Securities Administrator shall have no liability for
transfers of Ownership Interests in the Book Entry Certificates made through the
book-entry facilities of the Depositary or between or among Depositary
Participants or Certificate Owners, made in violation of the applicable
restrictions.

         The Trustee, the Securities Administrator, the Master Servicer and the
Company may for all purposes (including the making of payments due on the
respective Classes of Book-Entry Certificates) deal with the Company 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
Company Participants and brokerage firms representing such Certificate Owners.
Multiple requests and directions from, and votes of, the Company 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 Securities Administrator may establish a reasonable
record date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Company of such record date.

         If (i)(A) the Company advises the Securities Administrator in writing
that the Company is no longer willing or able to properly discharge its
responsibilities as Company and (B) the Company is unable to locate a qualified
successor or (ii) the Company at its option advises the Securities Administrator
in writing that it elects to terminate the book-entry system through the
Company, the Securities Administrator shall notify all Certificate Owners,
through the Company, of the occurrence of any such event and of the availability
of Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Securities Administrator of the Book-Entry Certificates by the
Company, accompanied by registration instructions from the Company for
registration of transfer, the Securities Administrator shall, at the expense of
the Company, issue the Definitive Certificates. Neither the Company, the Master
Servicer nor the Securities Administrator shall be liable for any actions taken
by the Company 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 the Trustee, the Securities Administrator and the Master Servicer
shall recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.

         (c) Each Certificate 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.

         Section 5.02. Registration of Transfer and Exchange of Certificates.

         (a) The Securities Administrator shall maintain a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Securities Administrator shall provide for the registration of Certificates and
of transfers and exchanges of Certificates as herein provided.

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<PAGE>

         (b) Except as provided in Section 5.02(c), no transfer, sale, pledge or
other disposition of a Class P, Class C or Residual 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 "Act"),
and any applicable state securities laws or is made in accordance with said Act
and laws. In the event that a transfer of a Class P, Class C or Residual
Certificate is to be made under this Section 5.02(b), (i) the Securities
Administrator shall require an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Securities Administrator that such transfer shall
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 Securities
Administrator, the Trustee, the Company or the Master Servicer, provided that
such Opinion of Counsel will not be required in connection with the initial
transfer of any such Certificate by the Company or any affiliate thereof, to a
non-affiliate of the Company and (ii) the Securities Administrator shall require
the transferee to execute a representation letter, substantially in the form of
Exhibit G-1 hereto, and the Securities Administrator shall require the
transferor to execute a representation letter, substantially in the form of
Exhibit G-2 hereto, each acceptable to and in form and substance satisfactory to
the Securities Administrator certifying to the Company and the Securities
Administrator the facts surrounding such transfer, which representation letters
shall not be an expense of the Securities Administrator, the Trustee, the
Company or the Master Servicer; PROVIDED, HOWEVER, that such representation
letters will not be required in connection with any transfer of any such
Certificate by the Company to an affiliate of the Company and the Securities
Administrator shall be entitled to conclusively rely upon a representation
(which, upon the request of the Securities Administrator, shall be a written
representation) from the Company of the status of such transferee as an
affiliate of the Company. Any such Certificateholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Securities
Administrator, the Trustee, the Company and the Master Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such applicable federal and state laws.

         (c) Notwithstanding the requirements of Section 5.02(b), transfers of
Class P, Class C and Residual Certificates may be made in accordance with this
Section 5.02(c) if the prospective transferee of a Certificate provides the
Securities Administrator and the Company with an investment letter substantially
in the form of Exhibit G-3 attached hereto, which investment letter shall not be
an expense of the Securities Administrator, the Trustee, the Company or the
Master Servicer, and which investment letter states that, among other things,
such transferee is a "qualified institutional buyer" as defined under Rule 144A.
Such transfers shall be deemed to have complied with the requirements of Section
5.02(b) hereof; PROVIDED, HOWEVER, that no Transfer of any of the Class P
Certificates, Class C Certificates or Residual Certificates may be made pursuant
to this Section 5.02(c) by the Company. Any such Certificateholder desiring to
effect such transfer shall, and does hereby agree to, indemnify the Securities
Administrator, the Trustee, the Company and the Master Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such applicable federal and state laws.

         The Securities Administrator shall require an Opinion of Counsel, on
which the Securities Administrator, the Trustee, the Company, the Master
Servicer or the NIMS Insurer may rely, from a prospective transferee prior to
the transfer of any Class P, Class C or Class R Certificate to any employee
benefit plan or other retirement arrangement, including an individual

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<PAGE>

retirement account or Keogh plan, that is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code
(any of the foregoing, a "Plan"), to a trustee or other Person acting on behalf
of any Plan, or to any other person who is using "plan assets" of any Plan to
effect such acquisition (including any insurance company using funds in its
general or separate accounts that may constitute "plan assets"). Such Opinion of
Counsel must establish to the satisfaction of the Securities Administrator that
such transfer is permissible under applicable law, will not constitute or result
in a prohibited transaction under Section 406 of ERISA or Section 4975 of the
Code, and will not subject the Securities Administrator, the Trustee, the Master
Servicer, the Company or the NIMS Insurer to any obligation in addition to those
undertaken in this Agreement. None of the Company, the Master Servicer, the
Securities Administrator, the Trustee or the NIMS Insurer will be required to
obtain such Opinion of Counsel on behalf of any prospective transferee. A
purchaser of a Class P, Class C or Class R Certificate shall be deemed to
represent to the Securities Administrator, the Trustee, the Master Servicer, the
Company and the NIMS Insurer that it is not a Plan or using assets of a Plan if
it does not provide such an Opinion of Counsel.

         Each beneficial owner of a Class M Certificate or any interest therein
shall be deemed to have represented, by virtue of its acquisition or holding of
that certificate or interest therein, that either (i) it is not a Plan or a
trustee or other Person acting on behalf of a Plan or using "plan assets" of a
Plan to effect such acquisition (including any insurance company using funds in
its general or separate accounts that may constitute "plan assets"), (ii) it has
acquired and is holding such certificate in reliance on Prohibited Transaction
Exemption 2002-41 as amended from time to time (the "Exemption"), and that it
understands that there are certain conditions to the availability of the
Exemption, including that the certificate must be rated, at the time of
purchase, not lower than "BBB-"(or its equivalent) by S&P, Fitch Ratings or
Moody's, and the certificate is so rated or (iii) (1) it is an insurance
company, (2) the source of funds used to acquire or hold the certificate or
interest therein is an "insurance company general account," as such term is
defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and (3) the
conditions in Sections I and III of PTCE 95-60 have been satisfied.

         (d) [Reserved]

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

                  (A) Each Person holding or acquiring any Ownership Interest in
         a Residual Certificate shall be a Permitted Transferee and shall
         promptly notify the Securities Administrator 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 Residual Certificate, the Securities Administrator shall
         require delivery to it, and shall not

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<PAGE>

         register the Transfer of any Residual Certificate until its receipt of
         (I) an affidavit and agreement (a "Transfer Affidavit and Agreement" in
         the form attached hereto as Exhibit G-5) from the proposed Transferee,
         in form and substance satisfactory to the Securities Administrator
         representing and warranting, among other things, that it is a Permitted
         Transferee, that it is not acquiring its Ownership Interest in the
         Residual 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 Ownership Interest in a
         Residual Certificate, it will endeavor to remain a Permitted
         Transferee, and that it has reviewed the provisions of this Section
         5.02 and agrees to be bound by them, and (II) a certificate, in the
         form attached hereto as Exhibit G-4, from the Holder wishing to
         transfer the Residual Certificate, in form and substance satisfactory
         to the Securities Administrator 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 Securities Administrator assigned to this
         transaction has actual knowledge that the proposed Transferee is not a
         Permitted Transferee, no Transfer of an Ownership Interest in a
         Residual Certificate to such proposed Transferee shall be effected.

                  (D) Each Person holding or acquiring any Ownership Interest in
         a Residual 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 Residual Certificate and (y) not
         to transfer its Ownership Interest unless it provides a certificate to
         the Securities Administrator in the form attached hereto as Exhibit
         G-4.

                  (E) Each Person holding or acquiring an Ownership Interest in
         a Residual Certificate, by purchasing an Ownership Interest in such
         Certificate, agrees to give the Securities Administrator 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 Residual Certificate, if it
         is "a pass-through interest holder", or is holding an Ownership
         Interest in a Residual Certificate on behalf of a "pass-through
         interest holder."

                  (ii) The Securities Administrator will register the Transfer
         of any Residual Certificate only if it shall have received the Transfer
         Affidavit and Agreement in the form attached hereto as Exhibit G-5, a
         certificate of the Holder requesting such transfer in the form attached
         hereto as Exhibit G-4 and all of such other documents as shall have
         been reasonably required by the Securities Administrator as a condition
         to such registration. Transfers of the Residual Certificates other than
         to Permitted Transferees are prohibited.

                  (iii) (A) If any Person other than a Permitted Transferee
         shall become a Holder of a Residual 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
         Residual Certificate. If a Non-United States Person shall become a
         Holder of a Residual Certificate, then the last preceding Permitted
         Transferee shall be restored, to the extent permitted by law, to all

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         rights and obligations as Holder thereof retroactive to the date of
         registration of such Transfer of such Residual Certificate. If a
         transfer of a Residual Certificate is disregarded pursuant to the
         provisions of Treasury 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 Residual Certificate. The prior Holder shall be
         entitled to recover from any purported Holder of a Residual Certificate
         that was in fact not a Permitted Transferee under this Section 5.05(b)
         at the time it became a Holder all payments made on such Residual
         Certificate. Each Holder of a Residual Certificate, by acceptance
         thereof, shall be deemed for all purposes to have consented to the
         provisions of this clause (b) and to any amendment of this Agreement
         deemed necessary (whether as a result of new legislation or otherwise)
         by counsel of the Company to ensure that the Residual Certificates are
         not transferred to any Person who is not a Permitted Transferee and
         that any transfer of such Residual Certificates will not cause the
         imposition of a tax upon the Trust or cause any such REMIC to fail to
         qualify as a REMIC. The Securities Administrator shall be under no
         liability to any Person for any registration of Transfer of a Residual
         Certificate that is in fact not permitted by this Section 5.02 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.

                  (B) If any purported Transferee shall become a Holder of a
         Residual Certificate in violation of the restrictions in this Section
         5.02 and to the extent that the retroactive restoration of the rights
         of the Holder of such Residual Certificate as described in clause
         (iii)(A) above shall be invalid, illegal or unenforceable, then the
         Securities Administrator shall have the right, without notice to the
         Holder or any prior Holder of such Residual Certificate, to sell such
         Residual Certificate to a purchaser selected by the Securities
         Administrator on such terms as the Securities Administrator may choose.
         Such purported Transferee shall promptly endorse and deliver each
         Residual Certificate in accordance with the instructions of the
         Securities Administrator. Such purchaser may be the Securities
         Administrator itself. The proceeds of such sale, net of the commissions
         (which may include commissions payable to the Securities
         Administrator), expenses and taxes due, if any, will be remitted by the
         Securities Administrator 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 Securities Administrator, and the
         Securities Administrator shall not be liable to any Person having an
         Ownership Interest in a Residual Certificate as a result of its
         exercise of such discretion.

                  (iv) The Securities Administrator shall make available to the
         Internal Revenue Service and those Persons specified by the REMIC
         Provisions, all information necessary to compute any tax imposed (A) as
         a result of the transfer of an ownership interest in a Residual
         Certificate to any Person who is a Disqualified Organization, including
         the information regarding "excess inclusions" of such Residual
         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

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<PAGE>

         an Ownership Interest in a Residual Certificate having as among its
         record Holders at any time any Person who is a Disqualified
         Organization. The Securities Administrator may charge and shall be
         entitled to reasonable compensation for providing such information as
         may be required from those Persons which may have had a tax imposed
         upon them as specified in clauses (A) and (B) of this paragraph for
         providing such information.

                  (v) Subject to the preceding paragraphs, upon surrender for
         registration of transfer of any Certificate at the office of the
         Securities Administrator maintained for such purpose, the Securities
         Administrator shall execute and the Securities Administrator shall
         authenticate and deliver, in the name of the designated transferee or
         transferees, one or more new Certificates of the same Class of a like
         aggregate Percentage Interest. Every Certificate surrendered for
         transfer shall be accompanied by notification of the account of the
         designated transferee or transferees for the purpose of receiving
         distributions pursuant to Section 4.01 by wire transfer, if any such
         transferee desires and is eligible for distribution by wire transfer.

                  (vi) At the option of the Certificateholders, Certificates may
         be exchanged for other Certificates of authorized denominations of the
         same Class of a like aggregate Percentage Interest, upon surrender of
         the Certificates to be exchanged at the office of the Securities
         Administrator. Whenever any Certificates are so surrendered for
         exchange the Securities Administrator shall execute, authenticate and
         deliver the Certificates 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) be duly endorsed by, or be accompanied by a written instrument
         of transfer in the form satisfactory to the Trustee duly executed by,
         the Holder thereof or his attorney duly authorized in writing. In
         addition, with respect to each Class R Certificate, the Holder thereof
         may exchange, in the manner described above, such Class R Certificate
         for two separate Certificates, each representing such Holder's
         respective Percentage Interest in the Class R-1 Interest and the Class
         R-2 Interest, respectively, in each case that was evidenced by the
         Class R Certificate being exchanged.

                  (vii) No service charge shall be made to the
         Certificateholders for any transfer or exchange of Certificates, but
         the Securities Administrator 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.

                  (viii) All Certificates surrendered for transfer and exchange
         shall be canceled and retained by the Securities Administrator in
         accordance with the Securities Administrator's standard procedures.

         Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.

         If (i) any mutilated Certificate is surrendered to the Securities
Administrator and the Securities Administrator receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Securities Administrator and the NIMS Insurer such
security or indemnity as may be required by it to save it harmless, then, in the
absence of notice to the Securities Administrator that such Certificate has been
acquired by a bona fide

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purchaser, the Securities Administrator shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of the same Class and Percentage Interest. Upon
the issuance of any new Certificate under this Section 5.03, the Securities
Administrator 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 Securities Administrator)
connected therewith. Any replacement 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.

         Section 5.04. Persons Deemed Owners.

         The Company, the Master Servicer, Securities Administrator, the NIMS
Insurer, the Trustee and any agent of any of them 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 4.01 and for all other
purposes whatsoever, and neither the Company, the Master Servicer, the Trustee
nor any agent of any of them shall be affected by notice to the contrary.

         Section 5.05. Rule 144A Information.

         For so long as any Class P, Class C and Residual Certificates are
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
of the Securities Act, (1) the Company will provide or cause to be provided to
any Holder of such Certificates and any prospective purchaser thereof designated
by such a Holder, upon the request of such Holder or prospective purchaser, the
information required to be provided to such Holder or prospective purchaser by
Rule 144A(d)(4) under the Securities Act; and (2) the Company shall update such
information from time to time in order to prevent such information from becoming
false and misleading and will take such other actions as are necessary to ensure
that the safe harbor exemption from the registration requirements of the
Securities Act under Rule 144A is and will be available for resales of such
Certificates conducted in accordance with Rule 144A. The Master Servicer shall
cooperate with the Company and furnish the Company such information in the
Master Servicer's possession as the Company may reasonably request.

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                                   ARTICLE VI
                       THE COMPANY AND THE MASTER SERVICER

         Section 6.01. Liability of the Company and the Master Servicer.

         The Company and the Master Servicer each shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Company and the Master Servicer herein. Only the Master
Servicer, any successor Master Servicer or the Trustee acting as Master Servicer
shall be liable with respect to the master servicing of the Mortgage Loans and
the REO Property for actions taken by any such Person in contravention of the
Master Servicer's duties hereunder.

         Section 6.02. Merger, Consolidation or Conversion of the Company or the
Master Servicer.

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

         Any Person into which the Company or the Master Servicer may be merged,
consolidated or converted, or any corporation resulting from any merger or
consolidation to which the Company or the Master Servicer shall be a party, or
any Person succeeding to the business of the Company or the Master Servicer,
shall be the successor of the Company 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 or an affiliate thereof shall be qualified to service
mortgage loans for Fannie Mae or Freddie Mac.

         Section 6.03. Limitation on Liability of the Company, the Master
Servicer, the Securities Administrator and Others.

         Neither the Company, the Master Servicer nor any of the directors,
officers, employees or agents of the Company 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 Company or the Master Servicer (but this
provision shall protect the above described persons) against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Master Servicer pursuant to Section 3.01 or any other Section
hereof; and provided further that this provision shall not protect the Company,
the Master Servicer or any such person, against 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 Company, the Master Servicer and any
director, officer, employee or agent of the Company or the Master Servicer may
rely in good faith on any document of any kind PRIMA FACIE properly executed and
submitted by

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any Person respecting any matters arising hereunder. The Company, the Custodian,
the Master Servicer, the Securities Administrator, the NIMS Insurer and any
director, officer, employee or agent of the Company, the Custodian, the Master
Servicer, the Securities Administrator or NIMS Insurer shall be indemnified and
held harmless by the Trust Fund (with respect to the Master Servicer, Custodian
and Securities Administrator, in the aggregate up to a limit of $500,000 per
calendar year, against any loss, liability or expense incurred in connection
with this Agreement, the Custodial Agreement or the Certificates or the Mortgage
Loans (including reasonable legal fees and disbursements of counsel), other than
(a) any loss, liability or expense related to Master Servicer's master servicing
obligations with respect to any specific Mortgage Loan or Mortgage Loans (except
as any such loss, liability or expense shall be otherwise reimbursable pursuant
to this Agreement) or related to the Master Servicer's obligations under Section
3.01, or to the Custodian's failure to perform its duties under the Custodial
Agreement, respectively, or (b) 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. None of the Company, the Master Servicer, the Custodian or the
Securities Administrator shall be under any obligation to appear in, prosecute
or defend any legal action which 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 Company, the Master Servicer, the
Custodian or the Securities Administrator may in its sole discretion undertake
any such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom (except any action or
liability related to the Master Servicer's obligations under Section 3.01) shall
be expenses, costs and liabilities of the Trust Fund, and the Company, the
Custodian, the Master Servicer and the Securities Administrator shall be
entitled to be reimbursed therefor from the Certificate Account as provided in
Section 3.18, any such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Certificate Account.

         Section 6.04. Limitation on Resignation of the Master Servicer.

         The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon appointment of a successor master servicer
reasonably acceptable to the Trustee and the NIMS Insurer upon receipt by the
Trustee of a letter from each Rating Agency (obtained by the Master Servicer and
at its expense) that such a resignation and appointment will not, in and of
itself, result in a downgrading of the Certificates or (b) upon determination
that its duties hereunder are no longer permissible under applicable law. Any
such determination described in (b) above permitting the resignation of the
Master Servicer shall be evidenced by an Opinion of Counsel (at the expense of
the resigning Master Servicer) to such effect delivered to the Trustee. No such
resignation shall become effective until the Trustee or a successor servicer
shall have assumed the Master Servicer's responsibilities, duties, liabilities
and obligations hereunder. Any resignation of the Master Servicer shall result
in the automatic resignation of the Securities Administrator.

         Section 6.05. Sale and Assignment of Master Servicing.

         The Master Servicer may sell and assign its rights and delegate its
duties and obligations in their entirety as Master Servicer under this
Agreement; PROVIDED, HOWEVER, that: (i) the

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purchaser or transferee accepting such assignment and delegation (a) shall be a
Person which shall be qualified to service mortgage loans for Fannie Mae or
Freddie Mac; (b) shall, in the case of successor master servicers only, have a
net worth of not less than $10,000,000 (unless otherwise approved by each Rating
Agency pursuant to clause (ii) below); (c) shall be reasonably satisfactory to
the Trustee (as evidenced in a writing signed by the Trustee) and the NIMS
Insurer as having a comparable master servicing ability to that of the Master
Servicer on the Closing Date; (d) shall execute and deliver to the Trustee an
agreement, in form and substance reasonably satisfactory to the Trustee and the
NIMS Insurer, which contains an assumption by such Person of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by it as master servicer under this Agreement and any
custodial agreement, from and after the effective date of such agreement; (ii)
each Rating Agency shall be given prior written notice of the identity of the
proposed successor to the Master Servicer and each Rating Agency's rating of the
Certificates in effect immediately prior to such assignment, sale and delegation
will not be downgraded or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect obtained by the Master
Servicer at its expense and delivered to the Trustee; and (iii) the Master
Servicer assigning and selling the master servicing shall deliver to the Trustee
an Officer's Certificate and an Opinion of Counsel (at the expense of the Master
Servicer), each stating that all conditions precedent to such action under this
Agreement have been completed and such action is permitted by and complies with
the terms of this Agreement. No such assignment or delegation shall affect any
liability of the Master Servicer arising prior to the effective date thereof.

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                                  ARTICLE VII
                                     DEFAULT

         Section 7.01. Events of Default.

         "Event of Default", wherever used herein, means any one of the
following events:

                  (i) any failure by the Master Servicer to deposit into the
         Certificate Account on each Certificate Account Deposit Date the
         amounts required to be deposited therein (other than an Advance) under
         the terms of this Agreement which continues unremedied for one (1)
         Business Day after such amount was required to be remitted; or

                  (ii) any failure on the part of the Master Servicer duly 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 or in this Agreement (including any breach of the Master
         Servicer's representations and warranties pursuant to Section 2.03(a)
         which materially and adversely affects the interests of the
         Certificateholders) which continues unremedied for a period of 60 days
         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, the NIMS Insurer or to the Master Servicer and the Trustee
         by the Holders of Certificates entitled to at least 25% of the Voting
         Rights; or

                  (iii) a decree or order of a court or agency or supervisory
         authority having jurisdiction in an involuntary case under any present
         or future federal or state bankruptcy, insolvency or similar law or the
         appointment of a conservator or receiver or liquidator in any
         insolvency, readjustment of debt, marshaling of assets and liabilities
         or similar proceedings, or for the winding-up or liquidation of its
         affairs, shall have been entered against the Master Servicer and such
         decree or order shall have remained in force undischarged or unstayed
         for a period of 60 consecutive days; or

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

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

                  (vi) the Master Servicer shall fail to deposit in the
         Certificate Account on any Certificate Account Deposit Date an amount
         equal to any required Advance which continues unremedied for a period
         of one (1) Business Day after the Business Day immediately preceding
         the related Distribution Date.

         If an Event of Default described in clauses (i) - (vi) 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, the

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Trustee, the NIMS Insurer or the Holders of Certificates entitled to at least
51% of the Voting Rights, by notice in writing to the Master Servicer (and to
the Trustee and the NIMS Insurer if given by such Holders of Certificates), with
a copy to the Rating Agencies, may terminate all of the rights and obligations
(but not the liabilities) of the Master Servicer under this Agreement and in and
to the Trust Fund, other than its rights as a Certificateholder hereunder;
PROVIDED, HOWEVER, that the successor to the Master Servicer appointed pursuant
to Section 7.02 shall have accepted the duties of Master Servicer effective upon
the resignation or termination of the Master Servicer. On or after the receipt
by the Master Servicer of such 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 pass to and
be vested in the Trustee pursuant to and under this Section, 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 at the expense of the
Master Servicer. The Master Servicer agrees to cooperate with (and pay any
related costs and expenses of) the Trustee in effecting the termination of the
Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee or the successor Master Servicer for
administration by it of (i) the property and amounts which are then or should be
part of the Trust Fund or which thereafter become part of the Trust Fund; (ii)
originals or copies of all documents of the Master Servicer reasonably requested
by the Trustee to enable it to assume the Master Servicer's duties thereunder;
(iii) the rights and obligations of the Master Servicer under the Subservicing
Agreements with respect to the Mortgage Loans; and (iv) all cash amounts which
shall at the time be deposited by the Master Servicer or should have been
deposited to the Custodial or the Certificate Account or thereafter be received
with respect to the Mortgage Loans. The Trustee shall not be deemed to have
breached any obligation hereunder as a result of a failure to make or delay in
making any distribution as and when required hereunder caused by the failure of
the Master Servicer to remit any amounts received by it or to deliver any
documents held by it with respect to the Mortgage Loans. For purposes of this
Section 7.01, the Trustee shall not be deemed to have knowledge of an Event of
Default unless a Responsible Officer of the Trustee has actual knowledge thereof
or unless notice of any event which is in fact such an Event of Default is
received by the Trustee as provided in Section 11.05 and such notice references
the Certificates, the Trust Fund or this Agreement.

         Section 7.02. Trustee to Act; Appointment of Successor.

         Within 90 days of the time the Master Servicer receives a notice of
termination pursuant to Section 7.01(i) - (vi), the Trustee or its appointed
agent shall be the successor in all respects to the Master Servicer in its
capacity as Master Servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject thereafter to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer including the obligation to make Advances which have been or will be
required to be made (except for the responsibilities, duties and liabilities
contained in Section 2.03 and its obligations to deposit amounts in respect of
losses pursuant to 4.01(i)) by the terms and provisions hereof; and provided
further, that any failure to perform such duties or responsibilities caused by
the Master Servicer's failure to provide information required by Section 4.03
shall not be considered a default by the Trustee

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<PAGE>

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 and the Certificate Account if the
Master Servicer had continued to act hereunder. If the Trustee has become the
successor to the Master Servicer in accordance with Section 6.04 or Section
7.02, then notwithstanding the above, if the Trustee shall be unwilling to so
act, or shall be unable to so act, the Trustee may 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
PROVIDED, that the appointment of any such successor Master Servicer shall be
approved by the NIMS Insurer (such approval not to be unreasonably withheld), as
evidenced by the prior written consent of the NIMS Insurer. Pending appointment
of a successor to the Master Servicer hereunder, the Trustee shall act in such
capacity as herein above 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 Master Servicer hereunder. Each of the Company, the Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. In no event shall the successor
Master Servicer be liable for the acts or omissions of the predecessor Master
Servicer.

         In connection with the termination or resignation of the Master
Servicer hereunder, 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 Section 7.02. The
successor Master Servicer shall cause such assignment to be delivered to the
Trustee 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.

         Any successor, including the Trustee, to the Master Servicer shall
maintain in force during its term as master servicer hereunder policies and
fidelity bonds to the same extent as the Master Servicer is so required pursuant
to Section 3.18.

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<PAGE>

         Notwithstanding anything else herein to the contrary, in no event shall
the Trustee be liable for any Master Servicing Fee or for any differential in
the amount of the Master Servicing Fee paid hereunder and the amount necessary
to induce any successor Master Servicer to act as successor Master Servicer
under this Agreement and the transactions set forth or provided for herein.

         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 notice thereof to
Certificateholders and to the Rating Agencies.

         (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.

         Section 7.04. Waiver of Events of Default.

         The Holders representing at least 51% of the Voting Rights of
Certificates affected by a default or Event of Default hereunder, and with the
consent of the NIMS Insurer, may waive such default or Event of Default (other
than an Event of Default set forth in Section 7.01(vi)); 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 with the consent of the NIMS Insurer and (b) no waiver pursuant to
this Section 7.04 shall affect the Holders of Certificates in the manner set
forth in the second paragraph of Section 11.01 or materially adversely affect
any non-consenting Certificateholder. 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. The Master Servicer shall give notice of any
such waiver to the Rating Agencies and the NIMS Insurer.

         Section 7.05. List of Certificateholders.

         Upon written request of three or more Certificateholders of record, for
purposes of communicating with other Certificateholders with respect to their
rights under this Agreement, the Securities Administrator will afford such
Certificateholders access during business hours to the most recent list of
Certificateholders held by the Securities Administrator.

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                                  ARTICLE VIII
               CONCERNING THE TRUSTEE AND SECURITIES ADMINISTRATOR

         Section 8.01. Duties of Trustee and the Securities Administrator.

         The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default which may have occurred, and the
Securities Administrator each undertake to perform such duties and only such
duties as are specifically set forth in this Agreement as duties of the Trustee
and the Securities Administrator, respectively. If an Event of Default occurs,
is continuing and has not been 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 man would exercise or use under
the circumstances in the conduct of his own affairs. Any permissive right of the
Trustee enumerated in this Agreement shall not be construed as a duty.

         The Trustee and the Securities Administrator, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trustee and the Securities Administrator
which are specifically required to be furnished pursuant to any provision of
this Agreement, the Trustee and the Securities Administrator, respectively,
shall examine them in accordance with the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, the Trustee or the Securities Administrator, as applicable,
shall take such action as it deems appropriate to have the instrument corrected,
and if the instrument is not corrected to the Trustee's or the Securities
Administrator's, as applicable, satisfaction, the Trustee or the Securities
Administrator, as applicable, will provide notice thereof to the
Certificateholders and the NIMS Insurer. Notwithstanding the foregoing, neither
the Trustee nor the Securities Administrator shall be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Master Servicer hereunder
or any Opinion of Counsel required hereunder.

         The Trustee is hereby authorized and directed to execute and deliver on
behalf of the Trust, and to perform the duties and obligations of the Trustee
under, an Insurance and Indemnity Agreement with a NIMs Insurer and any other
agreement or instrument related thereto, in each case in such form as the
Depositor shall direct or shall approve, the execution and delivery of any such
agreement by the Depositor to be conclusive evidence of its approval thereof.

         The Securities Administrator shall prepare and file or cause to be
filed on behalf of the Trust Fund any tax return that is required with respect
to any Trust REMIC pursuant to applicable federal, state or local tax laws.

         The Securities Administrator covenants and agrees that it shall perform
its obligations hereunder in a manner so as to maintain the status of any Trust
REMIC under the REMIC Provisions and to prevent the imposition of any federal,
state or local income, prohibited transaction, contribution or other tax on any
of any Trust REMIC to the extent that maintaining such status and avoiding such
taxes are within the control of the Securities Administrator and are reasonably
within the scope of its duties under this Agreement.

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<PAGE>

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

                  (i) The duties and obligations of the Trustee 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 and the Securities
         Administrator, at all times, shall be determined solely by the express
         provisions of this Agreement, neither the Trustee nor the Securities
         Administrator shall 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 or the Securities Administrator and, in the absence
         of bad faith on the part of the Trustee or the Securities
         Administrator, respectively, the Trustee or the Securities
         Administrator may conclusively rely, as to the truth of the statements
         and the correctness of the opinions expressed therein, upon any
         certificates or opinions furnished to the Trustee or the Securities
         Administrator and conforming to the requirements of this Agreement;

                  (ii) Neither the Trustee nor the Securities Administrator
         shall be liable for an error of judgment made in good faith by a
         Responsible Officer or Responsible Officers of the Trustee or of the
         Securities Administrator, as applicable, unless it shall be proved that
         the Trustee or Securities Administrator, respectively, was negligent in
         ascertaining the pertinent facts; and

                  (iii) Neither the Trustee nor the Securities Administrator
         shall be liable with respect to any action taken, suffered or omitted
         to be taken by it in good faith in accordance with the direction of the
         Holders of Certificates entitled to at least 25% of the Voting Rights
         or the NIMS Insurer relating to the time, method and place of
         conducting any proceeding for any remedy available to the Trustee or
         the Securities Administrator, respectively, or exercising any trust or
         power conferred upon the Trustee or the Securities Administrator,
         respectively, under this Agreement.

         Section 8.02. Certain Matters Affecting the Trustee and the Securities
Administrator.

         Except as otherwise provided in Section 8.01:

         (a) The Trustee and the Securities Administrator may conclusively rely
upon and shall be fully protected in acting or refraining from acting in
reliance 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 reasonably believed
by it to be genuine and to have been signed or presented by the proper party or
parties;

         (b) The Trustee and the Securities Administrator may consult with
counsel and any written advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance therewith;

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<PAGE>

         (c) Neither the Trustee nor the Securities Administrator shall be under
any obligation to exercise any of the trusts or powers vested in it by this
Agreement, other than its obligation to give notice pursuant to this Agreement,
or to institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of any of the Certificateholders or
the NIMS Insurer, pursuant to the provisions of this Agreement, unless such
Certificateholders or the NIMS Insurer shall have offered to the Trustee or
Securities Administrator security or indemnity satisfactory to it against the
costs, expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default of which a Responsible Officer of the
Trustee's corporate trust department has actual knowledge (which has not been
waived or 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 man would exercise or use under the circumstances in the conduct of his
own affairs;

         (d) Neither the Trustee nor the Securities Administrator shall be
liable for any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;

         (e) Neither the Trustee prior to the occurrence of an Event of Default
hereunder and after the curing or waiver of all Events of Default which may have
occurred, nor the Securities Administrator, at any time, shall be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing to
do so by the Holders of Certificates entitled to at least 25% of the Voting
Rights or the NIMS Insurer; provided, however, that if the payment within a
reasonable time to the Trustee or Securities Administrator, as applicable, 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 or Securities
Administrator, as applicable, reasonably assured to the Trustee or the
Securities Administrator, as applicable, by the security afforded to it by the
terms of this Agreement reasonable expense of every such examination shall be
paid by the Certificateholders requesting the investigation;

         (f) The Trustee and the Securities Administrator may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys appointed with due care,
and shall not be responsible for any willful misconduct or negligence on the
part of any agent, attorney, custodian or nominee so appointed;

         (g) Neither the Trustee nor the Securities Administrator shall be
required to give any bond or surety with respect to the execution of the trust
created hereby or the powers granted hereunder; and

         (h) Whenever in the administration of the provisions of this Agreement
the Trustee and the Securities Administrator shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering
any action to be taken hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of gross
negligence or bad faith on the part of the Trustee or the Securities
Administrator, as applicable, be deemed to be conclusively proved and
established by a certificate signed and delivered to the

                                      103
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Trustee or Securities Administrator, as applicable, and such certificate, in the
absence of gross negligence or bad faith on the part of the Trustee or
Securities Administrator, as applicable, shall be full warrant to the Trustee or
Securities Administrator, as applicable, for any action taken, suffered or
omitted by it under the provisions of this Agreement upon the faith thereof.

         Neither the Trustee nor the Securities Administrator shall have any
obligation to invest and reinvest any cash held. The Trustee and the Securities
Administrator shall have no liability in respect of losses incurred as a result
of the liquidation of any investment incurred as a result of the liquidation of
any investment prior to its stated maturity.

         Section 8.03. Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans.

         The recitals contained herein and in the Certificates (other than the
signature of the Securities Administrator, the authentication of the Securities
Administrator on the Certificates, the acknowledgments of the Securities
Administrator contained in Article II) shall be taken as the statements of the
Company and neither the Trustee nor the Securities Administrator assumes any
responsibility for their correctness. Neither the Trustee nor the Securities
Administrator makes any representations or warranties as to the validity or
sufficiency of this Agreement or of the Certificates (other than the signature
and authentication of the Trustee on the Certificates) or of any Mortgage Loan
or related document, or of MERS or the MERS(R) System. Neither the Trustee nor
the Securities Administrator shall be accountable for the use or application by
the Company of any of the Certificates or of the proceeds of such Certificates,
or for the use or application of any funds paid to the Company or the Master
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Custodial Account by the Master Servicer.

         Section 8.04. Trustee and Securities Administrator May Own
Certificates.

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

         Section 8.05. Trustee's and Securities Administrator's Fees.

         Each of the Trustee and Securities Administrator shall be compensated
by the Master Servicer. Such compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
shall be paid for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder or of the Trustee and the Securities Administrator. Except as
otherwise provided in this Agreement, the Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified and held harmless by the
Trust Fund against any claim, loss, liability, fee or expense incurred in
connection with any Event of Default, any breach of this Agreement or any claim
or legal action (including any pending or threatened claim or legal action)
relating to the acceptance or administration of its trusts hereunder or the
Trustee's performance under the Certificates (up to a limit of $300,000 per
calendar year so long as any notes issued pursuant to the Indenture are insured
by a NIMS Insurer), other than any claim, loss,

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liability or expense (i) sustained in connection with this Agreement related to
the willful misfeasance, bad faith or negligence of the Master Servicer in the
performance of its duties hereunder or (ii) incurred in connection with a breach
constituting willful misfeasance, bad faith or negligence of the Trustee in the
performance of its duties hereunder or by reason of reckless disregard of its
obligations and duties hereunder.

         The Master Servicer shall indemnify the Company, the Trustee, the NIMS
Insurer and the Securities Administrator and any director, officer, employee or
agent of the Company, the Trustee or the Securities Administrator against any
such claim or legal action (including any pending or threatened claim or legal
action), loss, liability, fee or expense that may be sustained in connection
with this Agreement related to the willful misfeasance, bad faith, or negligence
in the performance of the Master Servicer's duties hereunder.

         The provisions of this Section 8.05 shall survive the resignation or
removal of the Trustee or the Securities Administrator or the termination of
this Agreement.

         Section 8.06. Eligibility Requirements for Trustee and the Securities
Administrator.

         The Trustee and the Securities Administrator hereunder shall at all
times be a corporation or a national banking association organized and doing
business under the laws of any state or the United States of America or the
District of Columbia, 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. In
addition, the Trustee and the Securities Administrator shall at all times be
acceptable to the Rating Agency rating the Certificates and the NIMS Insurer. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee or the Securities Administrator shall cease to be eligible in accordance
with the provisions of this Section, the Trustee or the Securities
Administrator, as applicable, shall resign immediately in the manner and with
the effect specified in Section 8.07. The corporation or national banking
association serving as Trustee or Securities Administrator may have normal
banking and trust relationships with the Seller and their affiliates or the
Master Servicer and its affiliates; PROVIDED, HOWEVER, that such corporation
cannot be an affiliate of the Master Servicer other than the Trustee in its role
as successor to the Master Servicer.

         Section 8.07. Resignation and Removal of the Trustee and the Securities
Administrator.

         The Trustee and the Securities Administrator may at any time resign and
be discharged from the trusts hereby created by giving written notice thereof to
the Master Servicer and the NIMS Insurer; with a copy to the Rating Agencies;
PROVIDED, that such resignation shall not be effective until a successor trustee
is appointed and accepts appointment in accordance with the following
provisions; PROVIDED, HOWEVER, that the resigning Trustee or Securities
Administrator, as applicable, shall not resign and be discharged from the trusts
hereby created until such time as the NIMS Insurer and the Rating Agency rating
the Certificates approves the successor trustee or successor securities
administrator. Any resignation or removal of the Securities Administrator

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shall result in the automatic removal of the Master Servicer. Upon receiving
such notice of resignation of the Trustee, the Master Servicer shall promptly
appoint a successor trustee who meets the eligibility requirements of Section
8.06 by written instrument, in triplicate, one copy of which instrument shall be
delivered to the resigning Trustee, and to the successor trustee. Upon receiving
notice of the resignation of the Securities Administrator, the Trustee shall
promptly appoint a successor securities administrator acceptable to the NIMS
Insurer who meets the eligibility requirements of Section 8.06 by written
instrument, in triplicate, copies of which instrument shall be delivered to the
resigning securities administrator and the successor securities administrator.
If no successor trustee or successor securities administrator shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee or resigning Securities
Administrator, as applicable may petition any court of competent jurisdiction
for the appointment of a successor trustee or successor securities
administrator, as applicable.

         If at any time the Trustee or the Securities Administrator 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 Master Servicer or the NIMS
Insurer, or if at any time the Trustee or the Securities Administrator shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or Securities Administrator, as applicable, or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or Securities Administrator, as applicable, or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, the
Master Servicer may remove the Trustee, or the Trustee shall remove the
Securities Administrator, as applicable, and appoint a successor trustee or
successor securities administrator acceptable to the NIMS Insurer, as
applicable, who meets the eligibility requirements of Section 8.06 by written
instrument, in triplicate, which instrument shall be delivered to the Trustee or
Securities Administrator, as applicable, so removed and to the successor trustee
or successor securities administrator, as applicable.

         The Holders of Certificates entitled to at least 51% of the Voting
Rights (or the NIMS Insurer upon the failure of, may at any time remove the
Trustee or Securities Administrator, as applicable, to perform its obligations
hereunder) the Trustee or Securities Administrator and appoint a successor
trustee or successor securities administrator acceptable to the NIMS Insurer 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 Master Servicer (if the Trustee is removed), the
Securities Administrator (if the Trustee is removed), and the Trustee (if the
Securities Administrator is removed), one complete set to the Trustee or
Securities Administrator so removed and one complete set to the successor so
appointed. A copy of such instrument shall be delivered to the
Certificateholders and the Company by the Master Servicer (if the Trustee is
removed) and by the Trustee (if the Securities Administrator is removed). If the
Trustee or the Securities Administrator is removed by the Certificateholders,
the NIMS Insurer will have the right to consent to any successor. If the Trustee
or the Securities Administrator is removed by the NIMS Insurer, the NIMS Insurer
will have the right to appoint any successor in its sole discretion.

         Any resignation or removal of the Trustee or Securities Administrator
and appointment of a successor trustee or successor securities administrator
pursuant to any of the provisions of this

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Section shall not become effective until acceptance of appointment by the
successor trustee or successor securities administrator as provided in Section
8.08.

         Section 8.08. Successor Trustee and Successor Securities Administrator.

         Any successor trustee or successor securities administrator appointed
as provided in Section 8.07 shall execute, acknowledge and deliver to the NIMS
Insurer and the Master Servicer and to its predecessor trustee or predecessor
securities administrator an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee or predecessor
securities administrator shall become effective and such successor trustee or
successor securities administrator, 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 or predecessor securities administrator
shall after payment of its outstanding fees and expenses, promptly deliver to
the successor trustee or successor securities administrator all assets and
records of the Trust Fund held by it hereunder, and the Master Servicer and the
predecessor trustee or predecessor securities administrator shall execute and
deliver all such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
trustee or successor securities administrator all such rights, powers, duties
and obligations.

         No successor trustee or successor securities administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee or successor securities administrator shall be eligible
under the provisions of Section 8.06.

         Upon acceptance of appointment by a successor trustee or successor
securities administrator as provided in this Section, the Master Servicer (in
the case of a successor trustee) and the Trustee (in the case of a successor
securities administrator) shall mail notice of the succession of such trustee or
securities administrator hereunder to all Holders of Certificates at their
addresses as shown in the Certificate Register. If the Master Servicer (in the
case of a successor trustee) and the Trustee (in the case of a successor
securities administrator) fails to mail such notice within ten days after
acceptance of appointment by the successor trustee successor securities
administrator, the successor trustee successor securities administrator shall
cause such notice to be mailed at the expense of the Master Servicer or Trustee,
as the case may be.

         Section 8.09. Merger or Consolidation of Trustee or Securities
Administrator.

         Any state bank or trust company or corporation or national banking
association into which the Trustee or Securities Administrator may be merged or
converted or with which it may be consolidated or any state bank or trust
company or national banking association resulting from any merger, conversion or
consolidation to which the Trustee or Securities Administrator shall be a party,
or any state bank or trust company or corporation or national banking
association succeeding to all or substantially all of the corporate trust
business of the Trustee or Securities Administrator, shall be the successor of
the Trustee or Securities Administrator hereunder, provided such state bank or
trust company or 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

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further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.

         Section 8.10. Appointment of Co-Trustee or Separate Trustee.

         Notwithstanding any other provisions 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 and the NIMS Insurer 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 without the Master Servicer. 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.

         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 and required to be conferred or such
co-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.

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

         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,

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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.

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                                   ARTICLE IX
                                   TERMINATION

         Section 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans or upon Purchase of Certificates.

         (a) Subject to Section 9.03, the respective obligations and
responsibilities of the Company, the Master Servicer, the Securities
Administrator and the Trustee created hereby (other than the obligations of the
Master Servicer to the Trustee pursuant to Section 8.05 and of the Master
Servicer to provide for and the Securities Administrator to make payments to
Certificateholders as hereafter set forth) shall terminate upon payment to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them hereunder following the earlier to occur of (i) the
repurchase by the Servicer, or its designee (or if the Servicer fails to
exercise such option, the NIMS Insurer or if the NIMS Insurer fails to exercise
such option, the Master Servicer) of all Mortgage Loans and each REO Property in
respect thereof remaining in the Trust Fund at a price equal to (a) 100% of the
unpaid principal balance of each Mortgage Loan (other than one as to which a REO
Property was acquired) on the day of repurchase together with accrued interest
on such unpaid principal balance at the Net Mortgage Rate to the first day of
the month in which the proceeds of such repurchase are to be distributed, plus
(b) the appraised value of any REO Property (but not more than the unpaid
principal balance of the related Mortgage Loan, together with accrued interest
on that balance at the Net Mortgage Rate to the first day of the month such
repurchase price is distributed), less the good faith estimate of the Servicer,
the NIMS Insurer or the Master Servicer, as applicable, of liquidation expenses
to be incurred in connection with its disposal thereof, such appraisal to be
conducted by an appraiser mutually agreed upon by the Servicer, the NIMS Insurer
or the Master Servicer, as applicable, and the Master Servicer on behalf of the
Trustee at the expense of the terminating party, and (ii) 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 REO Property in
respect thereof); PROVIDED, HOWEVER, that in no event shall the trust created
hereby continue beyond the earlier of (i) the Distribution Date occurring in
October 2034 and (ii) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James, living on the date hereof, and PROVIDED
FURTHER, that the purchase price set forth above shall be increased as is
necessary, as determined by the Servicer, the Master Servicer, the NIMS Insurer
or the Master Servicer, as applicable, to avoid disqualification of any of any
Trust REMIC as a REMIC. In the case of any repurchase by the Servicer, the
Master Servicer or the NIMS Insurer, as applicable, pursuant to clause (i), the
Master Servicer shall exercise reasonable efforts to cooperate fully with the
Trustee in effecting such repurchase and the transfer of the Mortgage Loans and
related Mortgage Files and related records to the Servicer, the NIMS Insurer or
the Master Servicer, as applicable; provided, however, such option may only be
exercised if (i) the purchase price is sufficient to pay all interest accrued
on, as well as amounts necessary to retire the principal balance of, each class
of notes secured primarily by the Class C Certificates and the Class P
Certificates and issued pursuant to the Indenture and any amounts owed to the
NIMS Insurer.

         The right of the Servicer or the NIMS Insurer, as applicable, or its
designee to repurchase all Mortgage Loans pursuant to (i) above shall be
conditioned upon the aggregate Stated Principal Balance of such Mortgage Loans
at the time of any such repurchase aggregating an

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<PAGE>

amount equal to or less than 10% of the aggregate Stated Principal Balance of
the Mortgage Loans at the Cut-off Date. If such right is exercised, the Servicer
or the NIMS Insurer, as applicable, upon such repurchase shall provide to the
Trustee and Securities Administrator, notice of such exercise prior to the
Determination Date in the month preceding the month of purchase and the
certification required by Section 3.16.

         The right of the Master Servicer, or its designee to repurchase all
Mortgage Loans pursuant to (i) in the second preceding paragraph shall be
conditioned upon the aggregate Stated Principal Balance of such Mortgage Loans
at the time of any such repurchase aggregating an amount equal to or less than
5% of the aggregate Stated Principal Balance of the Mortgage Loans at the
Cut-off Date. If such right is exercised, the Master Servicer, upon such
repurchase shall provide to the Trustee and Securities Administrator, notice of
such exercise prior to the Determination Date in the month preceding the month
of purchase and the certification required by Section 3.16.

         Written notice of any termination, specifying the Distribution Date
upon which the Certificateholders may surrender their Certificates to the
Securities Administrator for payment of the final distribution and cancellation,
shall be given promptly by the Securities Administrator by letter to the
Certificateholders mailed (a) in the event such notice is given in connection
with the Servicer's, the Master Servicer's or the NIMS Insurer's, as applicable,
election to repurchase, not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution or (b)
otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which final payment of the Certificates will be made upon presentation
and surrender of Certificates at the office of the Securities Administrator
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Securities Administrator therein specified. In the event such
notice is given in connection with the Servicer, the Master Servicer or the NIMS
Insurer, as applicable, or its designee's election to repurchase, the Servicer,
the Master Servicer or the NIMS Insurer, as applicable, or its designee shall
deliver to the Securities Administrator for deposit in the Certificate Account
on the Business Day immediately preceding the Distribution Date specified in
such notice an amount equal to the above-described repurchase price payable out
of its own funds. Upon presentation and surrender of the Certificates by the
Certificateholders, the Securities Administrator shall first pay any amounts
owing to the Trustee, Master Servicer, Custodian, Servicer and Securities
Administrator, as applicable, under this Agreement, and second, distribute to
the Certificateholders (i) the amount otherwise distributable on such
Distribution Date, if not in connection with the Servicer's, the Master
Servicer's or the NIMS Insurer's, as applicable, election to repurchase, or (ii)
if the Servicer, the Master Servicer or the NIMS Insurer, as applicable, elected
to so repurchase, an amount determined as follows: with respect to each Regular
Certificate, the outstanding Certificate Principal Balance thereof, plus with
respect to each Class A, Class M or Class C Certificate, one month's interest
thereon at the applicable Pass-Through Rate and any Unpaid Interest Shortfall
Amount, plus with respect to each Class M Certificate, any unpaid Allocated
Realized Loss Amount; and with respect to each Class R Certificate, the
Percentage Interest evidenced thereby multiplied by the difference, if any,
between the above described repurchase price and the aggregate amount to be
distributed to the Holders of the Regular Certificates, subject to the
priorities set forth in Section 4.01.

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<PAGE>

Notwithstanding the foregoing, by acceptance of the Class R Certificates, the
Holders of the Class R Certificates agree, in connection with any termination
hereunder, to assign and transfer any amounts received in respect of such
termination to the Holders of the Class C Certificates and to pay any such
amounts to the Holders of the Class C Certificates. Upon certification to the
Custodian by a Servicing Officer, following such final deposit, the Custodian
shall promptly release the Mortgage Files as directed by the Servicer, the
Master Servicer or the NIMS Insurer, as applicable, for the remaining Mortgage
Loans, and the Trustee shall execute all assignments, endorsements and other
instruments required by the Servicer, the Master Servicer or the NIMS Insurer,
as applicable, as being necessary to effectuate such transfer.

         In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned notice, the Securities Administrator shall give a second
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all of the Certificates shall not have been
surrendered for cancellation, the Securities Administrator shall take reasonable
steps as directed by the Company in writing, or appoint an agent to take
reasonable steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets which remain subject hereto. If within nine months after
the second notice all the Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets which remain subject hereto.

         Section 9.02. Termination of REMIC 2.

         REMIC 2 shall be terminated on the earlier of the Final Distribution
Date and the date on which it is deemed to receive the last deemed distributions
on the REMIC 1 Regular Interests and the last distribution due on the Regular
Certificates and the Class R Certificates (in respect of the Class R-2 Interest)
is made.

         Section 9.03. Additional Termination Requirements.

         (a) In the event the Servicer, the NIMS Insurer or the Master Servicer,
as applicable, repurchases the Mortgage Loans as provided in Section 9.01, the
Trust Fund shall be terminated in accordance with the following additional
requirements, unless the Servicer or the Master Servicer, as applicable, at its
own expense, obtains for the Trustee and the Securities Administrator an Opinion
of Counsel to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 9.03 will not (i) result in the imposition on the
Trust of taxes on "prohibited transactions," as described in Section 860F of the
Code, or (ii) cause either any Trust REMIC to fail to qualify as a REMIC at any
time that any Certificate is outstanding:

                  (i) The Securities Administrator shall establish a 90-day
         liquidation period for REMIC 1 and REMIC 2, as the case may be, 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 Securities Administrator also shall satisfy all of the
         requirements of a qualified liquidation for each Trust REMIC, as the
         case may be, under Section 860F of the Code and regulations thereunder;
         and

                                      112
<PAGE>

                  (ii) The Servicer shall notify the Trustee and the Securities
         Administrator 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.

         (b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the Securities Administrator as its attorney-in-fact to
adopt a plan of complete liquidation for each Trust REMIC at the expense of the
Trust Fund in accordance with the terms and conditions of this Agreement.

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<PAGE>

                                   ARTICLE X
                                REMIC PROVISIONS

         Section 10.01. REMIC Administration.

         (a) The Securities Administrator shall make an election to treat the
Trust Fund as two REMICs under the Code and, if necessary, under applicable
state law. Each 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. For the purposes of the REMIC elections in respect
of the Trust Fund, (i) the REMIC 1 Regular Interests will represent the "regular
interests" in REMIC 1, the Class R-1 Interest will constitute the sole class of
"residual interests" in REMIC 1, (ii) the Class A and Class M Certificates
(exclusive of any right to receive payments from the Basis Risk Shortfall
Reserve Fund) the Class C Certificates and the Class P Certificates shall be
designated as the "regular interests" in REMIC 2 and the Class R-2 Interest will
constitute the sole class of "residual interests" in REMIC 2. The Securities
Administrator and the Trustee shall not permit the creation of any "interests"
(within the meaning of Section 860G of the Code) other than the REMIC Regular
Interests, the Class R-1 Interest and the Class R-2 Interest". The Securities
Administrator will apply for an Employee Identification Number from the IRS via
form SS-4 or any other acceptable method for each Trust REMIC.

         (b) The Closing Date is hereby designated as the "startup day" of the
Trust Fund within the meaning of Section 860G(a)(9) of the Code.

         (c) The Securities Administrator shall pay out of its own funds,
without any right of reimbursement, any and all expenses relating to any tax
audit of the REMICs (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to the REMICs that involve
the Internal Revenue Service or state tax authorities), other than the expense
of obtaining any tax-related Opinion of Counsel except as specified herein. The
Securities Administrator, as agent for the REMICs' tax matters person, shall (i)
act on behalf of the REMICs 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. By their acceptance thereof, the Holder
of the largest Percentage Interest of the Class R Certificates hereby agrees to
irrevocably appoint the Securities Administrator or an Affiliate as its agent to
perform all of the duties of the tax matters person for the REMICs.

         (d) The Securities Administrator shall prepare and file or cause to be
filed, and the Trustee shall sign, all of the Tax Returns (including Form 8811,
which must be filed within 30 days of the Closing Date) in respect of the REMICs
created hereunder. The expenses of preparing and filing such returns shall be
borne by the Securities Administrator without any right of reimbursement
therefor. The Master Servicer shall provide on a timely basis to the Securities
Administrator or its designee such information with respect to the assets of the
REMICs as is in its possession and reasonably required by the Securities
Administrator to enable it to perform its obligations under this Article X.

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<PAGE>

         (e) The Securities Administrator shall perform on behalf of the REMICs
all reporting and other tax compliance duties that are the responsibility of the
REMICs under the Code, the REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Securities 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 Certificateholders such
information or reports as are required by the Code or the REMIC Provisions
including reports relating to interest, original issue discount and market
discount or premium (using the Prepayment Assumption as required) and (iii) to
the Internal Revenue Service the name, title, address and telephone number of
the person who will serve as the representative of the REMICs. The Master
Servicer shall provide on a timely basis to the Securities Administrator such
information with respect to the assets of the REMICs, including, without
limitation, the Mortgage Loans, as is in its possession and reasonably required
by the Securities Administrator to enable it to perform its obligations under
this subsection. In addition, the Company shall provide or cause to be provided
to the Securities Administrator, within ten (10) days after the Closing Date,
all information or data that the Securities Administrator reasonably determines
to be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

         (f) The Securities Administrator shall take such action and shall cause
the REMICs created hereunder to take such action as shall be necessary to create
or maintain the status thereof as REMICs under the REMIC Provisions (and the
Master Servicer shall assist it, to the extent reasonably requested by it). The
Securities Administrator shall not take any action, cause the Trust Fund to take
any action or fail to take (or fail to cause to be taken) any action that, under
the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of the REMIC 1 or REMIC 2 as REMICs or (ii) result in the
imposition of a tax upon the REMICs (including but not limited to the tax on
prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) (either
such event, an "Adverse REMIC Event") unless the Securities Administrator and
the NIMS Insurer has received an Opinion of Counsel, addressed to the Securities
Administrator (at the expense of the party seeking to take such action but in no
event at the expense of the Securities Administrator) to the effect that the
contemplated action will not, with respect to the REMICs created hereunder,
endanger such status or result in the imposition of such a tax, nor shall the
Master Servicer take or fail to take any action (whether or not authorized
hereunder) as to which the Securities Administrator and the NIMS Insurer has
advised it in writing that each 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 REMICs or the assets of
the REMICs, or causing the REMICs to take any action, which is not contemplated
under the terms of this Agreement, the Master Servicer will consult with the
Securities Administrator 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 Master Servicer shall not take any such action or cause the
Trust Fund to take any such action as to which the Securities Administrator has
advised it in writing that an Adverse REMIC Event could occur. The Securities
Administrator 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 permitted by
this Agreement, but

                                      115
<PAGE>

in no event shall such cost be an expense of the Securities Administrator. At
all times as may be required by the Code, the Securities Administrator will
ensure that substantially all of the assets of the REMICs created hereunder will
consist of "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 the REMICs created hereunder as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of the REMICs as defined in Section
860G(c) of the Code, on any contributions to the REMICs after the Startup Day
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Securities Administrator pursuant to Section 10.03 hereof,
if such tax arises out of or results from a breach by the Securities
Administrator of any of its obligations under this Article X, (ii) to the Master
Servicer pursuant to Section 10.03 hereof, if such tax arises out of or results
from a breach by the Master Servicer of any of its obligations under Article III
or this Article X, or otherwise, (iii) to the Master Servicer as provided in
Section 3.05, if applicable, (iv) to the Class R Certificateholder to the extent
of any funds distributed to such Certificateholder, (v) otherwise against
amounts on deposit in the Certificate Account and shall be paid by withdrawal
therefrom to the extent not required to be paid by the Master Servicer, the
Securities Administrator or the Class R Certificateholder pursuant to another
provision of this Agreement.

         (h) On or before April 15 of each calendar year, commencing April 15,
2005, the Securities Administrator shall deliver to the Master Servicer, the
NIMS Insurer and the Rating Agency a Certificate from a Responsible Officer of
the Securities Administrator stating the Securities Administrator's compliance
with its obligations under this Article X.

         (i) The Securities Administrator shall, for federal income tax
purposes, maintain books and records with respect to the REMICs on a calendar
year and on an accrual basis.

         (j) Following the Startup Day, the Securities Administrator shall not
accept any contributions of assets to the REMICs other than in connection with
any Qualified Substitute Mortgage Loan delivered in accordance with Section 2.04
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the REMICs will not cause any Trust REMIC to fail to
qualify as REMICs at any time that any Certificates are outstanding or subject
any Trust REMIC to any tax under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.

         (k) Neither the Securities Administrator nor the Master Servicer shall
enter into any arrangement by which the REMICs will receive a fee or other
compensation for services nor permit the REMICs to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of the
Code or "permitted investments" as defined in Section 860G(a)(5) of the Code.

         (l) The Securities Administrator shall treat the rights of the
Certificateholders (other than the Class P Certificateholders and Residual
Certificateholders) to receive payments from the Basis Risk Shortfall Reserve
Fund as a notional principal contract between the Holders of the

                                      116
<PAGE>

Class C Certificates, as owner of the Basis Risk Reserve Fund and the Holders of
the Class A Certificates and Class M Certificates). For federal tax return and
information reporting, the right of the Holders of the Class A and Class M
Certificates to receive payments from the Carryover Reserve Fund in respect of
any Basis Risk Carry-Forward Amount may be obtained from the Securities
Administrator upon request. For purposes of determining the issue price of the
REMIC 2 Regular Interests, the Securities Administrator shall assume that the
Class A Corridor Contract and Class M Corridor Contract have values of $805,000
and $245,000, respectively.

         Section 10.02. Prohibited Transactions and Activities.

         None of the Company, the Master Servicer, the Securities Administrator
or the Trustee shall sell, dispose of or substitute for any of the Mortgage
Loans (except in connection with (i) the 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 Trust REMIC pursuant to Article IX of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement), nor
acquire any assets for the Trust Fund (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the Custodial Account or the Certificate Account for gain, nor accept any
contributions to the REMICs after the Closing Date (other than a Qualified
Substitute Mortgage Loan delivered in accordance with Section 2.04), unless each
such party and the NIMS Insurer have received an Opinion of Counsel, addressed
to the Trustee and Securities Administrator (at the expense of the party seeking
to cause such sale, disposition, substitution, acquisition or contribution but
in no event at the expense of the Trustee) that such sale, disposition,
substitution, acquisition or contribution will not (a) affect adversely the
status of any Trust REMIC as REMICs or (b) cause the Trust Fund to be subject to
a tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.

         Section 10.03. Master Servicer, Securities Administrator and Trustee
Indemnification.

         (a) The Securities Administrator agrees to indemnify the Trust Fund,
the Company, the NIMS Insurer 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 Company, the NIMS Insurer or the Master
Servicer, as a result of (i) a breach of the Securities Administrator's
covenants set forth in this Article X or (ii) any state, local or franchise
taxes imposed upon the Trust Fund as a result of the location of the Securities
Administrator.

         (b) The Master Servicer agrees to indemnify the Trust Fund, the
Company, the NIMS Insurer and the Trustee for any taxes and costs including,
without limitation, any reasonable attorneys' fees imposed on or incurred by the
Trust Fund, the Company, the NIMS Insurer or the Trustee, as a result of (i) a
breach of the Master Servicer's covenants set forth in Article III or this
Article X with respect to compliance with the REMIC Provisions or (ii) any
state, local or franchise taxes imposed upon the Trust Fund as a result of the
location of the Master Servicer.

         (c) The Seller agrees to indemnify the Trust Fund, the Company and the
NIMS Insurer for any taxes and costs including, without limitation, any
reasonable attorneys' fees imposed on or incurred by the Trust Fund, the Company
or the NIMS Insurer, as a result of any

                                      117
<PAGE>

state, local or franchise taxes imposed upon the Trust Fund as a result of the
location of the Trustee, the Servicer or the Subservicers.

                                      118
<PAGE>

                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

         Section 11.01. Amendment.

         This Agreement may be amended from time to time by the Company, the
Master Servicer, the Securities Administrator and the Trustee, with the consent
of the NIMS Insurer but without the consent of any of the Certificateholders,
(i) to cure any ambiguity, (ii) to correct or supplement any provisions herein
which may be defective or inconsistent with any other provisions herein or to
correct any error, (iii) to amend this Agreement in any respect subject to the
provisions in clauses (A) and (B) below, or (iv) if such amendment, as evidenced
by an Opinion of Counsel (provided by the Person requesting such amendment)
delivered to the Trustee, is reasonably necessary to comply with any
requirements imposed by the Code or any successor or amendatory statute or any
temporary or final regulation, revenue ruling, revenue procedure or other
written official announcement or interpretation relating to federal income tax
laws or any proposed such action which, if made effective, would apply
retroactively to the Trust Fund at least from the effective date of such
amendment; PROVIDED that such action (except any amendment described in (iv)
above) shall not adversely affect in any material respect the interests of any
Certificateholder (other than Certificateholders who shall consent to such
amendment), as evidenced by (A) an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee and the NIMS Insurer, and
(B) a letter from each Rating Agency, confirming that such amendment shall not
cause it to lower its rating on any of the Certificates.

         This Agreement may also be amended from time to time by the Company,
the Master Servicer, the Securities Administrator and the Trustee with the
consent of the NIMS Insurer and Holders of Certificates entitled to at least
66-2/3% of the Voting Rights for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; PROVIDED,
HOWEVER, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans 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 interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing at
least 66-2/3% of the Voting Rights of such Class, or (iii) reduce the aforesaid
percentage of Certificates the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all Certificates then
outstanding. Notwithstanding any other provision of this Agreement, for purposes
of the giving or withholding of consents pursuant to this Section 11.01,
Certificates registered in the name of the Seller, the Trustee, the Securities
Administrator or the Master Servicer or any affiliate thereof shall be entitled
to Voting Rights with respect to matters described in (i), (ii) and (iii) of
this paragraph.

         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 (provided by the Person requesting such
amendment) and addressed to the Trustee and the Securities Administrator to the
effect that such amendment will not result in the imposition of

                                      119
<PAGE>

any tax on any Trust REMIC pursuant to the REMIC Provisions or cause any Trust
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding.

         Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment or a written statement describing the amendment
to each Certificateholder, with a copy to the Rating Agencies.

         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.

         Prior to executing any amendment pursuant to this Section, the Trustee
shall be entitled to receive (with a copy to the NIMS Insurer) an Opinion of
Counsel (provided by the Person requesting such amendment) to the effect that
such amendment is authorized or permitted by this Agreement. The cost of any
Opinion of Counsel delivered pursuant to this Section 11.01 shall be an expense
of the party requesting such amendment, but in any case shall not be an expense
of the Trustee.

         Each of the Trustee and the Securities Administrator may, but shall not
be obligated to, enter into any amendment pursuant to this Section that affects
its rights, duties and immunities under this Agreement or otherwise.

         Section 11.02. Recordation of Agreement; Counterparts.

         To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
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 at the expense of the Certificateholders, but only upon
direction of the Company accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.

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

         Section 11.03. Limitation on Rights of Certificateholders.

         The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal 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 the parties hereto
or any of them.

                                      120
<PAGE>

         No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.

         No Certificateholder shall have any right by virtue 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 notice of an Event of Default, or of a default
by the Seller or the Trustee in the performance of any obligation hereunder, and
of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 51% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

         Section 11.04. Governing Law.

         This Agreement and the Certificates shall be 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, notices and direction hereunder shall be in writing and
shall be deemed effective upon receipt when delivered to (a) in the case of the
Company, Homestar Mortgage Acceptance Corp., W. 115 Century Road, Paramus, New
Jersey 07652, Attention: General Counsel, or such other address as may hereafter
be furnished to the other parties hereto in writing; (b) in the case of Master
Servicer, Wells Fargo Bank, N.A., P.O. Box 98, Columbia Maryland 21046 (or, in
the case of overnight deliveries, 9062 Old Annapolis Road, Columbia, Maryland
21045) (Attention: Corporate Trust Services - HMAC 2004-5), facsimile no.: (410)
715-2380, or such other address as may hereafter be furnished to the other
parties hereto in writing; (c) in the case of the securities administrator, the
Corporate Trust Office; (d) in the case of the Trustee, to its Corporate Trust
Office, or such other address as may hereafter be furnished to the other parties
hereto in writing; or (e) in the case of the Rating Agencies, Standard &

                                      121
<PAGE>

Poor's, 55 Water Street, 41st Floor, New York, NY 10041, Attention: Asset Backed
Surveillance Department; and Moody's, Moody's Investors Service, Inc.,
Residential Mortgage Monitoring Department, 99 Church Street, New York, New York
10007; or (f) in the case of the NIMS Insurer, such address furnished to
Company, the Master Servicer and the Trustee in writing by the NIMS Insurer. 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. Severability of Provisions.

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

         Section 11.07. Successors and Assigns.

         The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Trustee and the
Certificateholders.

         Section 11.08. Article and Section Headings.

         The article and Section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.

Section 11.09.    Notice to Rating Agencies and the NIMS Insurer.

         The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency and the NIMS Insurer referred to below with respect to each
of the following of which it has actual knowledge:

         1. Any material change or amendment to this Agreement;

         2. The occurrence of any Event of Default that has not been cured;

         3. The resignation or termination of the Master Servicer, the
Securities Administrator or the Trustee;

         4. The repurchase or substitution of Mortgage Loans pursuant to Section
2.04;

         5. The final payment to Certificateholders; and

         6. Any change in the location of the Custodial Account or the
Certificate Account.

                                      122
<PAGE>

         In addition, the Trustee shall promptly furnish to the Rating Agency
and the NIMS Insurer copies of each report to Certificateholders described in
Section 4.02; and the Master Servicer shall promptly furnish to the Rating
Agency and the NIMS Insurer copies of each annual independent public
accountants' servicing report received as described in Section 3.20.

         Any such notice pursuant to this Section 11.09 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to (i) in the
case of Standard & Poor's, 55 Water Street, 41st Floor, New York, New York
10041, Attention: Asset Backed Surveillance Department and (ii) in the case of
Moody's, Residential Mortgage Monitoring Department, 99 Church Street, New York,
New York 10007, or, in each case, such other address as either such Rating
Agency may designate in writing to the parties thereto.

         Section 11.10. Third Party Rights.

         The NIMS Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement. The Seller shall be deemed a
third-party beneficiary of Section 3.25 this Agreement to the same extent as if
it were a party hereto, and shall have the right to enforce the provisions of
such Section. The Servicer shall be deemed a third-party beneficiary of Section
3.25 of this Agreement to the same extent as if it were a party hereto, and
shall have the right to enforce the provisions of such Section.

                                      123
<PAGE>

         IN WITNESS WHEREOF, the Company, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized all as of the day and year first above written.

                                   HOMESTAR MORTGAGE ACCEPTANCE CORP.,
                                   Company

                                   By: /s/ Frank Plenskofski
                                       -------------------------------
                                   Name:   Frank Plenskofski
                                   Title:  Vice President/Treasurer

                                   WELLS FARGO BANK, N.A.,
                                   Master Servicer

                                   By: /s/ Stacey Taylor
                                       -------------------------------
                                   Name:   Stacey Taylor
                                   Title:  Assistant Vice President

                                   HSBC BANK USA, NATIONAL ASSOCIATION

                                   By: /s/ Wendy Zhang
                                       -------------------------------
                                   Name:   Wendy Zhang
                                   Title:  Assistant Vice President

                                   WELLS FARGO BANK, N.A.,
                                   Securities Administrator

                                   By: /s/ Stacey Taylor
                                       -------------------------------
                                   Name:   Stacey Taylor
                                   Title:  Assistant Vice President

<PAGE>

STATE OF NEW JERSEY        )
                           )  ss.:
COUNTY OF BERGEN           )

         On the _____ day of ________________, 2004, before me, a notary public
in and for said State, personally appeared __________________, known to me to be
the _____________ of Homestar Mortgage Acceptance Corp., 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 MARYLAND          )
                           ) ss.:
COUNTY OF HOWARD           )

         On the _____ day of _____________, 2004, before me, a notary public in
and for said State, personally appeared ________________, known to me to be a
_____________ of Wells Fargo Bank, N.A., the entity that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said entity, and acknowledged to me that such 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

[Notarial Seal]

<PAGE>

STATE OF NEW YORK          )
                           ) ss.:
COUNTY OF NEW YORK         )

         On the _____ day of ________________, 2004, before me, a notary public
in and for said State, personally appeared _____________________, known to me to
be a ________________ of HSBC Bank USA, National Association, the entity that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said entity, and acknowledged to me that such 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

[Notarial Seal]

<PAGE>

STATE OF MARYLAND          )
                           ) ss.:
COUNTY OF HOWARD           )

         On the _______ day of _______________, 2004, before me, a notary public
in and for said State, personally appeared ______________, known to me to be a
_____________ of Wells Fargo Bank, N.A., the entity that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said entity, and acknowledged to me that such 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

[Notarial Seal]

<PAGE>

                                    EXHIBIT A

                         FORM OF CLASS A-[_] CERTIFICATE

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").

THIS CERTIFICATE 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 OF SUCH
BOOK-ENTRY CERTIFICATES 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 IN THE BOOK-ENTRY CERTIFICATES SHALL BE MADE IN
ACCORDANCE WITH THE PROCEDURES ESTABLISHED BY THE DEPOSITORY PARTICIPANT OR
BROKERAGE FIRM REPRESENTING SUCH CERTIFICATE OWNER. EACH DEPOSITORY PARTICIPANT
SHALL 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 SHALL
NOT BE REQUIRED TO MONITOR, DETERMINE OR INQUIRE AS TO COMPLIANCE WITH THE
TRANSFER RESTRICTIONS WITH RESPECT TO THE BOOK-ENTRY CERTIFICATES, AND THE
TRUSTEE SHALL HAVE NO LIABILITY FOR TRANSFERS OF OWNERSHIP INTERESTS IN THE
BOOK-ENTRY CERTIFICATES MADE THROUGH THE BOOK-ENTRY FACILITIES OF THE DEPOSITORY
OR BETWEEN OR AMONG DEPOSITORY PARTICIPANTS OR CERTIFICATE OWNERS, MADE IN
VIOLATION OF THE APPLICABLE RESTRICTIONS.

                                       A-1
<PAGE>

<TABLE>
<CAPTION>

<S>                                                  <C>
Certificate No. 1                                    Adjustable Pass-Through Rate
Class A-[_]

Date of Pooling and Servicing                        Percentage Interest: 100%
Agreement and Cut-off Date:
October 1, 2004

First Distribution Date:                             Aggregate Initial Certificate Principal Balance
November 26, 2004                                    of the Class A-[_] Certificates:
                                                     $______________

Master Servicer:                                     Initial Certificate Principal
Wells Fargo Bank, National Association               Balance of this Certificate:
                                                     $______________

Assumed Final                                        CUSIP:__________
Distribution Date:
[____________], 2034
</TABLE>

                      ASSET-BACKED PASS-THROUGH CERTIFICATE
                                  SERIES 2004-5

         evidencing a percentage interest in the distributions allocable to the
         Class A-[_] Certificates with respect to a Trust Fund consisting
         primarily of a pool of one- to four-family adjustable and fixed-rate
         first lien mortgage loans formed and sold by HOMESTAR MORTGAGE
         ACCEPTANCE CORP.

This Certificate is payable solely from the assets of the Trust Fund, and does
not represent an obligation of or interest in Homestar Mortgage Acceptance
Corp., the Master Servicer, the Securities Administrator, the Trustee referred
to below or any of their affiliates. Neither this Certificate nor the underlying
Mortgage Loans are guaranteed or insured by any governmental agency or
instrumentality or by Homestar Mortgage Acceptance Corp., the Master Servicer,
the Securities Administrator, the Trustee or any of their affiliates. None of
the Company, the Master Servicer, the Securities Administrator or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.

This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial
Certificate Principal Balance of this Certificate by the aggregate Initial
Certificate Principal Balance of all Class A-[_] Certificates, both as specified
above) in certain distributions with respect to the Trust Fund consisting
primarily of an interest in a pool of one- to four-family fixed-rate and
adjustable-rate first lien mortgage loans (the "Mortgage Loans"), sold by
Homestar Mortgage Acceptance Corp. (hereinafter called the "Company," which term
includes any successor entity under the Agreement referred to below). The Trust
Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Company, the Master Servicer, the
Securities Administrator and HSBC Bank USA, National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the

                                      A-2
<PAGE>

last Business Day of the month immediately preceding the month of such
Distribution Date (the "Record Date"), from the Available Distribution Amount in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount of interest and principal, if any, required to be
distributed to Holders of Class A-[_] Certificates on such Distribution Date.

         Distributions on this Certificate will be made by the Securities
Administrator either in immediately available funds (by wire transfer or
otherwise) for the account of the Person entitled thereto if such Person shall
have so notified the Securities Administrator and the Trustee at least 5
Business Days prior to the related Record Date, or by check mailed to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register.

         Any transferee shall be deemed to have made the representation set
forth in Section 5.02(c) of the Agreement.

         Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose in the City of Minneapolis and
State of Minnesota. The Initial Certificate Principal Balance of this
Certificate is set forth above. The Certificate Principal Balance hereof will be
reduced to the extent of distributions allocable to principal.

         This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Asset-Backed Pass-Through Certificates
of the Series specified hereon (herein collectively called the "Certificates").

         The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.

         As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Trustee, the Company and the Master Servicer of advances
made, or certain expenses incurred, by either of them.

         The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Company, the Master Servicer, the Securities Administrator and the Trustee
and the rights of the Certificateholders under the Agreement at any time by the
Company, the Master Servicer, the Securities Administrator and the Trustee with
the consent of the Holders of Certificates evidencing in the aggregate not less
than 66-2/3% of the Percentage Interests of each Class of Certificates affected
thereby. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon the
Certificate. The Agreement also permits the amendment thereof in certain
circumstances without the consent of the Holders of any of the Certificates and,
in certain additional circumstances, without the consent of the Holders of
certain Classes of Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Securities
Administrator upon surrender of this Certificate for registration of transfer at
the offices or agencies maintained by the Securities Administrator, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Securities
Administrator duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.

                                      A-3
<PAGE>

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

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

         The Company, the Master Servicer, the Securities Administrator, the
Servicer and the Trustee and any agent of the Company, the Master Servicer, the
Securities Administrator, the Servicer or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Master Servicer, the Securities Administrator, the
Servicer, the Trustee nor any such agent shall be affected by notice to the
contrary.

         This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

         The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the purchase by the Servicer or its designee or the Master Servicer from the
Trust Fund of all remaining Mortgage Loans and each REO Property in respect
thereof remaining in the Trust Fund, thereby effecting early retirement of the
Certificates and (ii) 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 REO Property in respect thereof). The Agreement permits,
but does not require, the Servicer or the Master Servicer to purchase at a price
determined as provided in the Agreement all remaining Mortgage Loans and all REO
Property; provided, that any such option may only be exercised on or after the
first Distribution Date on which the aggregate unpaid balance of the Mortgage
Loans is less than or equal to ten percent of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date with respect to a purchase
by the Servicer, or on or after the first Distribution Date on which the
aggregate unpaid principal balance of the Mortgage Loans is less than or equal
to five percent of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date with respect to a purchase by the Master Servicer.

         Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

                                      A-4
<PAGE>

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

Dated:   October [___], 2004                WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

This is one of the Certificates referred to in the within-mentioned Agreement.

                                            WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                                      A-5
<PAGE>

                                   ASSIGNMENT
                                   ----------

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto _____________________________________ (Please print or typewrite name and
address including postal zip code of assignee) a Percentage Interest evidenced
by the within Mortgage Pass-Through Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

I (We) further direct the Certificate Registrar to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:__________________________________________
_______________________________________________________________________________

Dated:                              ___________________________________________
                                    Signature by or on behalf of assignor

                                                            Signature Guaranteed

                                      A-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ___________________________________for the account of
__________________ account number _______________, or, if mailed by check, to
________________________. Applicable statements should be mailed
to____________________________________________.

This information is provided by __________________, the assignee named above, or
________________, as its agent.

                                      A-7
<PAGE>

                                   EXHIBIT B-1
                           FORM OF CLASS M CERTIFICATE

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES,
[THE CLASS M-1 CERTIFICATES] [AND THE CLASS M-2 CERTIFICATES] [AND THE CLASS M-3
CERTIFICATES] [AND THE CLASS M-4 CERTIFICATES] [AND THE CLASS M-5 CERTIFICATES]
[AND THE CLASS M-6 CERTIFICATES] [AND THE CLASS M-7 CERTIFICATES] AS DESCRIBED
IN THE AGREEMENT (AS DEFINED BELOW).

THIS CERTIFICATE 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 OF SUCH
BOOK-ENTRY CERTIFICATES 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 IN THE BOOK-ENTRY CERTIFICATES SHALL BE MADE IN
ACCORDANCE WITH THE PROCEDURES ESTABLISHED BY THE DEPOSITORY PARTICIPANT OR
BROKERAGE FIRM REPRESENTING SUCH CERTIFICATE OWNER. EACH DEPOSITORY PARTICIPANT
SHALL 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 SHALL
NOT BE REQUIRED TO MONITOR, DETERMINE OR INQUIRE AS TO COMPLIANCE WITH THE
TRANSFER RESTRICTIONS WITH RESPECT TO THE BOOK-ENTRY CERTIFICATES, AND THE
TRUSTEE SHALL HAVE NO LIABILITY FOR TRANSFERS OF OWNERSHIP INTERESTS IN THE
BOOK-ENTRY CERTIFICATES MADE THROUGH THE BOOK-ENTRY FACILITIES OF THE DEPOSITORY
OR BETWEEN OR AMONG DEPOSITORY PARTICIPANTS OR CERTIFICATE OWNERS, MADE IN
VIOLATION OF THE APPLICABLE RESTRICTIONS.

         ANY TRANSFEREE SHALL BE DEEMED TO HAVE MADE THE REPRESENTATION SET
FORTH IN SECTION 5.02(C) OF THE POOLING AND SERVICING AGREEMENT.

                                     B-1-1
<PAGE>

<TABLE>
<CAPTION>

<S>                                                     <C>
Certificate No.______                                   Adjustable Pass-Through Rate

Class [M-__][Mezzanine]                                 Aggregate Initial Certificate Principal
                                                        Balance of the Class [M-__]
                                                        Certificates:
                                                        $____________

Date of Pooling and Servicing                           Initial Certificate Principal Balance of this Certificate:
Agreement and Cut-off Date:                             $__________________
October 1, 2004

First Distribution Date:                                CUSIP:______________
November 26, 2004

Master Servicer:
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
[__________] 2034
</TABLE>

                      ASSET-BACKED PASS-THROUGH CERTIFICATE
                                  SERIES 2004-5

         evidencing a percentage interest in any distributions allocable to the
         Class M-__ Certificates with respect to the Trust Fund consisting
         primarily of a pool of one- to four-family adjustable and fixed-rate
         first lien mortgage loans formed and sold by HOMESTAR MORTGAGE
         ACCEPTANCE CORP.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Homestar Mortgage
Acceptance Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator, the Trustee referred to below or any of their affiliates. Neither
this Certificate nor the underlying Mortgage Loans are guaranteed or insured by
any governmental agency or instrumentality or by Homestar Mortgage Acceptance
Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator, the Trustee or any of their affiliates. None of Homestar Mortgage
Acceptance Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator or any of their affiliates will have any obligation with respect
to any certificate or other obligation secured by or payable from payments on
the Certificates.

         This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Initial Certificate Principal Balance of this Certificate by the aggregate
Initial Certificate Principal Balance of all Class M-__ Certificates, both as
specified above) in certain distributions with respect to the Trust Fund
consisting primarily of an interest in a pool of one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans"), sold by
Homestar Mortgage Acceptance Corp. (hereinafter called the "Company," which term
includes any successor entity under the Agreement referred to below). The Trust
Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Company, the Master Servicer, the
Securities Administrator and HSBC Bank USA, National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the

                                     B-1-2
<PAGE>

last Business Day of the month immediately preceding the month of such
Distribution Date (the "Record Date"), from the Available Distribution Amount in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount of interest and principal, if any , required to be
distributed to Holders of Class M-__ Certificates on such Distribution Date.

         Distributions on this Certificate will be made by the Securities
Administrator either in immediately available funds (by wire transfer or
otherwise) for the account of the Person entitled thereto if such Person shall
have so notified the Securities Administrator and the Trustee at least 5
Business Days prior to the related Record Date, or by check mailed to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register.

         Any transferee shall be deemed to have made the representation set
forth in Section 5.02(c) of the Agreement.

         Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose in the City of Minneapolis and
State of Minnesota. The Initial Certificate Principal Balance of this
Certificate is set forth above. The Certificate Principal Balance hereof will be
reduced to the extent of distributions allocable to principal.

         This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Asset-Backed Pass-Through Certificates
of the Series specified hereon (herein collectively called the "Certificates").

         The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.

         As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Trustee, the Company and the Master Servicer of advances
made, or certain expenses incurred, by either of them.

         The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Company, the Master Servicer, the Securities Administrator and the Trustee
and the rights of the Certificateholders under the Agreement at any time by the
Company, the Master Servicer, the Securities Administrator and the Trustee with
the consent of the Holders of Certificates evidencing in the aggregate not less
than 66-2/3% of the Percentage Interests of each Class of Certificates affected
thereby. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon the
Certificate. The Agreement also permits the amendment thereof in certain
circumstances without the consent of the Holders of any of the Certificates and,
in certain additional circumstances, without the consent of the Holders of
certain Classes of Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Securities
Administrator upon surrender of this Certificate for registration of transfer at
the offices or agencies maintained by the Securities Administrator, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Securities
Administrator duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.

                                     B-1-3
<PAGE>

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

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

         The Company, the Master Servicer, the Securities Administrator, the
Servicer and the Trustee and any agent of the Company, the Master Servicer, the
Securities Administrator, the Servicer or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Master Servicer, the Securities Administrator, the
Servicer, the Trustee nor any such agent shall be affected by notice to the
contrary.

         This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

         The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the purchase by the Servicer or its designee or the Master Servicer from the
Trust Fund of all remaining Mortgage Loans and each REO Property in respect
thereof remaining in the Trust Fund, thereby effecting early retirement of the
Certificates and (ii) 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 REO Property in respect thereof). The Agreement permits,
but does not require, the Servicer or the Master Servicer to purchase at a price
determined as provided in the Agreement all remaining Mortgage Loans and all REO
Property; provided, that any such option may only be exercised on or after the
first Distribution Date on which the aggregate unpaid balance of the Mortgage
Loans is less than or equal to ten percent of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date with respect to a purchase
by the Servicer, or on or after the first Distribution Date on which the
aggregate unpaid principal balance of the Mortgage Loans is less than or equal
to five percent of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date with respect to a purchase by the Master Servicer.

         Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

                                     B-1-4
<PAGE>

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

Dated:   October [___], 2004                WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

This is one of the Certificates referred to in the within-mentioned Agreement.

                                            WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                                     B-1-5
<PAGE>

                                   ASSIGNMENT
                                   ----------

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto _____________________________________ (Please print or typewrite name and
address including postal zip code of assignee) a Percentage Interest evidenced
by the within Mortgage Pass-Through Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

I (We) further direct the Certificate Registrar to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:__________________________________________
_______________________________________________________________________________

Dated:                              ___________________________________________
                                    Signature by or on behalf of assignor

                                                            Signature Guaranteed

                                     B-1-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ___________________________________for the account of
__________________ account number _______________, or, if mailed by check, to
________________________. Applicable statements should be mailed
to____________________________________________.

This information is provided by __________________, the assignee named above, or
________________, as its agent.

                                     B-1-7
<PAGE>

                                   EXHIBIT B-2

                          FORM OF CLASS C CERTIFICATES

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-[_], AND
CLASS M CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED BELOW).

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.

                                     B-2-1
<PAGE>

<TABLE>
<CAPTION>

<S>                                                         <C>
Certificate No. 1

Class C                                                     Aggregate Initial Notional Amount of the
                                                            Class C Certificates:
                                                            $_________________

Date of Pooling and Servicing                               Initial Notional Amount
Agreement and Cut-off Date:                                 of this Certificate ("Denomination"):
October 1, 2004                                             $______________

First Distribution Date:                                    Initial Certificate Principal Balance of
November 26, 2004                                           this Certificate ("Denomination"):
                                                            $______________

Master Servicer:
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
[______________]
</TABLE>

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2004-5

         evidencing percentage interest in the distributions allocable to the
         Class C Certificates with respect to a Trust Fund consisting primarily
         of a pool of one- to four- family adjustable and fixed-rate first lien
         mortgage loans formed and sold by HOMESTAR MORTGAGE ACCEPTANCE CORP.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Homestar Mortgage
Acceptance Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator, the Trustee referred to below or any of their affiliates. Neither
this Certificate nor the underlying Mortgage Loans are guaranteed or insured by
any governmental agency or instrumentality or by Homestar Mortgage Acceptance
Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator, the Trustee or any of their affiliates. None of Homestar Mortgage
Acceptance Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator or any of their affiliates will have any obligation with respect
to any certificate or other obligation secured by or payable from payments on
the Certificates.

         This certifies that ___________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Original Class C Certificate by the Original Class Certificate Principal
Balance) in certain distributions with respect to the Trust Fund consisting
primarily of an interest in a pool of one- to four-family fixed-rate and
adjustable-rate first lien mortgage loans (the "Mortgage Loans"), sold by
Homestar Mortgage Acceptance Corp. (hereinafter called the "Company," which term
includes any successor entity under the Agreement referred to below). The Trust
Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Company, the Master Servicer, the
Securities Administrator and HSBC Bank USA, National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Class C
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such Distribution Date (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by

                                     B-2-2
<PAGE>

this Certificate and the amount of interest and principal, if any , required to
be distributed to Holders of Class C Certificates on such Distribution Date.

         Distributions on this Certificate will be made by the Securities
Administrator either in immediately available funds (by wire transfer or
otherwise) for the account of the Person entitled thereto if such Person shall
have so notified the Securities Administrator and the Trustee at least 5
Business Days prior to the related Record Date, or by check mailed to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register.

         Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose in the City of Minneapolis and
State of Minnesota.

         This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Asset-Backed Pass-Through Certificates
of the Series specified hereon (herein collectively called the "Certificates").

         The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.

         As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Trustee, the Company and the Master Servicer of advances
made, or certain expenses incurred, by either of them.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Company in writing the facts surrounding the
transfer. In the event that such a transfer is not to be made pursuant to Rule
144A of the act, there shall be delivered to the Trustee and the Company of an
Opinion of Counsel that such transfer may be made pursuant to an exemption from
the Act, which Opinion of Counsel shall not be obtained at the expense of the
Trustee, the Master Servicer or the Company; or there shall be delivered to the
Trustee and the Company a transferor certificate by the transferor and an
investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Company against any liability that may result if the transfer is
not so exempt or is not made in accordance with such federal and state laws.

         No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

         The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Company, the Master Servicer, the Securities Administrator and the Trustee
and the rights of the Certificateholders under the Agreement at any time by the
Company, the Master Servicer, the Securities Administrator and the Trustee with
the consent of the Holders of Certificates evidencing in the aggregate not less
than 66-2/3% of the Percentage Interests of each Class of Certificates affected
thereby. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon the
Certificate. The Agreement also permits the

                                     B-2-3
<PAGE>

amendment thereof in certain circumstances without the consent of the Holders of
any of the Certificates and, in certain additional circumstances, without the
consent of the Holders of certain Classes of Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Securities
Administrator upon surrender of this Certificate for registration of transfer at
the offices or agencies maintained by the Securities Administrator, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Securities
Administrator duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.

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

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

         The Company, the Master Servicer, the Securities Administrator, the
Servicer and the Trustee and any agent of the Company, the Master Servicer, the
Securities Administrator, the Servicer or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Master Servicer, the Securities Administrator, the
Servicer, the Trustee nor any such agent shall be affected by notice to the
contrary.

         This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

         The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the purchase by the Servicer or its designee or the Master Servicer from the
Trust Fund of all remaining Mortgage Loans and each REO Property in respect
thereof remaining in the Trust Fund, thereby effecting early retirement of the
Certificates and (ii) 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 REO Property in respect thereof). The Agreement permits,
but does not require, the Servicer or the Master Servicer to purchase at a price
determined as provided in the Agreement all remaining Mortgage Loans and all REO
Property; provided, that any such option may only be exercised on or after the
first Distribution Date on which the aggregate unpaid balance of the Mortgage
Loans is less than or equal to ten percent of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date with respect to a purchase
by the Servicer, or on or after the first Distribution Date on which the
aggregate unpaid principal balance of the Mortgage Loans is less than or equal
to five percent of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date with respect to a purchase by the Master Servicer.

         Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

                                     B-2-4
<PAGE>

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

Dated:   October [___], 2004                WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

This is one of the Certificates referred to in the within-mentioned Agreement.

                                            WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                                     B-2-5
<PAGE>

                                   ASSIGNMENT
                                   ----------

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto _____________________________________ (Please print or typewrite name and
address including postal zip code of assignee) a Percentage Interest evidenced
by the within Mortgage Pass-Through Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

I (We) further direct the Certificate Registrar to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:__________________________________________
_______________________________________________________________________________

Dated:                              ___________________________________________
                                    Signature by or on behalf of assignor

                                                            Signature Guaranteed

                                     B-2-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ___________________________________for the account of
__________________ account number _______________, or, if mailed by check, to
________________________. Applicable statements should be mailed
to____________________________________________.

This information is provided by __________________, the assignee named above, or
________________, as its agent.

                                     B-2-7
<PAGE>

                                   EXHIBIT B-3
                           FORM OF CLASS P CERTIFICATE

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.

                                     B-3-1
<PAGE>

<TABLE>
<CAPTION>

<S>                                                         <C>
Certificate No. 1

Class P                                                     Aggregate Initial Certificate Principal
                                                            Balance of the Class P Certificates:
                                                            $100.00

Date of Pooling and Servicing                               Initial Certificate Principal Balance
Agreement and Cut-off Date:                                 of this Certificate ("Denomination"):
October 1, 2004                                             $100.00

First Distribution Date:                                    Percentage Interest of this Certificate:
November 26, 2004                                           100.00%

Master Servicer:
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
[_______________]
</TABLE>

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2004-5

         evidencing a percentage interest in any distributions allocable to the
         Class P Certificates with respect to the Trust Fund consisting
         primarily of a pool of one- to four-family adjustable and fixed-rate
         first lien mortgage loans formed and sold by HOMESTAR MORTGAGE
         ACCEPTANCE CORP.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Homestar Mortgage
Acceptance Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator, the Trustee referred to below or any of their affiliates. Neither
this Certificate nor the underlying Mortgage Loans are guaranteed or insured by
any governmental agency or instrumentality or by Homestar Mortgage Acceptance
Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator, the Trustee or any of their affiliates. None of Homestar Mortgage
Acceptance Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator or any of their affiliates will have any obligation with respect
to any certificate or other obligation secured by or payable from payments on
the Certificates.

         This certifies that ___________________ is the registered owner of the
Percentage Interest evidenced by this Class P Certificate (obtained by dividing
the Denomination of this Class P Certificate by the Original Class Certificate
Principal Balance) in certain distributions with respect to the Trust Fund
consisting primarily of an interest in a pool of one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans"), sold by
Homestar Mortgage Acceptance Corp. (hereinafter called the "Company," which term
includes any successor entity under the Agreement referred to below). The Trust
Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Company, the Master Servicer, the
Securities Administrator and HSBC Bank USA, National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such Distribution Date (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by

                                     B-3-2
<PAGE>

this Certificate and the amount of interest and principal, if any , required to
be distributed to Holders of Class P Certificates on such Distribution Date.

         Distributions on this Certificate will be made by the Securities
Administrator either in immediately available funds (by wire transfer or
otherwise) for the account of the Person entitled thereto if such Person shall
have so notified the Securities Administrator and the Trustee at least 5
Business Days prior to the related Record Date, or by check mailed to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register.

         Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose in the City of Minneapolis and
State of Minnesota. The Initial Certificate Principal Balance of this
Certificate is set forth above. The Certificate Principal Balance hereof will be
reduced to the extent of distributions allocable to principal. This Certificate
is one of a duly authorized issue of Certificates issued in several Classes
designated as Asset-Backed Pass-Through Certificates of the Series specified
hereon (herein collectively called the "Certificates").

         The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.

         As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Trustee, the Company and the Master Servicer of advances
made, or certain expenses incurred, by either of them.

         No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Company in writing the facts surrounding the
transfer. In the event that such a transfer is not to be made pursuant to Rule
144A of the Act, there shall be delivered to the Trustee and the Company of an
Opinion of Counsel that such transfer may be made pursuant to an exemption from
the Act, which Opinion of Counsel shall not be obtained at the expense of the
Trustee, the Master Servicer or the Company; or there shall be delivered to the
Trustee and the Company a transferor certificate by the transferor and an
investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Company against any liability that may result if the transfer is
not so exempt or is not made in accordance with such federal and state laws.

         No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

         The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Company, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Company, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66-2/3% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon the

                                     B-3-3
<PAGE>

Certificate. The Agreement also permits the amendment thereof in certain
circumstances without the consent of the Holders of any of the Certificates and,
in certain additional circumstances, without the consent of the Holders of
certain Classes of Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Securities
Administrator upon surrender of this Certificate for registration of transfer at
the offices or agencies maintained by the Securities Administrator, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Securities
Administrator duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.

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

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

         The Company, the Master Servicer, the Securities Administrator, the
Servicer and the Trustee and any agent of the Company, the Master Servicer, the
Securities Administrator, the Servicer or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Master Servicer, the Securities Administrator, the
Servicer, the Trustee nor any such agent shall be affected by notice to the
contrary.

         This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

         The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the purchase by the Servicer or its designee or the Master Servicer from the
Trust Fund of all remaining Mortgage Loans and each REO Property in respect
thereof remaining in the Trust Fund, thereby effecting early retirement of the
Certificates and (ii) 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 REO Property in respect thereof). The Agreement permits,
but does not require, the Servicer or the Master Servicer to purchase at a price
determined as provided in the Agreement all remaining Mortgage Loans and all REO
Property; provided, that any such option may only be exercised on or after the
first Distribution Date on which the aggregate unpaid balance of the Mortgage
Loans is less than or equal to ten percent of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date with respect to a purchase
by the Servicer, or on or after the first Distribution Date on which the
aggregate unpaid principal balance of the Mortgage Loans is less than or equal
to five percent of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date with respect to a purchase by the Master Servicer.

         Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

                                     B-3-4
<PAGE>

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

Dated:   October [___], 2004                WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                                     B-3-5
<PAGE>

                                   ASSIGNMENT
                                   ----------

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto _____________________________________ (Please print or typewrite name and
address including postal zip code of assignee) a Percentage Interest evidenced
by the within Mortgage Pass-Through Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

I (We) further direct the Certificate Registrar to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:__________________________________________
_______________________________________________________________________________

Dated:                              ___________________________________________
                                    Signature by or on behalf of assignor

                                                            Signature Guaranteed

                                     B-3-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ___________________________________for the account of
__________________ account number _______________, or, if mailed by check, to
________________________. Applicable statements should be mailed
to____________________________________________.

This information is provided by __________________, the assignee named above, or
________________, as its agent.

                                     B-3-7
<PAGE>

                                   EXHIBIT B-4

                           FORM OF CLASS R CERTIFICATE

THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES PERSON
OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").

NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE TRANSFEREE
PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(C) OF THE AGREEMENT OR
AN OPINION OF COUNSEL AS PROVIDED IN SECTION 5.02(C) THAT THE PURCHASE OF THIS
CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT
IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE AND WILL NOT SUBJECT THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR,
THE COMPANY OR THE TRUSTEE TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE POOLING AND SERVICING AGREEMENT (THE "AGREEMENT").

THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.

ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER SERVICER
AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES, ANY STATE
OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY
ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (ANY SUCH PERSON
DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN REFERRED TO AS A
"DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION, (2)
NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND
(3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION
IN THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE, EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.

                                     B-4-1
<PAGE>

Certificate No. 1

Class R

Date of Pooling and, Servicing                       Percentage Interest:  100%
Agreement and Cut-off Date:
October 1, 2004

First Distribution Date:
November 26, 2004

Master Servicer:
Wells Fargo Bank, National Association

Assumed Final Distribution Date:
________________

                        MORTGAGE PASS-THROUGH CERTIFICATE
                                  SERIES 2004-5

         evidencing a percentage interest in any distributions allocable to the
         Class R Certificates with respect to a Trust Fund consisting primarily
         of a pool of one- to four-family adjustable and fixed-rate first lien
         mortgage loans formed and sold by HOMESTAR MORTGAGE ACCEPTANCE CORP.

         This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in Homestar Mortgage
Acceptance Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator, the Trustee referred to below or any of their affiliates. Neither
this Certificate nor the underlying Mortgage Loans are guaranteed or insured by
any governmental agency or instrumentality or by Homestar Mortgage Acceptance
Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator, the Trustee or any of their affiliates. None of Homestar Mortgage
Acceptance Corp., the Master Servicer, the Servicer, the Seller, the Securities
Administrator or any of their affiliates will have any obligation with respect
to any certificate or other obligation secured by or payable from payments on
the Certificates.

         This certifies that ___________________ is the registered owner of the
Percentage Interest evidenced by this Certificate in certain distributions with
respect to the Trust Fund consisting primarily of an interest in a pool of one-
to four-family fixed-rate and adjustable-rate first lien mortgage loans (the
"Mortgage Loans"), sold by Homestar Mortgage Acceptance Corp. (hereinafter
called the "Company," which term includes any successor entity under the
Agreement referred to below). The Trust Fund was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") among the
Company, the Master Servicer, the Securities Administrator and HSBC Bank USA,
National Association, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of

                                     B-4-2
<PAGE>

the Agreement, to which Agreement the Holder of this Certificate by virtue of
the acceptance hereof assents and by which such Holder is bound.

         Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such Distribution Date (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount of interest and
principal, if any , required to be distributed to Holders of Class R
Certificates on such Distribution Date.

         Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i) each
person holding or acquiring any Ownership Interest in this Certificate must be a
United States Person and a Permitted Transferee, (ii) the transfer of any
Ownership Interest in this Certificate will be conditioned upon the delivery to
the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Company will have the right, in its
sole discretion and without notice to the Holder of this Certificate, to sell
this Certificate to a purchaser selected by the Company, which purchaser may be
the Company, or any affiliate of the Company, on such terms and conditions as
the Company may choose.

         Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose in the City of Minneapolis and
State of Minnesota.

         In connection with any transfer of this Certificate, the Trustee will
also require either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee with respect to the permissibility of such
transfer under the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and Section 4975 of the Internal Revenue Code (the "Code") and
stating, among other things, that the transferee's acquisition of a Class R
Certificate will not constitute or result in a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code or (ii) a representation
letter, in the form as described by the Agreement, stating that the transferee
is not an employee benefit or other plan subject to the prohibited transaction
provisions of ERISA or Section 4975 of the Code (a "Plan"), or any other person
(including an investment manager, a named fiduciary or a trustee of any Plan)
acting, directly or indirectly, on behalf of or purchasing any Certificate with
"plan assets" of any Plan.

         This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Asset-Backed Pass-Through Certificates
of the Series specified hereon (herein collectively called the "Certificates").

         The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement. In the event Master Servicer funds are advanced
with respect to any Mortgage Loan, such advance is reimbursable to the Master
Servicer, to the extent provided in the Agreement, from related recoveries on
such Mortgage Loan or from other cash that would have been distributable to
Certificateholders.

         As provided in the Agreement, withdrawals from the Custodial Account
and/or the Certificate Account created for the benefit of Certificateholders may
be made by the Master Servicer from time to time for purposes other than
distributions to Certificateholders, such purposes including without limitation
reimbursement to the Trustee, the Company and the Master Servicer of advances
made, or certain expenses incurred, by either of them.

         The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations of
the Company, the Master Servicer, the Securities Administrator and the

                                     B-4-3
<PAGE>

Trustee and the rights of the Certificateholders under the Agreement at any time
by the Company, the Master Servicer, the Securities Administrator and the
Trustee with the consent of the Holders of Certificates evidencing in the
aggregate not less than 66-2/3% of the Percentage Interests of each Class of
Certificates affected thereby. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon the Certificate. The Agreement also permits the amendment
thereof in certain circumstances without the consent of the Holders of any of
the Certificates and, in certain additional circumstances, without the consent
of the Holders of certain Classes of Certificates.

         As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable with the Securities
Administrator upon surrender of this Certificate for registration of transfer at
the offices or agencies maintained by the Securities Administrator, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Securities
Administrator duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.

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

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

         The Company, the Master Servicer, the Securities Administrator, the
Servicer and the Trustee and any agent of the Company, the Master Servicer, the
Securities Administrator, the Servicer or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Master Servicer, the Securities Administrator, the
Servicer, the Trustee nor any such agent shall be affected by notice to the
contrary.

         This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.

         The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the purchase by the Servicer or its designee or the Master Servicer from the
Trust Fund of all remaining Mortgage Loans and each REO Property in respect
thereof remaining in the Trust Fund, thereby effecting early retirement of the
Certificates and (ii) 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 REO Property in respect thereof). The Agreement permits,
but does not require, the Servicer or the Master Servicer to purchase at a price
determined as provided in the Agreement all remaining Mortgage Loans and all REO
Property; provided, that any such option may only be exercised on or after the
first Distribution Date on which the aggregate unpaid balance of the Mortgage
Loans is less than or equal to ten percent of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date with respect to a purchase
by the Servicer, or on or after the first Distribution Date on which the
aggregate unpaid principal balance of the Mortgage Loans is less than or equal
to five percent of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date with respect to a purchase by the Master Servicer.

         Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purpose
have the same effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

                                     B-4-4
<PAGE>

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

Dated:   October [___], 2004                WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

         This is one of the Certificates referred to in the within-mentioned
Agreement.

                                            WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Securities Administrator

                                            By:_____________________________
                                                   Authorized Signatory

                                     B-4-5
<PAGE>

                                   ASSIGNMENT
                                   ----------

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto _____________________________________ (Please print or typewrite name and
address including postal zip code of assignee) a Percentage Interest evidenced
by the within Mortgage Pass-Through Certificate and hereby authorizes the
transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.

I (We) further direct the Certificate Registrar to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:__________________________________________
_______________________________________________________________________________

Dated:                              ___________________________________________
                                    Signature by or on behalf of assignor

                                                            Signature Guaranteed

                                     B-4-6
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ___________________________________for the account of
__________________ account number _______________, or, if mailed by check, to
________________________. Applicable statements should be mailed
to____________________________________________.

This information is provided by __________________, the assignee named above, or
________________, as its agent.

                                     B-4-7
<PAGE>

                                    EXHIBIT C

                     FORM OF CUSTODIAN INITIAL CERTIFICATION

                                                                 October 1, 2004

HSBC Bank USA, National Association          Homestar Mortgage Acceptance Corp.
452 Fifth Avenue                             W. 115 Century Road
New York, New York 10018                     Paramus, New Jersey 07652

         Attention: Homestar Mortgage Acceptance Corp., HMAC Mortgage Trust
         2004-5, Asset-Backed Pass-Through Certificates, Series 2004-5

         Re:      Custodial Agreement, dated as of October 1, 2004, by and among
                  HSBC Bank USA, National Association, Homestar Mortgage
                  Acceptance Corp. and Wells Fargo Bank, National Association
                  relating to HMAC Mortgage Trust 2004-5, Asset-Backed
                  Pass-Through Certificates, Series 2004-5
                  ----------------------------------------

Ladies and Gentlemen:

                  In accordance with Section 2.3 of the above-captioned
Custodial Agreement and subject to Section 2.02 of the Pooling and Servicing
Agreement, dated as of October 1, 2004 among Homestar Mortgage Acceptance Corp.,
HSBC Bank USA, National Association and Wells Fargo Bank, National Association,
the undersigned, as custodian (the "Custodian"), hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto) it has reviewed the
Mortgage File, and has determined that: (1) all documents required to be
included in the Mortgage File are in its possession and (2) such documents have
been reviewed by it and appear regular on their face and relate to such Mortgage
Loan.

                  The Custodian has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Custodial and Pooling and Servicing Agreements.
The Custodian makes no representations as to and shall not be responsible to
verify: (i) the validity, legality, sufficiency, enforceability, due
authorization, recordability or genuineness of any of the documents contained in
each Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule, (ii) the collectability, insurability, effectiveness or suitability of
any such Mortgage Loan, or (iii) the existence of any assumption, modification,
written assurance or substitution agreement with respect to any Mortgage File if
no such documents appear in the Mortgage File delivered to the Custodian.

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.

                                            WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION, as Custodian

                                            By:________________________________
                                            Name:
                                            Title:

                                       C-1
<PAGE>

                                    EXHIBIT D

                      FORM OF CUSTODIAN FINAL CERTIFICATION

                                                             _____________, 20__

HSBC Bank USA, National Association          Homestar Mortgage Acceptance Corp.
452 Fifth Avenue                             W. 115 Century Road
New York, New York 10018                     Paramus, New Jersey 07652

         Attention: Homestar Mortgage Acceptance Corp., HMAC Mortgage Trust
         2004-5, Mortgage Pass-Through Certificates, Series 2004-5

         Re:      Custodial Agreement, dated as of October 1, 2004, by and among
                  HSBC Bank USA, National Association, Homestar Mortgage
                  Acceptance Corp. and Wells Fargo Bank, National Association
                  relating to HMAC Mortgage Trust 2004-5, Asset-Backed
                  Pass-Through Certificates, Series 2004-5
                  ----------------------------------------

Ladies and Gentlemen:

                  In accordance with Section 2.3 of the above-captioned
Custodial Agreement and subject to Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule containing with respect to each Mortgage Loan:

                  (i) the original Mortgage Note (including all riders thereto)
         bearing all intervening endorsements necessary to show a complete chain
         of endorsements from the original payee, endorsed "Pay to the order of
         HSBC Bank USA, National Association without recourse", via original
         signature, and, if previously endorsed, signed in the name of the last
         endorsee by a duly qualified officer of the last endorsee. If the
         Mortgage Loan was acquired by the last endorsee in a merger, the
         endorsement must be by "[name of last endorsee], successor by merger to
         [name of the predecessor]." If the Mortgage Loan was acquired or
         originated by the last endorsee while doing business under another
         name, the endorsement must be by "[name of last endorsee], formerly
         known as [previous name].";

                  (ii) The original recorded Mortgage, noting the presence of
         the MIN of the Mortgage Loan and either language indicating that the
         Mortgage Loan is a MOM loan or if the Mortgage Loan was not a MOM loan
         at origination, the original Mortgage and the assignment thereof to
         MERS, with evidence of recording indicated thereon; provided that if
         such document is not included because of a delay by the public
         recording office where such document has been delivered for recordation
         or such office as a matter of policy does not return the original of
         such document or if such original Mortgage has been lost, the Seller
         shall include or cause to be included a copy thereof certified by the
         appropriate recording office, if available;

                  (iii) the original Assignment of Mortgage in blank, in form
         and substance acceptable for recordation in the jurisdiction in which
         the related mortgage property is located and signed in the name of the
         Last Endorsee by an authorized officer; unless the Mortgage Loan is
         registered on the MERS system;

                  (iv) The original intervening Assignments, if any and if
         available, with evidence of recording thereon, showing an unbroken
         chain of title to the Mortgage from the originator thereof to Person
         assigning it to the Trustee (or to MERS, if the Mortgage Loan is
         registered on the MERS(R) System); provided that if such document is
         not included because of a delay by the public recording office where
         such document has been delivered for recordation or such office as a
         matter of policy does not return the original of such

                                       D-1
<PAGE>

         document, the Seller shall include or cause to be included a copy
         thereof certified by the appropriate recording office, if available;

                  (v) The originals of each assumption, modification or
         substitution agreement, if any and if available, relating to the
         Mortgage Loan; and

                  (vi) the original title insurance policy, or, if such policy
         has not been issued, any one of an original or a copy of the
         preliminary title report, title binder or title commitment on the
         Mortgaged Property with the original policy of the insurance to be
         delivered promptly following the receipt thereof;

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement
or in the Pooling and Servicing Agreement, as applicable.

                                            WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION, as Custodian

                                            By:________________________________
                                            Name:______________________________
                                            Title:_____________________________

                                       D-2
<PAGE>

                                    EXHIBIT E

                            FORM OF REMITTANCE REPORT

                             (Provided Upon Request)

                                       E-1
<PAGE>

                                    EXHIBIT F
                    FORM OF REQUEST FOR RELEASE OF DOCUMENTS

To:      HSBC Bank USA, National Association
         452 Fifth Avenue
         New York, New York 10018

         Re:      Pooling and Servicing Agreement, dated as of October 1, 2004,
                  by and among HSBC Bank USA, National Association, Homestar
                  Mortgage Acceptance Corp. and Wells Fargo Bank, National
                  Association relating to HMAC Mortgage Trust 2004-5,
                  Asset-Backed Pass-Through Certificates, Series 2004-5
                  -----------------------------------------------------

         In connection with the administration of the Mortgage Loans held by you
pursuant to the above-captioned Pooling and Servicing Agreement, we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage
Loan described below, for the reason indicated.

Mortgage Loan Number:
---------------------

Mortgagor Name, Address & Zip Code:
-----------------------------------

Reason for Requesting Documents (check one):
--------------------------------------------

_____     1.       Mortgage Paid in Full and proceeds have been deposited into
                   the Custodial Account

_____     2.       Foreclosure

_____     3.       Substitution

_____     4.       Other Liquidation

_____     5.       Nonliquidation              Reason:_________________________

_____     6.       California Mortgage Loan paid in full

                                               By:_____________________________
                                                      (authorized signer)

                                               Issuer:_________________________
                                               Address:________________________
                                               Date:___________________________

                                       F-1
<PAGE>

                                   EXHIBIT G-1
                     FORM OF INVESTOR REPRESENTATION LETTER

                               _____________,200__

Homestar Mortgage Acceptance Corp.
W. 115 Century Road
Paramus, New Jersey 07652

HSBC Bank USA, National Association
452 Fifth Avenue
New York, New York 10018
Attention: Homestar Mortgage Acceptance Corp. Series 2004-5

         Re:      Homestar Mortgage Acceptance Corp.
                  Asset-Backed Pass-Through Certificates Series 2004-5, Class
                  [___]
                  -----------------------------------------------------------

Ladies and Gentlemen:

         ______________ (the "Purchaser") intends to purchase from
______________ (the "Seller") $_________ Initial Certificate Principal Balance
of Asset-Backed Pass-Through Certificates, Series 2004-5, Class _____ (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of October 1, 2004 among Homestar
Mortgage Acceptance Corp., as company (the "Company"), Wells Fargo Bank,
National Association, as master servicer (in such capacity, the "Master
Servicer") and as securities administrator (in such capacity, the "Securities
Administrator") and HSBC Bank USA, National Association, as trustee (the
"Trustee"). All terms used herein and not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement. The Purchaser hereby
certifies, represents and warrants to, and covenants with, the Company and the
Trustee that:

                           1. The Purchaser understands that (a) the
                  Certificates have not been and will not be registered or
                  qualified under the Securities Act of 1933, as amended (the
                  "Act") or any state securities law, (b) the Company is not
                  required to so register or qualify the Certificates, (c) the
                  Certificates may be resold only if registered and qualified
                  pursuant to the provisions of the Act or any state securities
                  law, or if an exemption from such registration and
                  qualification is available, (d) the Pooling and Servicing
                  Agreement contains restrictions regarding the transfer of the
                  Certificates and (e) the Certificates will bear a legend to
                  the foregoing effect.

                           2. The Purchaser is acquiring the Certificates for
                  its own account for investment only and not with a view to or
                  for sale in connection with any distribution thereof in any
                  manner that would violate the Act or any applicable state
                  securities laws.

                           3. The Purchaser is (a) a substantial, sophisticated
                  institutional investor having such knowledge and experience in
                  financial and business matters, and, in particular, in such
                  matters related to securities similar to the Certificates,
                  such that it is capable of evaluating the merits and risks of
                  investment in the Certificates, (b) able to bear the economic
                  risks of such an investment and (c) an "accredited investor"
                  within the meaning of Rule 501 (a) promulgated pursuant to the
                  Act.

                           4. The Purchaser has been furnished with, and has had
                  an opportunity to review a copy of the Pooling and Servicing
                  Agreement and such other information concerning the
                  Certificates, the Mortgage Loans and the Company as has been
                  requested by the Purchaser from the Company or the Seller and
                  is relevant to the Purchaser's decision to purchase the
                  Certificates. The Purchaser has had any questions arising from
                  such review answered by the Company or the Seller to the
                  satisfaction of the Purchaser.

                                     G-1-1
<PAGE>

                           5. The Purchaser has not and will not nor has it
                  authorized or will it authorize any person to (a) offer,
                  pledge, sell, dispose of or otherwise transfer any
                  Certificate, any interest in any Certificate or any other
                  similar security to any person in any manner, (b) solicit any
                  offer to buy or to accept a pledge, disposition of other
                  transfer of any Certificate, any interest in any Certificate
                  or any other similar security from any person in any manner,
                  (c) otherwise approach or negotiate with respect to any
                  Certificate, any interest in any Certificate or any other
                  similar security with any person in any manner, (d) make any
                  general solicitation by means of general advertising or in any
                  other manner or (e) take any other action, that (as to any of
                  (a) through (e) above) would constitute a distribution of any
                  Certificate under the Act, that would render the disposition
                  of any Certificate a violation of Section 5 of the Act or any
                  state securities law, or that would require registration or
                  qualification pursuant thereto. The Purchaser will not sell or
                  otherwise transfer any of the Certificates, except in
                  compliance with the provisions of the Pooling and Servicing
                  Agreement.

                                       Very truly yours,

                                       ______________________________________
                                       (Purchaser)

                                       By:___________________________________
                                       Name:_________________________________
                                       Title:________________________________

                                     G-1-2
<PAGE>

                                   EXHIBIT G-2
                    FORM OF TRANSFEROR REPRESENTATION LETTER

                              ______________,200___

Homestar Mortgage Acceptance Corp.
W. 115 Century Road
Paramus, New Jersey 07652

HSBC Bank USA, National Association
452 Fifth Avenue
New York, New York 10018
Attention: Homestar Mortgage Acceptance Corp. Series 2004-5

         Re:      Homestar Mortgage Acceptance Corp.
                  Asset-Backed Pass-Through Certificates, Series 2004-5,
                  Class __
                  -------------------------------------------------------

Ladies and Gentlemen:

         In connection with the sale by ___________ (the "Seller") to ________
(the "Purchaser") of $_________ Initial Certificate Principal Balance of
Asset-Backed Pass-Through Certificates, Series 2004-5, Class _____ (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of October 1, 2004 among Homestar
Mortgage Acceptance Corp., as company (the "Company"), Wells Fargo Bank,
National Association, as master servicer (in such capacity, the "Master
Servicer") and as securities administrator (in such capacity, the "Securities
Administrator") and HSBC Bank USA, National Association, as trustee (the
"Trustee"). The Seller hereby certifies, represents and warrants to, and
covenants with, the Company and the Trustee that:

         Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act in any
manner set forth in the foregoing sentence with respect to any Certificate. The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.

                                Very truly yours,

                                ___________________________________________
                                (Seller)

                                By:________________________________________
                                Name:______________________________________
                                Title:_____________________________________

                                      G-2-1
<PAGE>

                                   EXHIBIT G-3
                   FORM OF RULE 144A INVESTMENT REPRESENTATION

             Description of Rule 144A Securities, including numbers:

                       Homestar Mortgage Acceptance Corp.
                     Asset-Backed Pass-Through Certificates
                       Series 2004-5, Class ____, No. ____

                  The undersigned seller, as registered holder (the
"Transferor"), intends to transfer the Rule 144A Securities described above to
the undersigned buyer (the "Buyer").

                  1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the
Transferor hereby certifies the following facts: Neither the Transferor nor
anyone acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, which would constitute a
distribution of the Rule 144A Securities under the Securities Act of 1933, as
amended (the "1933 Act"), or which would render the disposition of the Rule 144A
Securities a violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Transferor has not offered the Rule 144A
Securities to any person other than the Buyer or another "qualified
institutional buyer" as defined in Rule 144A under the 1933 Act.

                  2. The Buyer warrants and represents to, and covenants with,
the Transferor, the Trustee and the Master Servicer pursuant to Section 5.02 of
the Pooling and Servicing Agreement as follows:

                           a. The Buyer understands that the Rule 144A
                  Securities have not been registered under the 1933 Act or the
                  securities laws of any state.

                           b. The Buyer considers itself a substantial,
                  sophisticated institutional investor having such knowledge and
                  experience in financial and business matters that it is
                  capable of evaluating the merits and risks of investment in
                  the Rule 144A Securities.

                           c. The Buyer has been furnished with all information
                  regarding the Rule 144A Securities that it has requested from
                  the Transferor, the Trustee or the Master Servicer.

                           d. Neither the Buyer nor anyone acting on its behalf
                  has offered, transferred, pledged, sold or otherwise disposed
                  of the Rule 144A Securities, any interest in the Rule 144A
                  Securities or any other similar security to, or solicited any
                  offer to buy or accept a transfer, pledge or other disposition
                  of the Rule 144A Securities, any interest in the Rule 144A
                  Securities or any other similar security from, or otherwise
                  approached or negotiated with respect to the Rule 144A
                  Securities, any interest in the Rule 144A Securities or any
                  other similar security with, any person in any manner, or made
                  any general solicitation by means of general advertising or in
                  any other manner, or taken any other action, that would
                  constitute a distribution of the Rule 144A Securities under
                  the 1933 Act or that would render the disposition of the Rule
                  144A Securities a violation of Section 5 of the 1933 Act or
                  require registration pursuant thereto, nor will it act, nor
                  has it authorized or will it authorize any person to act, in
                  such manner with respect to the Rule 144A Securities.

                           e. The Buyer is a "qualified institutional buyer" as
                  that term is defined in Rule 144 under the 1933 Act and has
                  completed either of the forms of certification to that effect
                  attached hereto as

                                      G-3-1
<PAGE>

                  Annex 1 or Annex 2. The Buyer is aware that the sale to it is
                  being made in reliance on Rule 144A. The Buyer is acquiring
                  the Rule 144A Securities for its own account or the account of
                  other qualified institutional buyers, understands that such
                  Rule 144 Securities may be resold, pledged or transferred only
                  (i) to a person reasonably believed to be a qualified
                  institutional buyer that purchases for its own account or for
                  the account of a qualified institutional buyer to whom notice
                  is given that the resale, pledge or transfer is being made in
                  reliance on Rule 144A, or (ii) pursuant to another exemption
                  from registration under the 1933 Act.

                  3. The Buyer warrants and represents to, and covenants with,
the Transferor, the Servicer and the Company that either (1) the Buyer is not an
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("Plan"), or a plan
within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986
(the "Code") (also a "Plan"), and the Buyer is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan, or (2) the Buyer
has provided the Trustee with the opinion letter required by section 5.02(c) of
the Pooling and Servicing Agreement.

                  4. This document may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same document.

                                      G-3-2
<PAGE>

                  IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.

___________________________________       __________________________________
Print Name of Transferor                  Print Name of Buyer

By:________________________________       By:_______________________________
Name:                                     Name:
Title:                                    Title:

Taxpayer Identification:                  Taxpayer Identification:

No.________________________________       No._______________________________

Date:______________________________       Date:_____________________________

                                     G-3-3
<PAGE>

                             ANNEX 1 TO EXHIBIT G-3
                             ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

             [For Buyers Other Than Registered Investment Companies]

         The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:

         1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.

         2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested on a
discretionary basis $____________________1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.

____     CORPORATION, ETC. The Buyer is a corporation (other than a bank,
         savings and loan association or similar institution), Massachusetts or
         similar business trust, partnership, or charitable organization
         described in Section 501(c)(3) of the Internal Revenue Code.

____     BANK. The Buyer (a) is a national bank or banking institution organized
         under the laws of any State, territory or the District of Columbia, the
         business of which is substantially confined to banking and is
         supervised by the State or territorial banking commission or similar
         official or is a foreign bank or equivalent institution, and (b) has an
         audited net worth of at least $25,000,000 as demonstrated in its latest
         annual financial statement, a copy of which is attached hereto.

____     SAVINGS AND LOAN. The Buyer (a) is a savings and loan association,
         building and loan association, cooperative bank, homestead association
         or similar institution, which is supervised and examined by a State or
         Federal authority having supervision over any such institutions or is a
         foreign savings and loan association or equivalent institution and (b)
         has an audited net worth of at least $25,000,000 as demonstrated in its
         latest annual financial statements.

____     BROKER-DEALER. The Buyer is a dealer registered pursuant to Section 15
         of the Securities Exchange Act of 1934.

____     INSURANCE COMPANY. The Buyer is an insurance company whose primary and
         predominant business activity is the writing of insurance or the
         reinsuring of risks underwritten by insurance companies and which is
         subject to supervision by the insurance commissioner or a similar
         official or agency of a State, territory or the District of Columbia.

____     STATE OR LOCAL PLAN. The Buyer is a plan established and maintained by
         a State, its political subdivisions, or any agency or instrumentality
         of the State or its political subdivisions, for the benefit of its
         employees.

-------------------
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.

                                     G-3-4
<PAGE>

____     ERISA PLAN. The Buyer is an employee benefit plan within the meaning of
         Title I of the Employee Retirement Income Security Act of 1974.

____     INVESTMENT ADVISER. The Buyer is an investment adviser registered under
         the Investment Advisers Act of 1940.

____     SBIC. The Buyer is a Small Business Investment Company licensed by the
         U.S. Small Business Administration under Section 301(c) or (d) of the
         Small Business Investment Act of 1958.

____     BUSINESS DEVELOPMENT COMPANY. The Buyer is a business development
         company as defined in Section 202(a)(22) of the Investment Advisers Act
         of 1940.

____     TRUST FUND. The Buyer is a trust fund whose trustee is a bank or trust
         company and whose participants are exclusively (a) plans established
         and maintained by a State, its political subdivisions, or any agency or
         instrumentality of the State or its political subdivisions, for the
         benefit of its employees, or (b) employee benefit plans within the
         meaning of Title I of the Employee Retirement Income Security Act of
         1974, but is not a trust fund that includes as participants individual
         retirement accounts or H.R. 10 plans.

         3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) bank deposit notes and certificates of deposit, (iv) loan participations,
(v) repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.

         4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934.

         5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

___      ___               Will the Buyer be purchasing the Rule 144A
Yes      No                Securities only for the Buyer's own account?

         6. If the answer to the foregoing question is "no", the Buyer agrees
that, in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer will only purchase for the account of a third party that at the
time is a "qualified institutional buyer" within the meaning of Rule 144A. In
addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.

         7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.

                                      G-3-5
<PAGE>

                               ________________________________________
                               Print Name of Buyer

                               By:_____________________________________
                               Name:
                               Title:

                               Date:___________________________________

                                     G-3-6
<PAGE>

                             ANNEX 2 TO EXHIBIT G-3
                             ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

              [For Buyers That Are Registered Investment Companies]

                  The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this Certification is attached:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.

                  2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used.

____              The Buyer owned $_______________ in securities (other than the
                  excluded securities referred to below) as of the end of the
                  Buyer's most recent fiscal year (such amount being calculated
                  in accordance with Rule 144A).

____              The Buyer is part of a Family of Investment Companies which
                  owned in the aggregate $____________ in securities (other than
                  the excluded securities referred to below) as of the end of
                  the Buyer's most recent fiscal year (such amount being
                  calculated in accordance with Rule 144A).

                  3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).

                  4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.

                  5. The Buyer is familiar with Rule 144A and understands that
each of the parties to which this certification is made are relying and will
continue to rely on the statements made herein because one or more sales to the
Buyer will be in reliance on Rule 144A. In addition, the Buyer will only
purchase for the Buyer's own account.

                  6. The undersigned will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

                                      G-3-7
<PAGE>

                                          _____________________________________
                                          Print Name of Buyer

                                          By:__________________________________
                                          Name:
                                          Title:

                                          IF AN ADVISER:

                                          _____________________________________
                                          Print Name of Buyer

                                          Date:________________________________

                                     G-3-8
<PAGE>

                                   EXHIBIT G-4
                         FORM OF TRANSFEROR CERTIFICATE

                              ______________, 200__

Homestar Mortgage Acceptance Corp.
W. 115 Century Road
Paramus, New Jersey 07652

HSBC Bank USA, National Association
452 Fifth Avenue
New York, New York 10018

Attention: Homestar Mortgage Acceptance Corp. Series 2004-5

                  Re:      Homestar Mortgage Acceptance Corp.
                           Asset-Backed Pass-Through Certificates
                           Series 2004-5, Class R
                           ----------------------

Ladies and Gentlemen:

                  This letter is delivered to you in connection with the sale by
________________________ (the "Seller") to
__________________________________________ (the "Purchaser") of a ____%
Percentage Interest in the Asset-Backed Pass-Through Certificates, Series
2004-5, Class R Certificates (the "Certificates"), issued pursuant to Section
5.02 of the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of October 1, 2004, among Homestar Mortgage Acceptance
Corp., as company (the "Company"), Wells Fargo Bank, National Association, as
master servicer (in such capacity, the "Master Servicer") and as securities
administrator (in such capacity, the "Securities Administrator") and HSBC Bank
USA, National Association, as trustee (the "Trustee"). All terms used herein and
not otherwise defined shall have the meaning set forth in the Pooling and
Servicing Agreement. The Seller hereby certifies, represents and warrants to,
and covenants with, the Company and the Trustee that:

                  1. No purpose of the Seller relating to the sale of the
Certificates by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.

                  2. The Seller understands that the Purchaser has delivered to
the Trustee and the Master Servicer a transfer affidavit and agreement in the
form attached to the Pooling and Servicing Agreement as Exhibit E-5. The Seller
does not know or believe that any representation contained therein is false.

                  3. The Seller has at the time of the transfer conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Seller has determined that the Purchaser has
historically paid its debts as they have become due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Seller understands that the transfer of the
Certificates may not be respected for United States income tax purposes (and the
Seller may continue to be liable for United States income taxes associated
therewith) unless the Seller has conducted such an investigation.

                  4. The Seller has no actual knowledge that the proposed
Transferee is a Disqualified Organization, an agent of a Disqualified
Organization or a Non-United States Person.

                                Very truly yours,

                                __________________________________________
                                (Seller)

                                By:_______________________________________
                                Name:_____________________________________
                                Title:____________________________________

                                     G-4-1
<PAGE>

                                   EXHIBIT G-5
                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF          )
                  :ss.:
COUNTY OF         )

         ___________________, being first duly sworn, deposes, represents and
warrants:

         1. That he/she is [Title of Officer] of [Name of Owner], a [savings
institution] [corporation] duly organized and existing under the laws of [the
State of __________] [the United States], (the "Owner"), (record or beneficial
owner of the Class R Certificates (the "Class R Certificates") on behalf of
which he/she makes this affidavit and agreement). This Class R Certificates were
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") dated as of October 1, 2004 among Homestar Mortgage
Acceptance Corp., as company, Wells Fargo Bank, National Association, as master
servicer (in such capacity, the "Master Servicer") and as securities
administrator (in such capacity, the "Securities Administrator"), and HSBC Bank
USA, National Association, as trustee (the "Trustee").

         2. That the Owner (i) is not and will not be a "disqualified
organization" as of _____________ [date of transfer] within the meaning of
Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) will endeavor to remain other than a disqualified organization for
so long as it retains its ownership interest in the Class R Certificates, and
(iii) is acquiring the Class R Certificates for its own account or for the
account of another Owner from which it has received an affidavit and agreement
in substantially the same form as this affidavit and agreement. (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for Freddie Mac, a majority of whose board of
directors is not selected by any such governmental entity) or any foreign
government, international organization or any agency or instrumentality of such
foreign government or organization, any rural electric or telephone cooperative,
or any organization (other than certain farmers' cooperatives) that is generally
exempt from federal income tax unless such organization is subject to the tax on
unrelated business taxable income).

         3. That the Owner is aware (i) of the tax that would be imposed on
transfers of Class R Certificates to disqualified organizations under the Code,
that applies to all transfers of Class R Certificates after March 31, 1988; (ii)
that such tax would be on the transferor, or, if such transfer is through an
agent (which person includes a broker, nominee or middleman) for a disqualified
organization, on the agent; (iii) that the person otherwise liable for the tax
shall be relieved of liability for the tax if the transferee furnishes to such
person an affidavit that the transferee is not a disqualified organization and,
at the time of transfer, such person does not have actual knowledge that the
affidavit is false; and (iv) that the Class R Certificates may be "noneconomic
residual interests" within the meaning of Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest
will remain liable for any taxes due with respect to the income on such residual
interest, unless no significant purpose of the transfer was to impede the
assessment or collection of tax.

         4. That the Owner is aware of the tax imposed on a "pass-through
entity" holding Class R Certificates if at any time during the taxable year of
the pass-through entity a disqualified organization is the record holder of an
interest in such entity. (For this purpose, a "pass through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)

         5. That the Owner is aware that the Trustee will not register the
transfer of any Class R Certificates unless the transferee, or the transferee's
agent, delivers to it an affidavit and agreement, among other things, in
substantially the same form as this affidavit and agreement. The Owner expressly
agrees that it will not consummate any such transfer if it knows or believes
that any of the representations contained in such affidavit and agreement are
false.

                                     G-5-1
<PAGE>

         6. That the Owner has reviewed the restrictions set forth on the face
of the Class R Certificates and the provisions of Section 5.02(f) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clause (iii)(A) and (iii)(B) of Section 5.02(f) which authorize the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event the Owner holds such Certificates in
violation of Section 5.02(f)). The Owner expressly agrees to be bound by and to
comply with such restrictions and provisions.

         7. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.

         8. The Owner's Taxpayer Identification Number is _____________________.

         9. This affidavit and agreement relates only to the Class R
Certificates held by the owner and not to any other holder of the Class R
Certificates. The Owner understands that the liabilities described herein relate
only to the Class R Certificates.

         10. That no purpose of the Owner relating to the transfer of any of the
Class R Certificates by the Owner is or will be to impede the assessment or
collection of any tax.

         11. That the Owner has no present knowledge or expectation that it will
be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding. In this regard, the Owner hereby represents to
and for the benefit of the person from whom it acquired the Class R Certificate
that the Owner intends to pay taxes associated with holding such Class R
Certificate as they become due, fully understanding that it may incur tax
liabilities in excess of any cash flows generated by the Class R Certificate.

         12. That the Owner has no present knowledge or expectation that it will
become insolvent or subject to a bankruptcy proceeding for so long as any of the
Class R Certificates remain outstanding.

         13. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, provided that
with respect to any partnership or other entity treated as a partnership for
United States federal income tax purposes, 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 or trust whose
income from sources without the United States is includible in gross income for
United States federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States.

         14. (a) The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
other retirement arrangement, including individual retirement accounts and
annuities, Keogh plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to ERISA or Section 4975 of the
Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a "Plan"),
(ii) are not being acquired with "plan assets" of a Plan within the meaning of
the Department of Labor ("DOL") regulation, 29 C.F.R. ss. 2510.3-101 or
otherwise under ERISA, and (iii) will not be transferred to any entity that is
deemed to be investing in plan assets within the meaning of the DOL regulation,
29 C.F.R. ss. 2510.3-101 or otherwise under ERISA; or

                  (b) The Owner will provide the Trustee with an opinion of
counsel, as specified in Section 5.02(c) of the Pooling and Servicing Agreement,
acceptable to and in form and substance satisfactory to the Trustee to the
effect that the purchase of Certificates is permissible under applicable law,
will not constitute or result in any non-exempt prohibited transaction under
ERISA or Section 4975 of the Code and will not subject the Trustee, the Company,
the Securities Administrator or the Master Servicer to any obligation or
liability (including obligations or

                                     G-5-2
<PAGE>

liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in the Pooling and Servicing Agreement.

         In addition, the Owner hereby certifies, represents and warrants to,
and covenants with, the Company, the Trustee, the Securities Administrator and
the Master Servicer that the Owner will not transfer such Certificates to any
Plan or person unless either such Plan or person meets the requirements set
forth in either (a) or (b) above.

         Capitalized terms used but not defined herein shall have the meanings
assigned in the Pooling and Servicing Agreement.

                                     G-5-3
<PAGE>

         IN WITNESS WHEREOF, the Owner has caused this instrument to be executed
on its behalf, by its [Title of Officer] and its corporate seal to be hereunto
attached, attested by its [Assistant] Secretary, this ______ day of
_____________, _____.

                                             [NAME OF OWNER]

                                             By:_______________________________
                                             [Name of Officer]
                                             [Title of Officer]

[Corporate Seal]

ATTEST:

____________________________________
[Assistant] Secretary

         Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Owner, and acknowledged to me that such
person executed the same as such person's free act and deed and the free act and
deed of the Owner.

         Subscribed and sworn before me this ____ day of ___________, 200__.

                              __________________________________
                                       NOTARY PUBLIC

                              COUNTY OF_________________________
                              STATE OF___________________________
                              My Commission expires the ____ day of __________,
                              200__.

                                     G-5-4
<PAGE>

                                    EXHIBIT H
                             MORTGAGE LOAN SCHEDULE
                                (Filed Manually)

(In accordance with Rule 202 of Regulation S-T, this Mortgage Loan Schedule, is
being filed in paper pursuant to a continuing hardship exemption.)

                                       H-1
<PAGE>

                                    EXHIBIT I
                                   [RESERVED]

                                       I-1
<PAGE>

                                    EXHIBIT J
                                   [RESERVED]

                                       J-1
<PAGE>

                                    EXHIBIT K
                          FORM OF ASSIGNMENT AGREEMENT

         This Assignment, Assumption and Recognition Agreement (the "AAR
Agreement") is made and entered into as of October ____, 2004 (the "Closing
Date"), among Homestar Mortgage Acceptance Corp. (the "Assignor"), HSBC Bank
USA, National Association as trustee for the holders of Homestar Mortgage
Acceptance Corp., Asset-Backed Pass-Through Certificates, Series 2004-5 (the
"Assignee") and Home Star Mortgage Services, LLC (the "Company").

         Whereas, Wells Fargo Bank, N.A. (the "Master Servicer") and the Company
entered into that certain Servicing Agreement, dated as of March 5, 2004 (the
"Cenlar Servicing Agreement"), pursuant to which the Company agreed to service
certain mortgage loans (the "Cenlar Mortgage Loans") for the benefit of the
Assignee; and

         Whereas, the Assignor and the Company entered into that certain
Servicing Agreement, dated as of March 5, 2004 (the "Option One Servicing
Agreement", together with the Cenlar Servicing Agreement, the "Servicing
Agreements"), pursuant to which the Company agreed to service certain other
mortgage loans (the "Option One Mortgage Loans", together with the Cenlar
Mortgage Loans, the "Mortgage Loans") on behalf of the Assignor.

         In consideration of the mutual promises and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that the
Mortgage Loans listed on Attachment 1 annexed hereto (the "Assigned Loans")
shall be subject to the terms of this AAR Agreement. Any capitalized term used
and not otherwise defined herein shall have the meaning assigned to such term in
the Servicing Agreements or the Pooling and Servicing Agreement (as defined
below).

Assignment and Assumption
-------------------------

         1. Except as expressly provided for herein, the Assignor hereby grants,
transfers and assigns to the Assignee all of its right, title and interest as
in, to and under the Assigned Loans, and as they relate to the Assigned Loans,
the Servicing Agreements. Notwithstanding anything to the contrary contained
herein, the Assignor is not assigning to the Assignee any of its right, title
and interest, to and under the Servicing Agreements with respect to any other
mortgage loan other than the Assigned Loans. Except as is otherwise expressly
provided herein, the Assignor makes no representations, warranties or covenants
to the Assignee and the Assignee acknowledges that the Assignor has no
obligations to the Assignee under the terms of the Servicing Agreements or
otherwise relating to the transaction contemplated herein (including, but not
limited to, any obligation to indemnify the Assignee).

                  Assignor acknowledges and agrees that upon execution of this
Agreement, with respect to the Assigned Loans, all representations, warranties
and covenants by the Company under the Servicing Agreements shall accrue to
Assignee by virtue of this Agreement.

Representations, Warranties and Covenants
-----------------------------------------

                  2. Assignor warrants and represents to, and covenants with,
         Assignee and Company as of the date hereof that:

         a. Attached hereto as Attachment 2 are true and correct copies of the
         Servicing Agreements, which Servicing Agreements are in full force and
         effect as of the date hereof and the provisions of which have not been
         waived, amended or modified in any respect, nor has any notice of
         termination been given thereunder;

         b. Assignor was the lawful owner of the Assigned Loans with full right
         to transfer the Assigned Loans and any and all of its interests, rights
         and obligations under the Servicing Agreements they relate to the
         Assigned Loans, free and clear from any and all claims and
         encumbrances; and upon the transfer of the Assigned Loans to Assignee
         as contemplated herein, Assignee shall have good title to each and
         every

                                       K-1
<PAGE>

         Assigned Loan, as well as any and all of Assignee's interests, rights
         and obligations under the Servicing Agreements as they relate to the
         Assigned Loans, free and clear of any and all liens, claims and
         encumbrances;

         c. There are no offsets, counterclaims or other defenses available to
         the Company with respect to the Servicing Agreements;

         d. Assignor has no knowledge of, and has not received notice of, any
         waivers under, or any modification of, any Assigned Loan;

         e. Assignor is duly organized, validly existing and in good standing
         under the laws of the jurisdiction of its incorporation, and has all
         requisite power and authority to acquire, own and sell the Assigned
         Loans;

         f. Assignor has full corporate power and authority to execute, deliver
         and perform its obligations under this AAR Agreement, and to consummate
         the transactions set forth herein. The consummation of the transactions
         contemplated by this AAR Agreement is in the ordinary course of
         Assignor's business and will not conflict with, or result in a breach
         of, any of the terms, conditions or provisions of Assignor's charter or
         by-laws or any legal restriction, or any material agreement or
         instrument to which Assignor is now a party or by which it is bound, or
         result in the violation of any law, rule, regulation, order, judgment
         or decree to which Assignor or its property is subject. The execution,
         delivery and performance by Assignor of this AAR Agreement and the
         consummation by it of the transactions contemplated hereby, have been
         duly authorized by all necessary corporate action on part of Assignor.
         This AAR Agreement has been duly executed and delivered by Assignor
         and, upon the due authorization, execution and delivery by Assignee and
         the parties hereto, will constitute the valid and legally binding
         obligation of Assignor enforceable against Assignor in accordance with
         its terms except as enforceability may be limited by bankruptcy,
         reorganization, insolvency, moratorium or other similar laws now or
         hereafter in effect relating to creditors' rights generally, and by
         general principles of equity regardless of whether enforceability is
         considered in a proceeding in equity or at law;

         g. No consent, approval, order or authorization of, or declaration,
         filing or registration with, any governmental entity is required to be
         obtained or made by Assignor in connection with the execution, delivery
         or performance by Assignor of this AAR Agreement, or the consummation
         by it of the transactions contemplated hereby. Neither Assignor nor
         anyone acting on its behalf has offered, transferred, pledged, sold or
         otherwise disposed of the Assigned Loans or any interest in the
         Assigned Loans, or solicited any offer to buy or accept a transfer,
         pledge or other disposition of the Assigned Loans, or any interest in
         the Assigned Loans or otherwise approached or negotiated with respect
         to the Assigned Loans, or any interest in the Assigned Loans with any
         Person in any manner, or made any general solicitation by means of
         general advertising or in any other manner, or taken any other action
         which would constitute a distribution of the Assigned Loans under the
         Securities Act of 1933, as amended (the "1933 Act") or which would
         render the disposition of the Assigned Loans a violation of Section 5
         of the 1933 Act or require registration pursuant thereto; and

         h. There is no action, suit, proceeding, investigation or litigation
         pending or, to Assignor's knowledge, threatened, which either in any
         instance or in the aggregate, if determined adversely to Assignor,
         would adversely affect Assignor's execution or delivery of, or the
         enforceability of, this AAR Agreement, or the Assignor's ability to
         perform its obligations under this AAR Agreement.

         3. The Assignee warrants and represents to, and covenants with, the
Assignor and the Company as of the date hereof that:

         a. Assignee is duly organized, validly existing and in good standing
         under the laws of the jurisdiction of its organization and has all
         requisite power and authority to hold the Assigned Loans as trustee on
         behalf

                                       K-2
<PAGE>

         of the holders of Homestar Mortgage Acceptance Corp., Asset-Backed
         Pass-Through Certificates, Series 2004-5;

         b. Assignee has full power and authority to execute, deliver and
         perform its obligations under this AAR Agreement, and to consummate the
         transactions set forth herein. The consummation of the transactions
         contemplated by this AAR Agreement is in the ordinary course of
         Assignee's business and will not conflict with, or result in a breach
         of, any of the terms, conditions or provisions of Assignee's charter or
         by-laws or any legal restriction, or any material agreement or
         instrument to which Assignee is now a party or by which it is bound, or
         result in the violation of any law, rule, regulation, order, judgment
         or decree to which Assignee or its property is subject. The execution,
         delivery and performance by Assignee of this AAR Agreement and the
         consummation by it of the transactions contemplated hereby, have been
         duly authorized by all necessary corporate action on part of Assignee.
         This AAR Agreement has been duly executed and delivered by Assignee
         and, upon the due authorization, execution and delivery by Assignor and
         the parties hereto, will constitute the valid and legally binding
         obligation of Assignee enforceable against Assignee in accordance with
         its terms except as enforceability may be limited by bankruptcy,
         reorganization, insolvency, moratorium or other similar laws now or
         hereafter in effect relating to creditors' rights generally, and by
         general principles of equity regardless of whether enforceability is
         considered in a proceeding in equity or at law;

         c. No consent, approval, order or authorization of, or declaration,
         filing or registration with, any governmental entity is required to be
         obtained or made by Assignee in connection with the execution, delivery
         or performance by Assignee of this AAR Agreement, or the consummation
         by it of the transactions contemplated hereby;

         d. There is no action, suit, proceeding, investigation or litigation
         pending or, to Assignee's knowledge, threatened, which either in any
         instance or in the aggregate, if determined adversely to Assignee,
         would adversely affect Assignee's execution or delivery of, or the
         enforceability of, this AAR Agreement, or the Assignee's ability to
         perform its obligations under this AAR Agreement; and

         e. Assignee assumes for the benefit of each of Assignor and Company all
         of Assignor's rights under the Servicing Agreements but solely with
         respect to the Assigned Loans.

         4. Company warrants and represents to, and covenants with, Assignee and
Assignor, as of the date hereof, that:

         a. Attached hereto as Attachment 2 are true and accurate copies of the
         Servicing Agreements, which agreements are in full force and effect as
         of the date hereof and the provisions of which have not been waived,
         amended or modified in any respect, nor has any notice of termination
         been given thereunder;

         b. Company is duly organized, validly existing and in good standing
         under the laws of the jurisdiction of its formation, and has all
         requisite power and authority to service the Assigned Loans and
         otherwise to perform its obligations under the Servicing Agreements;

         c. Company has full power and authority to execute, deliver and perform
         its obligations under this AAR Agreement, and to consummate the
         transactions set forth herein. The consummation of the transactions
         contemplated by this AAR Agreement is in the ordinary course of
         Company's business and will not conflict with, or result in a breach
         of, any of the terms, conditions or provisions of Company's charter or
         by-laws or any legal restriction, or any material agreement or
         instrument to which Company is now a party or by which it is bound, or
         result in the violation of any law, rule, regulation, order, judgment
         or decree to which Company or its property is subject. The execution,
         delivery and performance by Company of this AAR Agreement and the
         consummation by it of the transactions contemplated hereby, have been
         duly authorized by all necessary corporate action on part of Company.
         This AAR Agreement has been duly executed and delivered by Company,
         and, upon the due authorization, execution and delivery by Assignor

                                       K-3
<PAGE>

         and Assignee, will constitute the valid and legally binding obligation
         of Company, enforceable against Company in accordance with its terms
         except as enforceability may be limited by bankruptcy, reorganization,
         insolvency, moratorium or other similar laws now or hereafter in effect
         relating to creditors' rights generally, and by general principles of
         equity regardless of whether enforceability is considered in a
         proceeding in equity or at law;

         d. No consent, approval, order or authorization of, or declaration,
         filing or registration with, any governmental entity is required to be
         obtained or made by Company in connection with the execution, delivery
         or performance by Company of this AAR Agreement, or the consummation by
         it of the transactions contemplated hereby;

         e. Company shall establish a Custodial Account and an Escrow Account
         under the Servicing Agreements in favor of Assignee with respect to the
         Assigned Loans separate from the Custodial Account and Escrow Account
         previously established under the Servicing Agreements in favor of
         Assignor;

         f. Pursuant to Section 6.01 of the Cenlar Servicing Agreement, the
         Company hereby restates the representations and warranties set forth in
         Section 6.01 of the Cenlar Servicing Agreement with respect to the
         Company; and

         g. Neither this AAR Agreement nor any certification, statement, report
         or other agreement, document or instrument furnished or to be furnished
         by the Company pursuant to this AAR Agreement contains or will contain
         any materially untrue statement of fact or omits or will omit to state
         a fact necessary to make the statements contained therein not
         misleading.

         5. Assignor hereby agrees to indemnify and hold the Assignee (and its
successors and assigns) harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that Assignee (and its successors and assigns) may
sustain in any way related to any breach of the representations or warranties of
Assignor set forth in this AAR Agreement or the breach of any covenant or
condition contained herein.

Recognition of Assignee
-----------------------

         6. From and after the date hereof, Company shall recognize Assignee as
owner of the Assigned Loans, and acknowledges that the Assigned Loans will be
part of a REMIC, and will service the Assigned Loans in accordance with the
Servicing Agreements but in no event in a manner that would (i) cause any REMIC
to fail to qualify as a REMIC or (ii) result in the imposition of a tax upon any
REMIC (including but not limited to the tax on prohibited transactions as
defined in Section 860F(a)(2) of the Code and the tax on contributions to a
REMIC set forth in Section 860G(d) of the Code). It is the intention of
Assignor, Company and Assignee that this AAR Agreement shall be binding upon and
for the benefit of the respective successors and assigns of the parties hereto.
Neither Company nor Assignor shall amend or agree to amend, modify, waiver, or
otherwise alter any of the terms or provisions of the Servicing Agreements which
amendment, modification, waiver or other alteration would in any way affect the
Assigned Loans without the prior written consent of Assignee and the NIMs
Insurer.

         7. Modification of Servicing Agreements:

         The Company and Assignor hereby amend the Option One Servicing
Agreement as follows:

         a. The definition of "Custodial Account" shall be deleted and replaced
with the following definition:

Custodial Account: The separate demand account or accounts created and
maintained pursuant to Section 4.04 which shall be entitled "Home Star Mortgage
Services, LLC Custodial Account in trust for HSBC Bank USA, National
Association, as trustee for the holders of Homestar Mortgage Acceptance Corp.,
Asset-Backed Pass-Through Certificates, Series 2004-5" and shall be established
at a Qualified Depository.

                                       K-4
<PAGE>

         b. The definition of "Custodial Agreement" shall be amended by deleting
         the date "March 1, 2004" and replacing it with the date "[________]".

         c. The definition of "Effective Date" shall be amended by deleting the
         date "March 5, 2004" and replacing it with the date "[________]".

         d. The definition of "Escrow Account" shall be deleted and replaced
         with the following definition:

Escrow Account: The separate trust account or accounts created and maintained
pursuant to Section 4.06 which shall be entitled "Home Star Mortgage Services,
LLC Escrow Account in trust for HSBC Bank USA, National Association, as trustee
for the holders of Homestar Mortgage Acceptance Corp., Asset-Backed Pass-Through
Certificates, Series 2004-5" and shall be established at a Qualified Depository.

         e. The definition of "Mortgage Loan Schedule" shall be deleted and
replaced with the following definition:

Mortgage Loan Schedule: The schedule of Mortgage Loans attached as Attachment 1
to the Assignment, Assumption and Recognition Agreement, dated as of October 1,
2004, among Homestar Mortgage Acceptance Corp., HSBC Bank USA, National
Association, as trustee for the holders of Homestar Mortgage Acceptance Corp.,
Asset-Backed Pass-Through Certificates, Series 2004-5 and Home Star Mortgage
Services, LLC.

         f. The definition of "Remittance Date" shall be amended by deleting the
         date "April 16, 2004" and replacing it with the date "[_________]".

         g. The following definitions shall be added to Section 1.01 of the
         Option One Servicing Agreement:

                  BALLOON MORTGAGE LOAN: A Mortgage Loan that provides for the
                  payment of the unamortized principal balance of such Mortgage
                  Loan in a single payment at the maturity of such Mortgage Loan
                  that is substantially greater than the preceding monthly
                  payment.

                  BALLOON PAYMENT: A payment of the unamortized principal
                  balance of a Mortgage Loan in a single payment at the maturity
                  of such Mortgage Loan that is substantially greater than the
                  preceding Monthly Payment.

         h. The following sentence shall be added following the first sentence
         in Section 5.03 of the Option One Servicing Agreement:

                  For purposes of the preceding sentence, the Monthly Payment on
                  each Balloon Mortgage Loan with a delinquent Balloon Payment
                  is equal to the assumed monthly payment that would have been
                  due on the related Due Date based on the original principal
                  amortization schedule for the such Balloon Mortgage Loan.

         i. The following sentence shall be added following the first sentence
         in Section 4.03 of the Cenlar Servicing Agreement:

For purposes of the preceding sentence, the Monthly Payment on each Balloon
Securitized Loan with a delinquent Balloon Payment is equal to the assumed
monthly payment that would have been due on the related Due Date based on the
original principal amortization schedule for the such Balloon Securitized Loan.

Miscellaneous
-------------

         8. All demands, notices and communications related to the Assigned
Loans, the Servicing Agreements and this AAR Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, as follows:

                                       K-5
<PAGE>

         a.       In the case of Company,
                  Home Star Mortgage Services, LLC
                  W. 115 Century Road
                  Paramus, New Jersey 07652

         b.       In the case of Assignor,
                  Homestar Mortgage Acceptance Corp.
                  W. 115 Century Road
                  Paramus, New Jersey 07652

         c.       In the case of Assignee,
                  HSBC Bank USA, National Association,
                  as Trustee
                  452 Fifth Avenue
                  New York, New York 10018
                  Attention: HMAC 2004-5
                  Telecopier No.:

         9. The Company hereby acknowledges that Wells Fargo Bank, N.A. (the
"Master Servicer") has been appointed as the master servicer of the Assigned
Loans pursuant to the Pooling and Servicing Agreement, dated as of October 1,
2004, among the Assignor, the Assignee and the Master Servicer, and therefor has
the right to enforce all obligations of the Company, as they relate to the
Assigned Loans, under the Servicing Agreements. Each reference to the Owner in
the Option One Servicing Agreement shall be a reference to the Assignee. Such
right will include, without limitation, the right to terminate the Company under
the Servicing Agreements upon the occurrence of an event of default thereunder,
the right to receive all remittances required to be made by the Company under
the Servicing Agreements, the right to receive all monthly reports and other
data required to be delivered by the Company under the Servicing Agreements, the
right to examine the books and records of the Company, indemnification rights,
and the right to exercise certain rights of consent and approval relating to
actions taken by the Company. The Company shall make all distributions under the
Servicing Agreements, as they relate to the Assigned Loans, to the Master
Servicer by wire transfer of immediately available funds to:

                  HMAC Trust 2004-5
                  Wells Fargo Bank, National Association
                  ABA# 121000248
                  SAS Clearing
                  Account # 3970771416
                  For Further Credit to: HMAC 2004-5, Account # [________]

and the Company shall deliver all reports required to be delivered under the
Servicing Agreements, as they relate to the Assigned Loans, to the Assignee at
the address set forth in Section 8 herein and to the Master Servicer at:

                  Wells Fargo Bank, National Association
                  9062 Old Annapolis Road
                  Columbia, Maryland 21045.
                  Attention: HMAC 2004-5

         10. THIS AAR AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

         11. No term or provision of this AAR Agreement may be waived or
modified unless such waiver or modification is in writing and signed by the
party against whom such waiver or modification is sought to be enforced.

                                       K-6
<PAGE>

         12. This AAR Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or consolidated shall, without the requirement for any
further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.

         13. This AAR Agreement shall survive the conveyance of the Assigned
Loans, the assignment of the Servicing Agreements to the extent of the Assigned
Loans by Assignor to Assignee and the termination of the Servicing Agreements.

         14. This AAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.

         15. In the event that any provision of this AAR Agreement conflicts
with any provision of the Servicing Agreements with respect to the Assigned
Loans, the terms of this AAR Agreement shall control.

         16. The NIMs Insurer shall be a third party beneficiary of this AAR
Agreement and shall be entitled to enforce the provisions hereof as if it were a
party hereto.

                                      K-7
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this AAR Agreement
on the date first above written.

<TABLE>
<CAPTION>

<S>                                                          <C>
HOMESTAR MORTGAGE ACCEPTANCE CORP.,                          HSBC BANK USA, NATIONAL  ASSOCIATION,  as
the Assignor                                                 trustee for the holders of Homestar Mortgage Acceptance
                                                             Corp., Asset-Backed Pass-Through Certificates, Series
                                                             2004-5, the Assignee

By:______________________________________                    By:_____________________________________________

Its:_____________________________________                    Its:____________________________________________

HOME STAR MORTGAGE SERVICES, LLC,
The Company

By:_____________________________________________

Its:____________________________________________

Acknowledged and Agreed:

WELLS FARGO BANK, N.A.

By:_____________________________________________

Its:____________________________________________
</TABLE>

                                      K-8
<PAGE>

                                  Attachment I

                                 Assigned Loans

                                      K-9
<PAGE>

                                  Attachment II

                              Servicing Agreements

                                      K-10
<PAGE>

                                   EXHIBIT L-1
            FORM CERTIFICATION TO BE PROVIDED BY THE MASTER SERVICER
                                 WITH FORM 10-K

                  Re:      Homestar Mortgage Acceptance Corp.,
                           Mortgage Pass-Through Certificates, Series 2004-5

                  I, [Identify the certifying individual], certify that:

                  1. I have reviewed this annual report on Form 10-K, and all
reports on Form 8-K containing distribution or servicing reports filed in
respect of periods included in the year covered by this annual report, of
Homestar Mortgage Acceptance Corp.;

                  2. Based on my knowledge, the information in these reports,
taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading as of
the last day of the period covered by this annual report;

                  3. Based on my knowledge, the distribution or servicing
information required to be provided to the trustee by the servicer under the
pooling and servicing, or similar, agreement, for inclusion in these reports is
included in these reports;

                  4. I am responsible for reviewing the activities performed by
the servicer under the pooling and servicing, or similar, agreement and based
upon my knowledge and the annual compliance review required under that
agreement, and except as disclosed in the reports, the servicer has fulfilled
its obligations under that agreement; and

                  5. The reports disclose all significant deficiencies relating
to the servicer's compliance with the minimum servicing standards based upon the
report provided by an independent public accountant, after conducting a review
in compliance with the Uniform Single Attestation Program for Mortgage Bankers
or similar procedure, as set forth in the pooling and servicing, or similar,
agreement, that is included in these reports.

         In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties: [the Trustee
and Sub-Servicers]

Date: _____________________
___________________________
[Signature]
[Title]
[Company]

                                      L-1-1
<PAGE>

                                   EXHIBIT L-2

                            FORM CERTIFICATION TO BE
                   PROVIDED TO MASTER SERVICER BY THE TRUSTEE

                  Re:      Homestar Mortgage Acceptance Corp.,
                           Mortgage Pass-Through Certificates, Series 2004-5

                  I, [Identify the certifying individual], a [______________] of
HSBC Bank USA, National Association, as Trustee, hereby certify to Wells Fargo
Bank, National Association and its officers, directors and affiliates, and with
the knowledge and intent that they will rely upon this certification, that:

                  1. I have reviewed the annual report on Form 10-K for the
fiscal year [__], and all reports on Form 8-K containing distribution reports
filed in respect of periods included in the year covered by that annual report,
of the Issuer relating to the above-referenced trust;

                  2. Based on my knowledge, the information in these
distribution reports prepared by the Trustee, taken as a whole, does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading as of the last day of the period
covered by that annual report; and

                  3. Based on my knowledge, the distribution information
required to be provided by the Trustee under the Agreement is included in these
distribution reports.

                  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Pooling and Servicing Agreement, dated October
1, 2004 (the "Agreement"), among Homestar Mortgage Acceptance Corp., as Company,
Wells Fargo Bank, National Association, (in such capacity, the "Master
Servicer") and as securities administrator (in such capacity, the "Securities
Administrator"), and HSBC Bank USA, National Association, as Trustee.

                               HSBC Bank USA, National Association, as Trustee

                               By:___________________________________
                               Name:
                               Title:
                               Date:

                                      L-2-1
<PAGE>

                                   EXHIBIT L-3

                            FORM CERTIFICATION TO BE
                   PROVIDED TO MASTER SERVICER BY THE TRUSTEE

         Re:      Homestar Mortgage Acceptance Corp.,
                  Mortgage Pass-Through Certificates, Series 2004-5

         I, [Identify the certifying individual], a [_________________] of HSBC
Bank USA, National Association, as Trustee, hereby certify to Wells Fargo Bank,
National Association and its officers, directors and affiliates, and with the
knowledge and intent that they will rely upon this certification, that:

         1. Based on my knowledge, the distribution information required to be
provided by the Trustee under the Agreement is included in these distribution
reports.

         Capitalized terms used but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement, dated October 1, 2004
(the "Agreement"), among Homestar Mortgage Acceptance Corp., as Company, Wells
Fargo Bank, National Association, (in such capacity, the "Master Servicer") and
as securities administrator (in such capacity, the "Securities Administrator"),
and HSBC Bank USA, National Association, as Trustee.

                              HSBC Bank USA, National Association, as Trustee

                              By:___________________________________
                              Name:
                              Title:
                              Date:

                                      L-3-1
<PAGE>

                                   EXHIBIT M-1
                           CENLAR SERVICING AGREEMENT

                       SERVICING AGREEMENT FOR ALT-A LOANS

         THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the 5th
day of March, 2004, by and among HOME STAR MORTGAGE SERVICES, LLC, a Delaware
corporation ("Home Star"), in its capacity as seller (the "Seller"), Home Star,
in its capacity as servicer (the "Servicer") and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as master servicer (the "Master Servicer"), recites and provides as
follows:

                                    RECITALS

         WHEREAS, Home Star owns and services certain residential Mortgage Loans
(the "Mortgage Loans");

         WHEREAS, CENLAR FSB, a federal savings bank (the "Sub-Servicer")
sub-services certain of the Mortgage Loans for Home Star pursuant to that
certain Sub-Servicing Agreement, dated as of March 1, 2004, by and between Home
Star and the Sub-Servicer, (the "Superseded Sub-Servicing Agreement");

         WHEREAS, Home Star, as Seller, from time to time may convey certain of
the Mortgage Loans, on a servicing-retained basis, to one or more Trusts, as
defined herein, under one or more Trust Agreements, as defined herein, in
connection with a Pass-Through Transfer, as defined herein, with Wells Fargo
Bank, National Association as the Master Servicer;

         WHEREAS, upon the Effective Date, as defined herein, of any such
Pass-Through Transfer, the Mortgage Loans shall become Securitized Loans, as
defined herein;

         WHEREAS, in connection with any such Pass-Through Transfer, the Seller
and the Master Servicer desire that the Servicer service any Securitized Loans
pursuant to this Agreement, and the Servicer has agreed to do so, subject to the
rights of the Seller and the Master Servicer to terminate the rights and
obligations of the Servicer hereunder as provided herein;

         WHEREAS, the Master Servicer shall be obligated under each Trust
Agreement, among other things, to supervise the servicing of the Securitized
Loans subject to the Trust Agreement on behalf of the related Trust, and shall
have the right to terminate the rights and obligations of the Servicer under
this Agreement or under the Agreement relating to specified Securitized Loans
upon the occurrence and continuance of an Event of Default as provided herein;

         WHEREAS, the Seller, the Servicer and the Master Servicer intend that
the NIMs Insurer and each Trustee be a third party beneficiary of this
Agreement;

         WHEREAS, the Seller and the Servicer acknowledge and agree that the
Seller will assign all of its rights and delegate all of its obligations
hereunder with regard to specified Securitized Loans (exclusive of the Seller's
rights and obligations as owner of the servicing rights relating to such
Securitized Loans) to the related Trust or Trustee, and that each reference
herein to the Seller with regard to specified Securitized Loans is intended,
unless otherwise specified, to mean the Seller or such Trust or Trustee, as
assignee of the specified Securitized Loans;

         WHEREAS, this Agreement shall supersede the Superseded Sub-Servicing
Agreement in its entirety with respect to any Securitized Loans;

         WHEREAS, the parties hereto mutually acknowledge and agree that,
pursuant to Section 7.04 of this Agreement, the Sub-Servicer will
contemporaneously herewith enter into a Sub-Servicing Acknowledgment Agreement
(the "Sub-Servicing Agreement") of even date herewith, pursuant to which the
Sub-Servicer will

                                     M-1-1
<PAGE>

sub-service the Securitized Loans on behalf of the Servicer in accordance with
the terms of this Agreement and will have the benefit of certain rights of the
Servicer under this Agreement, other than those under Section 7.04 hereof.

         NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Master Servicer, the Seller and
the Servicer hereby agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS

         The following terms are defined as follows (except as otherwise agreed
in writing by the parties):

         Accepted Servicing Practices: With respect to any Securitized Loan,
those mortgage servicing practices that prudent mortgage lending institutions
would employ in servicing their own portfolio of mortgage loans of the same type
as the Securitized Loans in the jurisdiction where the related Mortgaged
Property is located, giving due consideration to customary and usual standards
of practice of mortgage lenders and loan servicers administering similar
mortgage loans.

         Adjustable Rate Securitized Loan: A Securitized Loan under which the
Mortgage Interest Rate is adjusted from time to time in accordance with the
terms and provisions of the related Mortgage Note.

         Adverse REMIC Event: Taking (or causing to be taken) any action, or
failure to take (or failure to cause to be taken) any action, that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger
the status of such REMIC as a REMIC or (ii) result in the imposition of a tax
upon such REMIC (including but not limited to the tax on prohibited transactions
as defined in Section 860F(a)(2) of the Code and the tax on prohibited
contributions set forth on Section 860G(d) of the Code).

         Advancing Person:  As defined in Section 4.03 hereof.

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

         Ancillary Income: All income derived from the Securitized Loans (other
than the (i) Servicing Fee or (ii) Prepayment Charges or Servicer Prepayment
Charge Payment Amounts attributable to the Securitized Loans), including but not
limited to late charges, penalty interest, any interest paid on funds deposited
in the Custodial Account and Escrow Account (other than interest on escrowed
funds required by law to be paid to the Mortgagor), fees received with respect
to checks or bank drafts returned by the related bank for non-sufficient funds,
assumption fees, modification fees, optional insurance administrative fees and
all other incidental fees and charges.

         Assignment of Mortgage: An assignment of a 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 the
transfer of such Mortgage to the party indicated therein, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Securitized Loans secured by Mortgaged
Properties located in the same jurisdiction, if permitted by law.

         Balloon Securitized Loan: Any Securitized Loan that by its original
terms or by virtue of any modification provides for an amortization schedule
extending beyond its originally scheduled Maturity Date and which has a final
scheduled payment that is proportionately large in comparison to other scheduled
payments.

         Balloon Payment: The final scheduled payment in respect of a Balloon
Securitized Loan.

                                     M-1-2
<PAGE>

         Business Day: Any day other than (i) a Saturday or Sunday or (ii) a day
on which banking and savings and loan institutions in the States of New York,
Maryland, Minnesota and, with respect to any Trust, the jurisdiction in which
the related Trustee conducts its trust business, are authorized or obligated by
law or executive order to be closed.

         Certificates: Any or all of the certificates or other securities issued
pursuant to a Trust Agreement.

         Certificate Registrar: The registrar appointed pursuant to the Trust
Agreement.

         Closing Date: The actual date of closing of any Pass-Through Transfer,
without regard to the Effective Date thereof.

         Code: The Internal Revenue Code of 1986, as it may be amended from time
to time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.

         Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Securitized Loan documents.

         Conventional Loan: A conventional residential first or second lien
fixed or adjustable rate Securitized Loan that is neither FHA insured nor VA
guaranteed.

         Costs: For any Person, any claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses of such Person.

         Credit Risk Manager: With respect to Securitized Loans covered by a
Trust Agreement, any credit risk manager or loss mitigation advisor under such
Trust Agreement.

         Custodial Account: The account created and maintained by the Servicer
pursuant to Section 3.03.

         Custodial Agreement: With respect to Securitized Loans covered by a
Trust Agreement, the custodial agreement relating to custody of such Securitized
Loans between a Custodian and the related Trustee, as acknowledged by the
Servicer, dated as of the related Effective Date.

         Custodian: A custodian of Securitized Loans under any Custodial
Agreement.

         Delinquent: For reporting purposes, a Securitized Loan is "delinquent"
when any payment contractually due thereon has not been made by the close of
business on the Due Date therefor. Such Securitized Loan is "30 days Delinquent"
if such payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
payment was first due, or, if there is not such corresponding day (e.g., as when
a 30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days Delinquent" and the second immediately succeeding month
and "90 days Delinquent" and the third immediately succeeding month.

         Determination Date: With respect to each Remittance Date, the 15th day
of the month in which such Remittance Date occurs, or, if such 15th day is not a
Business Day, the immediately preceding Business Day.

         Depositor: With respect to Securitized Loans covered by a Trust
Agreement , the Person to which the Seller transfers Mortgage Loans, or any
successor in interest to such Person, which Person in turn transfers such
Mortgage Loans to a Trustee in a Pass-Through Transfer.

                                     M-1-3
<PAGE>

         Distressed Securitized Loan: As of any Effective Date, any related
Securitized Loan that was Delinquent in payment for a period of 90 days or more
as of the first calendar day of the month in which such Effective Date occurs,
without giving effect to any grace period permitted by the related Mortgage Note
or for which the Servicer has accepted a deed in lieu of foreclosure. No
Securitized Loan shall be considered delinquent for the purpose of this
definition by virtue of the related Mortgagor having made payment to the prior
servicer.

         Due Date: The day of the calendar month on which the Monthly Payment is
due on a Securitized Loan, exclusive of any days of grace. With respect to the
Securitized Loans for which payment from the Mortgagor is due on a day other
than the first day of the calendar month, such Securitized Loans will be treated
as if the Monthly Payment is due on the first day of the immediately succeeding
month.

         Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month immediately preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.

         Effective Date: The effective date of any Pass-Through Transfer as set
forth in the Transfer Notice.

         Eligible Investments: Any one or more of the obligations and securities
listed below which investment provides for a date of maturity not later than the
Determination Date in each month:

                  (i) direct obligations of, and obligations fully guaranteed as
to timely payment of principal and interest by, the United States of America or
any agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America,
including Federal Housing Administration debentures, but excluding any of such
securities whose terms do not provide for a payment of a fixed dollar amount
upon maturity or call for redemption ("Direct Obligations") and Freddie Mac
senior debt obligations;

                  (ii) federal funds, or demand and time deposits in,
certificates of deposits of, or bankers' acceptances issued by, any depository
institution or trust company (including U.S. subsidiaries of foreign
depositories, a Trustee, the Master Servicer or any agent of a Trustee or the
Master Servicer, acting in its respective commercial capacity) incorporated or
organized under the laws of the United States of America or any state thereof
and subject to supervision and examination by federal or state banking
authorities, so long as at the time of investment or the contractual commitment
providing for such investment the commercial paper or other short term debt
obligations of such depository institution or trust company (or, in the case of
a depository institution or trust company which is the principal subsidiary of a
holding company, the commercial paper or other short term debt or deposit
obligations of such holding company or deposit institution, as the case may be)
have been rated by each related Rating Agency in its highest short-term rating
category or one of its two highest long-term rating categories;

                  (iii) repurchase agreements collateralized by direct
obligations of, or securities guaranteed by, Ginnie Mae or Freddie Mac with any
registered broker/dealer subject to Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer
or bank has an uninsured, unsecured and unguaranteed obligation rated by each
related Rating Agency in its highest short-term rating category;

                  (iv) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of America
or any state thereof which have a credit rating from each related Rating Agency,
at the time of investment or the contractual commitment providing for such
investment, at least equal to one of the two highest long term credit rating
categories of each related Rating Agency; provided, however, that securities
issued by any particular corporation will not be Eligible Investments to the
extent that investment therein will cause the then outstanding principal amount
of securities issued by such corporation and held as part of the Custodial
Account to exceed 20% of the aggregate principal amount of all Eligible
Investments in the Custodial Account; provided, further, that such securities
will not be Eligible Investments if they are published as being under review
with negative implications from any Rating Agency;

                                     M-1-4
<PAGE>

                  (v) commercial paper (including both non-interest-bearing
discount obligations and interest bearing obligations payable on demand or on a
specified date not more than 180 days after the date of issuance thereof) rated
by each related Rating Agency in its highest short-term rating category;

                  (vi) a Qualified GIC (as defined in the Trust Agreement);

                  (vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations are
backed by the full faith and credit of the United States of America) held by a
custodian in safekeeping on behalf of the holders of such receipts; and

                  (viii) any other demand, money market, common trust fund or
time deposit or obligation, or interest bearing or other security or investment,
rated in the highest rating category by each related Rating Agency. Such
investments in this subsection (viii) may include money market mutual funds or
common trust funds, including any fund for which a Trustee, the Master Servicer
or any affiliate thereof serves as an investment advisor, administrator,
shareholder servicing agent, and/or custodian or subcustodian, notwithstanding
that (x) the related Trustee, the Master Servicer or any affiliate thereof
charges and collects fees and expenses from such funds for services rendered,
(y) a Trustee, the Master Servicer or any affiliate thereof charges and collects
fees and expenses for services rendered pursuant to this Agreement or a Trust
Agreement, and (z) services performed for such funds and pursuant to this
Agreement may converge at any time;

provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.

         Errors and Omissions Insurance: Errors and Omissions Insurance to be
maintained by the Servicer in accordance with the Master Servicing Guide.

         Escrow Account: The separate account or accounts created and maintained
pursuant to Section 3.05.

         Escrow Payments: With respect to any Securitized Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.

         Event of Default: Any of the events which may result in a termination
for cause set forth in Section 8.01.

         Fannie Mae: The Federal National Mortgage Association, or any successor
thereto.

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

         FHA: The Federal Housing Administration, an agency within HUD or any
successor thereto and including the Federal Housing Commissioner and the
Secretary of HUD where appropriate under the FHA Regulation.

         Fidelity Bond: A fidelity bond to be maintained by the Servicer in
accordance with the Master Servicing Guide.

         Fixed Rate Securitized Loan: Any Securitized Loan as to which the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of
such Securitized Loan.

                                     M-1-5
<PAGE>

         Final Recovery Determination: With respect to any defaulted Securitized
Loan or any REO Property (other than any Securitized Loan or REO Property
repurchased from the Trust), a determination made by the Servicer that all
Insurance Proceeds, Liquidation Proceeds and other payments or recoveries which
the Servicer, in its reasonable good faith judgment, expect to be finally
recoverable in respect thereof have been so recovered.

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

         Freddie Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.

         Ginnie Mae: The Government National Mortgage Association, or any
successor thereto.

         Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar provided for in the related
Trust Agreement.

         Home Star:  As defined in the first paragraph of this Agreement.

         Homestar Mortgage Securities Trusts: One or more trusts to be formed by
a Trust Agreement as part of a Pass-Through Transfer, pursuant to each of which
a numbered series of Certificates will be issued.

         HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and Ginnie Mae.

         Insurance Proceeds: With respect to each Securitized Loan, proceeds of
insurance policies insuring the Securitized Loan or the related Mortgaged
Property, including, but not limited to, proceeds from any PMI Policy, to the
extent any such proceeds are not to be applied to the restoration and repair of
the related Mortgaged Property or released to the Mortgagor in accordance with
the procedures that the Servicer would follow in servicing mortgage loans for
its own account, subject to the terms and conditions of the related Mortgage
Note and Mortgage.

         Issuer: The issuer of any Certificates pursuant to the Trust Agreement.

         LIBOR: The three-month London InterBank Offered Rate as published in
the Wall Street Journal on the first Business Day of the month of any Remittance
Date.

         Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Securitized Loan, whether through the sale or assignment of such
Securitized Loan, trustee's sale, foreclosure sale or otherwise, or the sale of
the related REO Property, if the Mortgaged Property is acquired in satisfaction
of the Securitized Loan.

         Master Servicer: With respect to each Trust Agreement, Wells Fargo
Bank, National Association, or any successor in interest, or if any successor
Master Servicer shall be appointed as provided in such Trust Agreement, then
such successor Master Servicer.

         Master Servicing Guide: The Wells Fargo Bank, N.A. Master Servicing
Guide, original dated January, 1997, as amended July, 2001, and all amendments
or additions thereto, including as amended hereby.

         MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.

         MERS Eligible Securitized Loan: Any Securitized Loan that has been
designated by the Servicer as recordable in the name of MERS, as nominee.

         MERS Securitized Loan: Any Securitized Loan as to which the related
Mortgage, or an Assignment of Mortgage, has been or will be recorded in the name
of MERS, as nominee for the holder from time to time of the related Mortgage
Note.

                                     M-1-6
<PAGE>

         Monthly Advance: With respect to each Remittance Date and each
Securitized Loan, an amount equal to the Monthly Payment (with the interest
portion of such Monthly Payment adjusted to the Securitized Loan Remittance
Rate) that was due on the Securitized Loan, and that was Delinquent at the close
of business on the first day of the month in which such Remittance Date occurs,
but only to the extent that such amount is expected, in the reasonable judgment
of the Servicer, to be recoverable from collections or other recoveries
(including Liquidation Proceeds and Insurance Proceeds) in respect of such
Securitized Loan. To the extent that the Servicer determines that any such
amount is not recoverable from collections or other recoveries in respect of
such Securitized Loan, such determination shall be evidenced by a certificate of
a Servicing Officer delivered to the Master Servicer setting forth such
determination and the procedures and considerations of the Servicer forming the
basis of such determination.

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

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

         Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first or second lien on a fee simple estate in
real property securing the Mortgage Note.

         Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note net of any Relief Act Reduction.

         Mortgage Note: The original, executed note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.

         Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.

         Mortgagor:  The obligor on a Mortgage Note.

         Net Sale Proceeds: The proceeds from the sale of REO Property, net of
all expenses and advances incurred by the Servicer in connection with such sale,
including, without limitation, legal fees and expenses, referral fees, brokerage
commissions, conveyance taxes and any other related expense.

         Non-MERS Eligible Securitized Loan: Any Securitized Loan other than a
MERS Eligible Securitized Loan.

         Non-MERS Securitized Loan: Any Securitized Loan other than a MERS
Securitized Loan.

         Officer's Certificate: A certificate signed by the Chairman of the
Board, the President or a vice president (however denominated), and by the
Treasurer, the Secretary, or one of the assistant treasurers or assistant
secretaries of the Servicer, the Master Servicer or the Seller, as applicable.

         Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Servicer, reasonably acceptable to the related Trustee, the
Master Servicer, and the Seller, provided that any Opinion of Counsel relating
to qualification of the Securitized Loans in a REMIC or compliance with the
REMIC Provisions must be an opinion of counsel acceptable to the related
Trustee, the Master Servicer, and the Seller, who (i) is in fact independent of
the Seller and the Servicer, (ii) does not have any material direct or indirect
financial interest in either the Seller or the Servicer or any affiliate of any
such entity and (iii) is not connected with either the Seller or the Servicer as
an officer, employee, director or person performing similar functions.

                                     M-1-7
<PAGE>

         Pass-Through Transfer: The sale or transfer by Home Star of some or all
of the Securitized Loans to a Depositor for transfer to a Trust to be formed as
part of a publicly-issued and/or privately placed, rated or unrated, mortgage
pass-through transaction or similar transaction, in each case in which Home Star
is retained as a Servicer thereunder, with Wells Fargo Bank, National
Association as the Master Servicer.

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

         PMI Insurer: Any Qualified Insurer issuing a PMI Policy with respect to
a Securitized Loan.

         PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement and the Trust Agreement with
respect to certain Securitized Loans.

         Prepayment Charge: With respect to any Securitized Loan and Remittance
Date, the charges or premiums, as specified in the Prepayment Charge Schedule,
if any, due in connection with a full or partial prepayment of such Securitized
Loan during the immediately preceding Prepayment Period in accordance with the
terms thereof (but excluding any Servicer Prepayment Charge Payment Amount).

         Prepayment Charge Schedule: A data field in the schedule of Securitized
Loans to be attached to the Transfer Notice, the form of which is attached
hereto as Exhibit A, which sets forth the amount of the Prepayment Charge and
the term during which the Prepayment Charge is imposed with respect to a
Securitized Loan.

         Prepayment Interest Shortfall Amount: With respect to any Securitized
Loan that was subject to a Principal Prepayment in full or in part during any
Due Period, which Principal Prepayment was applied to such Securitized Loan
prior to such Securitized Loan's Due Date in such Due Period, the amount of
interest that would have accrued on the amount of such Principal Prepayment
during the period commencing on the date as of which such Principal Prepayment
was applied to such Securitized Loan and ending on the day immediately preceding
such Due Date, inclusive.

         Prepayment Period: With respect to each Remittance Date and any full or
partial Principal Prepayments, the calendar month immediately preceding the
month in which the related Remittance Date occurs.

         Principal Prepayment: Any payment by a Mortgagor of principal (other
than a Balloon Payment) or other recovery of principal on a Securitized Loan
that is recognized as having been received or recovered in advance of its
scheduled Due Date and applied to reduce the principal balance of the
Securitized Loan in accordance with the terms of the Mortgage Note.

         Qualified Depository: With respect to each Pass-Through Transfer, any
of (i) a depository the accounts of which are insured by the FDIC (to the limits
established by such corporation) and the debt obligations of which are rated P-1
(or its equivalent) or better by each Rating Agency rating the related
Certificates; or (ii) the corporate trust department of any bank the debt
obligations of which are rated A-2 (or its equivalent) or better by each such
Rating Agency.

         Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by Freddie Mac and Fannie Mae.

         Qualifying Substitute Mortgage Loan: A mortgage loan permitted under
the terms of a Trust Agreement to be substituted for a related Securitized Loan.

         Rating Agency: With respect to Certificates issued by or in connection
with a Trust, any of Fitch, Moody's or S&P which assigns a rating to such
Certificates, and their successors. If such agencies or their successors are no
longer in existence, "Rating Agencies" shall be such nationally recognized
statistical rating agencies, or other

                                     M-1-8
<PAGE>

comparable Person, designated by the Seller, written notice of which designation
shall be given to the related Trustee, the Master Servicer and the Servicer.

         Relief Act Reduction: With respect to any Securitized Loan as to which
there has been a reduction in the amount of the interest collectible thereon as
a result of the application of the Servicemembers Civil Relief Act, any amount
by which interest collectible on such Securitized Loan for the Due Date in the
related Due Period is less than the interest accrued thereon for the applicable
one-month period at the Mortgage Interest Rate without giving effect to such
reduction.

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

         Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately preceding Business Day) of any calendar
month.

         REO Disposition: The final sale or other disposition by the Servicer of
any REO Property.

         REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 3.12.

         REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Trust through foreclosure or by deed in lieu of foreclosure pursuant to
Section 3.12 hereof.

         Residual Certificate: Any residual certificate or "Class R" Certificate
issued under any Trust Agreement.

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

         Securitized Loan: An individual Mortgage Loan that from time to time
becomes subject to this Agreement pursuant to a Pass-Through Transfer, each
Securitized Loan subject to this Agreement being identified on a schedule to the
Transfer Notice, the form of which is attached as Exhibit A hereto, which
Securitized Loan includes without limitation the Securitized Loan documents, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Securitized Loan.

         Securitized Loan Remittance Rate: With respect to each Securitized
Loan, the annual rate of interest remitted to the Master Servicer, which shall
be equal to the Mortgage Interest Rate minus the Servicing Fee Rate.

         Securitized Loan Schedule: The schedule of Securitized Loans to be
attached to the Transfer Notice, a form of which is attached hereto as Exhibit
A, setting forth information with respect to such Securitized Loans as agreed to
by the Seller, the Servicer and the Master Servicer, including, but not limited
to (i) any MERS identification number (if available) with respect to each MERS
Securitized Loan or MERS Eligible Securitized Loan, (ii) a data field indicating
whether such Securitized Loan is insured under a PMI Policy and identifying the
related Qualified Insurer, (iii) a Prepayment Charge Schedule and (iv) the
Servicing Fee Rate.

         Servicer: Home Star or its successor in interest or assigns or any
successor to the Servicer under this Agreement as herein provided.

         Servicer Prepayment Charge Payment Amount: The amount payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.15
hereof.

         Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (including reasonable
attorneys' fees and disbursements) incurred in the performance by the

                                     M-1-9
<PAGE>

Servicer of its servicing obligations, including, but not limited to, the cost
of (a) the preservation, inspection, restoration and protection of the Mortgaged
Property, (b) any enforcement of administrative or judicial proceedings,
including foreclosures, (c) the management and liquidation of the Mortgaged
Property (including costs incurred in connection with environmental inspections
or other related costs of foreclosure of Mortgaged Property potentially
contaminated by hazardous or toxic substance or wastes in accordance with
Section 3.12 hereof) if the Mortgaged Property is acquired in satisfaction of
the Mortgage, (d) taxes, assessments, water rates, sewer rents and other charges
which are or may become a lien upon the Mortgaged Property, and PMI Policy
premiums and fire and hazard insurance coverage and (e) any losses sustained by
the Servicer with respect to the liquidation of the Mortgaged Property.

         Servicing Fee: With respect to each Due Period and any Securitized
Loan, an amount equal to one-twelfth the product of (i) the Servicing Fee Rate
and (ii) the Scheduled Balance of such Securitized Loan as of the related
Determination Date. The obligation of the Trustee to pay the Servicing Fee is
limited to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds to the
extent permitted by Section 3.02 of this Agreement) of such Monthly Payments
collected by the Servicer, or as otherwise provided under this Agreement, and
the Servicing Fee is subject to reduction for compensating interest under
Section 4.04 hereof.

         Servicing Fee Rate: The servicing fee rate, stated as either a number
of basis points or as a percentage, for each Securitized Loan, as reflected in
the schedule of Securitized Loans to be attached to the Transfer Notice, the
form of which is attached hereto as Exhibit A.

         Servicing File: The items pertaining to a particular Securitized Loan
including, but not limited to, the computer files, data disks, books, records,
data tapes, notes, and all additional documents generated as a result of or
utilized in originating and/or servicing each Securitized Loan, which are held
in trust for the related Trust by the Servicer.

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

         Sub-Servicer: Cenlar FSB, a federal savings bank, pursuant to the
Sub-Servicing Agreement, or its successor in interest.

         Sub-Servicing Agreement: That certain Sub-Servicing Acknowledgment
Agreement of even date with this Agreement, by and between the Servicer and the
Sub-Servicer.

         Superseded Sub-Servicing Agreement: That certain Sub-Servicing
Agreement, dated as of March 1, 2004, by and between Home Star and the
Sub-Servicer.

         Transfer Notice: The Transfer Notice referred to in Section 2.01
hereof, in the form attached hereto as Exhibit A.

         Trust: The trust established by the Trust Agreement, the assets of
which consist of the transferred Securitized Loans and any other assets provided
for in the related Trust Agreement.

         Trust Agreement: Any trust agreement, pooling and servicing agreement,
indenture or comparable documents by and among some or all of the Issuer, the
Master Servicer, the Depositor and a Trustee (and which may include other
parties) creating a Trust and/or otherwise effectuating a Pass-Through Transfer.

         Trustee: Any trustee or trust with respect to the transferred
Securitized Loans in any Pass-Through Transfer, or any successor in interest, or
if any successor trustee or co-trustee shall be appointed as provided in the
Trust Agreement, then such successor trustee or such co-trustee, as the case may
be.

                                     M-1-10
<PAGE>

         VA: The Veterans Administration, an agency of the United States of
America, or any successor thereto, including the Administration of Veterans
Affairs.

         ANY CAPITALIZED TERMS USED AND NOT DEFINED IN THIS AGREEMENT SHALL HAVE
THE MEANINGS ASCRIBED TO SUCH TERMS IN THE RELATED TRUST AGREEMENT SPECIFIED IN
THE TRANSFER NOTICE.

                                     M-1-11
<PAGE>

                                   ARTICLE II.

           PASS- THROUGH TRANSFERS; SELLER'S ENGAGEMENT OF SERVICER TO
                       PERFORM SERVICING RESPONSIBILITIES

         Section 2.01 Pass-Through Transfers.

         (a) The Seller and the Servicer agree that from time to time the Seller
shall effect the sale or transfer of some or all of the Mortgage Loans to a
Trust to be formed as part of a Pass-Through Transfer. The Servicer shall
cooperate with the Seller in connection with any Pass-Through Transfer
contemplated by the Seller pursuant to this Section 2.01, including without
limitation providing requested information and reports to, and otherwise
cooperating with, any Credit Risk Manager. In connection therewith, the Servicer
shall provide to the Seller and any Trustee, Trust, Depositor, underwriter,
initial purchaser, NIMs Insurer or Credit Risk Manager in connection with a
Pass-Through Transfer, as the case may be: (i) any and all information and
appropriate verification of information which may be reasonably available to the
Servicer, including the Servicer's foreclosure, delinquency experience and the
Servicer's underwriting standards, whether through letters of its auditors and
counsel or otherwise, as such parties shall reasonably request; and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors, and certificates of public officials or officers of the Servicer
as are reasonably believed necessary by the Seller and any Trustee, Trust,
Depositor, underwriter, initial purchaser, NIMs Insurer or Credit Risk Manager,
as the case may be, in connection with such Pass-Through Transfer. The Servicer
shall indemnify the Depositor for any material misstatements or omissions or
alleged material misstatements or omissions contained in the information
provided pursuant to this Section 2.01(a). The Seller shall provide the Servicer
with a Transfer Notice with respect to any such Pass-Through Transfer, including
a schedule of Mortgage Loans which have been transferred, the Effective Date of
the Pass-Through Transfer and the name and address of the related Trustee. Upon
the Effective Date of such a Pass-Through Transfer, (A) the Servicer and the
Seller agree that the provisions of this Agreement shall go into effect with
respect to the Securitized Loans to which the Transfer Notice relates, and (B)
the Servicer agrees to recognize the Trustee and Trust with respect to the
transferred Mortgage Loans in the Pass-Through Transfer, or the Master Servicer
acting on their behalf, as having the same rights under this Agreement as the
Seller with respect to such transferred Mortgage Loans, including without
limitation the right to terminate the Servicer under this Agreement.

         Section 2.02 Contract for Servicing; Possession of Servicing Files.

         The Seller, by execution and delivery of this Agreement, does hereby
contract with the Servicer, subject to the terms of this Agreement, for the
servicing of the Securitized Loans. On or before each Closing Date, the Seller
shall cause to be delivered to the Servicer or to the Sub-Servicer the Servicing
Files with respect to the Securitized Loans listed in the schedule attached to
the applicable Transfer Notice. Each Servicing File delivered to the Servicer
shall be held in trust by the Servicer for the benefit of the Trust; provided,
however, that the Servicer shall have no liability for any Servicing Files (or
portions thereof) not delivered by the Seller. The Servicer's possession of any
portion of the Securitized Loan documents shall be on behalf of the Trust for
the sole purpose of facilitating servicing of the related Securitized Loan
pursuant to this Agreement, and such retention and possession by the Servicer
shall be in a custodial capacity only. The ownership of each Mortgage Note,
Mortgage, and the contents of the Servicing File shall be vested in the Trust
and the ownership of all records and documents with respect to the related
Securitized Loan prepared by or which come into the possession of the Servicer
shall immediately vest in the Trust and shall be retained and maintained, in
trust, by the Servicer on behalf of the Trust in such custodial capacity only.
The portion of each Servicing File retained by the Servicer pursuant to this
Agreement shall be segregated from the other books and records of the Servicer
and shall be appropriately marked to clearly reflect the ownership of the
related Securitized Loan by the Trust. The Servicer shall release from its
custody the contents of any Servicing File retained by it only in accordance
with this Agreement.

         Section 2.03 Books and Records.

                                     M-1-12
<PAGE>

         (a) Subject to Section 3.01(a) hereof, as soon as practicable after the
Closing Date or the date on which a Qualifying Substitute Mortgage Loan is
delivered pursuant to a Trust Agreement, as applicable (but in no event more
than 90 days thereafter except to the extent delays are caused by the applicable
recording office), the Servicer, at the expense of the Seller, shall cause the
Mortgage or Assignment of Mortgage, as applicable, with respect to each related
MERS Eligible Securitized Loan, to be properly recorded in the name of MERS in
the public recording office in the applicable jurisdiction, or shall ascertain
that such have previously been so recorded.

         (b) Subject to Section 3.01(a) hereof, an Assignment of Mortgage in
favor of the Trustee on behalf of the Trust shall be recorded as to each
Non-MERS Securitized Loan, unless instructions to the contrary are delivered to
the Servicer, in writing, by the Trustee, or the Servicer obtains an Opinion of
Counsel that recordation of such Assignment of Mortgage is not required. Subject
to the preceding sentence, as soon as practicable after the Closing Date (but in
no event more than 90 days thereafter except to the extent delays are caused by
the applicable recording office), the Servicer, at the expense of the Seller,
shall cause such related Assignment of Mortgage to be properly recorded in each
public recording office where such Non-MERS Eligible Securitized Loans are
recorded, unless the Servicer obtains an Opinion of Counsel that recordation of
such an Assignment of Mortgage is not required.

         (c) Additionally, the Servicer shall prepare and execute, at the
direction of the Trustee, any note endorsements relating to any of the related
Non-MERS Securitized Loans.

         (d) All rights arising out of the Securitized Loans shall be vested in
the related Trust, subject to the Servicer's right to service and administer the
Securitized Loans hereunder in accordance with the terms of this Agreement. All
funds received on or in connection with a Securitized Loan, other than the
Servicing Fee and other compensation to which the Servicer is entitled as set
forth herein, including but not limited to that compensation as set forth in
Section 5.01 below, shall be received and held by the Servicer in trust for the
benefit of the related Trust pursuant to the terms of this Agreement.

         (e) Any out-of-pocket costs incurred by the Servicer pursuant to this
Section 2.03 and Section 3.01(a), including any recording or other fees in
connection with the Servicer's obtaining the necessary powers of attorney (and
which are specified herein to be an expense of the Seller), shall be reimbursed
to the Servicer by the Seller within five (5) Business Days of receipt by the
Seller of an invoice for reimbursement. The Trust shall not reimburse the Seller
for any such reimbursement to the Servicer.

                                  ARTICLE III.

                       SERVICING OF THE SECURITIZED LOANS

         Section 3.01 Servicer to Service.

         The Servicer, as an independent contractor, shall service and
administer the Securitized Loans from and after the Closing Date and shall have
full power and authority, acting alone, to do any and all things in connection
with such servicing and administration which the Servicer may deem necessary or
desirable, consistent with the terms of this Agreement and with Accepted
Servicing Practices. The Servicer may designate the sub-servicer to perform the
obligations hereunder, provided that such designation shall not relieve the
Servicer of such obligations.

         The Seller and the Servicer additionally agree as follows:

         (a) The Servicer shall (A) record or cause to be recorded the Mortgage
or the Assignment of Mortgage, as applicable, with respect to all MERS Eligible
Securitized Loans, in the name of MERS, or shall ascertain that such have
previously been so recorded; (B) prepare or cause to be prepared all Assignments
of Mortgage with respect to all Non-MERS Eligible Securitized Loans; (C) prepare
for recording or cause to be recorded, subject to Section 2.03(b) hereof, all
Assignments of Mortgage with respect to Non-MERS Securitized Loans in the name
of the related Trust; (D) pay the recording costs pursuant to Section 2.03
hereof; and/or (E) track such Mortgages and Assignments of Mortgage to ensure
they have been recorded. The Servicer shall be entitled to be paid by the Seller
its

                                     M-1-13
<PAGE>

out-of-pocket costs for the preparation and recordation of the Mortgages and
Assignments of Mortgage. After the expenses of such recording costs pursuant to
Section 2.03 hereof shall have been paid by the Servicer, the Servicer shall
submit to the Seller a reasonably detailed invoice for reimbursement of
recording costs it incurred hereunder.

         (b) If applicable, the Servicer shall, in accordance with the relevant
provisions of the Cranston-Gonzales National Affordable Housing Act of 1990, as
the same may be amended from time to time, and the regulations provided in
accordance with the Real Estate Settlement Procedures Act, provide notice to the
Mortgagor of each Securitized Loan of the transfer of the servicing thereto to
the Servicer.

         (c) The Servicer shall be responsible for the preparation of and costs
associated with notifications to Mortgagors of the assumption of servicing by
the Servicer.

         Consistent with the terms of this Agreement and except as provided in
Section 3.15 hereof, the Servicer may waive any late payment charge, assumption
fee or other fee (other than a Prepayment Charge) that may be collected in the
ordinary course of servicing the Securitized Loans. The Servicer shall not make
any future advances to any Mortgagor under any Securitized Loan, and (unless the
Mortgagor is in default with respect to the Securitized Loan or such default is,
in the judgment of the Servicer, reasonably foreseeable) the Servicer shall not
permit any modification of any material term of any Securitized Loan, including
any modification that would change the Mortgage Interest Rate, defer or forgive
the payment of principal or interest, reduce or increase the outstanding
principal balance (except for actual payments of principal) or change the final
maturity date on such Securitized Loan. The NIMs Insurer's prior written consent
shall be required for any modification, waiver or amendment if the aggregate
number of outstanding Securitized Loans which have been modified, waived or
amended exceeds 5% of the number of Securitized Loans in the related Trust as of
the Effective Date. In the event of any such modification which permits the
deferral of interest or principal payments on any Securitized Loan, the Servicer
shall, on the Business Day immediately preceding the Remittance Date in any
month in which any such principal or interest payment has been deferred, make a
Monthly Advance in accordance with Section 4.03, in an amount equal to the
difference between (a) such month's principal and one month's interest at the
Securitized Loan Remittance Rate on the unpaid principal balance of such
Securitized Loan and (b) the amount paid by the Mortgagor. The Servicer shall be
entitled to reimbursement for such advances to the same extent as for all other
advances made pursuant to Section 4.03. The Servicer may permit modifications to
a Securitized Loan, with the consent of the NIMs Insurer, which are authorized
by the express terms of either an allonge to the related Mortgage Note or an
addendum to the related Mortgage in existence as of the Effective Date. If Home
Star wishes to make a modification to a Securitized Loan which is not permitted
under this Section 3.01, then Home Star must repurchase such Securitized Loan
from the related Trust on the terms and conditions provided in the Trust
Agreement. Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself and the related Trust, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Securitized Loans and with respect to the
Mortgaged Properties. Upon the written request of the Servicer, the Trustee
shall execute and deliver to the Servicer, within the later of fifteen days from
the Closing Date or within fifteen days of such Servicer request, any powers of
attorney (one for each county in which any of the Mortgaged Properties are
located) and other documents, furnished to it by the Servicer and reasonably
satisfactory to the Trustee, necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties under this Agreement.

         Notwithstanding anything in this Agreement to the contrary, the
Servicer (a) shall not permit any modification with respect to any Mortgage Loan
that would change the Mortgage Interest Rate and (b) shall not (unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Servicer, reasonably foreseeable) make or permit any
modification, waiver or amendment of any term of any Mortgage Loan that would
both (i) effect an exchange or reissuance of such Mortgage Loan under Section
1001 of the Code (or Treasury regulations promulgated thereunder) and (ii) cause
the Trust Fund to fail to qualify as a REMIC under the Code or the imposition of
any tax on "prohibited transactions" or "contributions" after the startup date
under the REMIC Provisions.

                                     M-1-14
<PAGE>

         Prior to taking any action with respect to the Mortgage Loans which is
not contemplated under the terms of this Agreement, the Servicer will obtain an
Opinion of Counsel acceptable to the NIMs Insurer and the Trustee or the Master
Servicer on its behalf with respect to whether such action could result in the
imposition of a tax upon the REMIC (including but not limited to the tax on
prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) (either
such event, an "Adverse REMIC Event"), and the Servicer shall not take any such
action or cause the Trust Fund to take any such action as to which it has been
advised that an Adverse REMIC Event could occur.

         The Servicer shall not permit the creation of any "interests" (within
the meaning of Section 860G of the Code) in the REMIC. The Servicer shall not
enter into any arrangement by which the REMIC will receive a fee or other
compensation for services nor permit the REMIC 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.

         Section 3.02 Collection of Securitized Loan Payments.

         Continuously from the Closing Date until the date each Securitized Loan
ceases to be subject to this Agreement, the Servicer shall proceed diligently to
collect all payments due under each of the Securitized Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Securitized Loans and each related Mortgaged
Property, to the end that the installments payable by the Mortgagors will be
sufficient to pay such charges as and when they become due and payable.

         Section 3.03 Establishment of and Deposits to Custodial Account.

         (a) The Servicer shall segregate and hold all funds collected and
received pursuant to the Securitized Loans separate and apart from any of its
own funds and general assets and shall establish and maintain for each related
Trust a Custodial Account, in the form of a time deposit or demand account,
titled "Home Star Mortgage Services, LLC in trust for [Name of Trust]." The
Custodial Account shall be established with a Qualified Depository. Any funds
deposited in the Custodial Account may be invested in Eligible Investments
subject to the provisions of Section 3.11 hereof. Funds deposited in the
Custodial Account may be drawn on by the Servicer in accordance with Section
3.04 hereof. The creation of the Custodial Account shall be evidenced by a
letter agreement in the form of Exhibit B. A copy of such letter agreement shall
be furnished to each Trustee, each NIMS Insurer and the Master Servicer. The
NIMs Insurer and the Trustee shall also be notified of any change in the
location of the Custodial Account.

         (b) The Servicer shall deposit in the Custodial Account on a daily
basis, and retain therein, the following collections received by the Servicer
and payments made by the Servicer after the Closing Date:

                  (i) all payments on account of principal received on the
Securitized Loans, including all Principal Prepayments;

                  (ii) all payments on account of interest received on the
Securitized Loans adjusted to the applicable Securitized Loan Remittance Rate;

                  (iii) all Prepayment Charges received or any Servicer
Prepayment Charge Payment Amounts to be paid by the Servicer to the related
Trust;

                  (iv) all Liquidation Proceeds;

                  (v) all Insurance Proceeds (other than any amounts immediately
applied to the restoration or repair of the Mortgaged Property or immediately
released to the Mortgagor);

                                     M-1-15
<PAGE>

                  (vi) all Condemnation Proceeds that are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor;

                  (vii) any Prepayment Interest Shortfall Amount required to be
paid by the Servicer pursuant to Section 4.04;

                  (viii) all Monthly Advances made by the Servicer or an
Advancing Person pursuant to Section 4.03;

                  (ix) any amounts required to be deposited by the Servicer in
connection with the deductible clause in any blanket hazard insurance policy;

                  (x) any amounts received with respect to or related to any REO
Property or REO Disposition Proceeds;

                  (xi) any amounts required to be deposited pursuant to Section
3.11 in connection with any losses realized on Eligible Investments with respect
to funds held in the Custodial Account;

                  (xii) any amounts required to be deposited by the Servicer
pursuant to Section 3.16(a) in connection with any unpaid claims that are a
result of a breach by the Servicer or any sub-servicer of its obligations
hereunder or under a PMI Policy;

                  (xiii) any amounts received by it under any PMI Policy; and

                  (xiv) any other amount required hereunder to be deposited by
the Servicer in the Custodial Account.

         Notwithstanding the foregoing clause (viii), no Monthly Advances or
Servicing Advances shall be required to be made by the Servicer if such Monthly
Advance or Servicing Advance would, if made, be, in the Servicer's reasonable
judgment, nonrecoverable. The determination by the Servicer that it has made a
nonrecoverable Monthly Advance or Servicing Advance, or that any proposed
Monthly Advance or Servicing Advance would be a nonrecoverable advance, shall be
evidenced by an Officer's Certificate of the Servicer delivered to the Master
Servicer and the NIMs Insurer.

         The foregoing requirements for deposit into the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of (i) late payment charges,
penalty interest and insufficient fund charges, (ii) assumption and modification
fees, (iii) other Ancillary Income and (iv) the Servicing Fee need not be
deposited by the Servicer into the Custodial Account.

         Any interest paid on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Servicer as additional
servicing compensation and the Servicer shall be entitled to retain and withdraw
such interest from the Custodial Account pursuant to Section 3.04 of this
Agreement. Additionally, any other benefit derived from the Custodial Account
associated with the receipt, disbursement and accumulation of principal,
interest, taxes, hazard insurance, mortgage insurance, etc. shall accrue for the
benefit of the Servicer.

         Section 3.04 Permitted Withdrawals From Custodial Account.

         The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:

                  (i) to make payments to the Master Servicer in the amounts and
in the manner provided for in Section 4.01;

                                     M-1-16
<PAGE>

                  (ii) in the event the Servicer has elected not to retain the
Servicing Fee out of any Mortgagor payments on account of interest or other
recovery of interest with respect to a particular Securitized Loan (including
late collections of interest on such Securitized Loan, or interest portions of
Insurance Proceeds, Liquidation Proceeds or Condemnation Proceeds) prior to the
deposit of such Mortgagor payment or recovery in the Custodial Account, to pay
to itself the related Servicing Fee from all such Mortgagor payments on account
of interest or other such recovery for interest with respect to that Securitized
Loan;

                  (iii) to pay itself investment earnings on funds deposited in
the Custodial Account;

                  (iv) to transfer funds to another Qualified Depository in
accordance with Section 3.11 hereof;

                  (v) to invest funds in certain Eligible Investments in
accordance with Section 3.11 hereof;

                  (vi) to reimburse itself to the extent of funds held in the
Custodial Account for Monthly Advances of the Servicer's funds made pursuant to
Section 4.03. The Servicer's right to reimburse itself pursuant to this
subclause (vi) with respect to any Securitized Loan shall be limited to amounts
received on or in respect of the related Securitized Loan which represent late
recoveries of payments of principal or interest with respect to which a Monthly
Advance was made, it being understood that in the case of any such reimbursement
the Servicer's right thereto shall be prior to the rights of the related Trust;
provided, however, that following the final liquidation of a Securitized Loan,
the Servicer may reimburse itself for previously unreimbursed Monthly Advances
in excess of Liquidation Proceeds or Insurance Proceeds with respect to such
Securitized Loan from any funds in the Custodial Account relating to Securitized
Loans in the same Trust, it being understood, in the case of any such
reimbursement, that the Servicer's right thereto shall be prior to the rights of
the related Trust. The Servicer may recover at any time from amounts on deposit
in the Custodial Account with respect to Securitized Loans in the same Trust the
amount of any Monthly Advances that the Servicer deems nonrecoverable or that
remain unreimbursed to the Servicer from related Liquidation Proceeds after the
final liquidation of the related Securitized Loan. In addition, the Servicer
may, at any time, withdraw from the Custodial Account funds that are held for
future distribution (i.e., were not included in the principal and interest for
the preceding Remittance Date) to reimburse itself for Monthly Advances
previously made by the Servicer;

                  (vii) to reimburse itself for unreimbursed Servicing Advances,
and for any unpaid Servicing Fees, the Servicer's right to reimburse itself
pursuant to this subclause (vii) with respect to any Securitized Loan being
limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, REO Disposition Proceeds and other amounts received in respect of the
related REO Property, and such other amounts as may be collected by the Servicer
from the Mortgagor or otherwise relating to the Securitized Loan, it being
understood that, in the case of any such reimbursement, the Servicer's right
thereto shall be prior to the rights of the related Trust;

                  (viii) to reimburse the Servicer for expenses incurred by, and
reimbursable to, the Servicer pursuant to Section 6.03, but only to extent such
amounts are determined to be reimbursable by the related Trust pursuant to
Section 6.03;

                  (ix) to reimburse itself for expenses incurred or reimbursable
to the Servicer pursuant to Section 3.12 from funds with respect to Securitized
Loans in the same Trust to the extent not previously reimbursed under clause
(vii) of this Section 3.04;

                  (x) to withdraw funds with respect to Securitized Loans in the
same Trust necessary for the operation, management and maintenance of any REO
related property to the extent not previously reimbursed under clause (vii) of
this Section 3.04;

                  (xi) to withdraw any funds deposited to the Custodial Account
in error; and,

                  (xii) to clear and terminate the Custodial Account upon the
termination of this Agreement;

                                     M-1-17
<PAGE>

                  (xiii) to reimburse the Trustee or the NIMs Insurer for
enforcement expenses incurred in respect of a breach of a representation or
warranty.

         Section 3.05 Establishment of and Deposits to Escrow Account.

         The Servicer shall segregate and hold all funds collected and received
pursuant to a Securitized Loan constituting Escrow Payments separate and apart
from any of its own funds and general assets and shall establish and maintain an
Escrow Account, in the form of a time deposit or demand account, titled "Home
Star Mortgage Services, LLC in trust for one or more Homestar Mortgage
Securities Trusts." The Escrow Account shall be established with a Qualified
Depository in a manner that shall provide maximum available insurance
thereunder. Funds deposited in the Escrow Account may be drawn on by the
Servicer in accordance with Section 3.06. The creation of the Escrow Account
shall be evidenced by a letter agreement in the form of Exhibit C. A copy of
such certification or letter agreement shall be furnished to each Trustee and
the Master Servicer.

         The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:

                  (i) all Escrow Payments collected on account of the
Securitized Loans, for the purpose of effecting timely payment of any such items
as required under the terms of this Agreement; and

                  (ii) all amounts representing Insurance Proceeds or
Condemnation Proceeds that are to be applied to the restoration or repair of any
Mortgaged Property.

         The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 3.06. The Servicer shall retain any interest paid on funds deposited in
the Escrow Account by the depository institution, other than interest on
escrowed funds required by law to be paid to the related Mortgagor.
Additionally, any other benefit derived from the Escrow Account associated with
the receipt, disbursement and accumulation of principal, interest, taxes, hazard
insurance, mortgage insurance, etc. shall accrue to the Servicer. To the extent
required by law, the Servicer shall pay interest on escrowed funds to the
related Mortgagor notwithstanding that the Escrow Account may be non-interest
bearing or that interest paid thereon is insufficient for such purposes.

         Section 3.06 Permitted Withdrawals From Escrow Account.

         Withdrawals from the Escrow Account or Accounts may be made by the
Servicer only:

                  (i) to effect payments of ground rents, taxes, assessments,
water rates, sewer rents, mortgage insurance premiums, condominium charges, fire
and hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;

                  (ii) to refund to any related Mortgagor any funds found to be
in excess of the amounts required under the terms of the related Securitized
Loan;

                  (iii) as permitted by applicable state law, for transfer to
the Custodial Account and application to reduce the principal balance of the
related Securitized Loan in accordance with the terms of the related Mortgage
and Mortgage Note;

                   (iv) for application to restore or repair the related
Mortgaged Property in accordance with the Master Servicing Guide;

                  (v) to pay to the Servicer, or the related Mortgagor to the
extent required by law, any interest paid on the funds with respect to a
Securitized Loan deposited in the Escrow Account; and

                                     M-1-18
<PAGE>

                  (vi) to reimburse itself for any Servicing Advances made with
respect to Escrow Payments for a Securitized Loan or the related Mortgaged
Properties, but only from amounts received on the related Securitized Loan which
represent late collections of Escrow Payments thereunder;

                  (vii) to withdraw any funds deposited into the Escrow Account
in error; and

                  (viii) to clear and terminate the Escrow Account on the
termination of this Agreement.

         The Servicer will be responsible for the administration of the Escrow
Accounts and will be obligated to make Servicing Advances to the Escrow Account
in respect of its obligations under this Section 3.06, reimbursable from the
Escrow Accounts or Custodial Account to the extent not collected from a
Mortgagor, anything to the contrary notwithstanding, when and as necessary to
avoid the lapse of insurance coverage on the related Mortgaged Property, or
which the Servicer knows, or in the exercise of the required standard of care of
the Servicer hereunder should know, is necessary to avoid the loss of such
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien. If any such payment has not been made and the Servicer receives notice of
a tax lien with respect to such Mortgaged Property being imposed, the Servicer
will, within ten (10) Business Days of such notice, advance or cause to be
advanced funds necessary to discharge such lien on such Mortgaged Property.

         Section 3.07 Restoration of Mortgaged Property.

         The Servicer need not obtain the approval of the Master Servicer prior
to releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to
be applied to the restoration or repair of the related Mortgaged Property if
such release is in accordance with Accepted Servicing Practices. At a minimum,
with respect to claims of $10,000 or more, the Servicer shall comply with the
following conditions in connection with any such release of Insurance Proceeds
or Condemnation Proceeds:

                  (i) the Servicer shall receive satisfactory independent
verification of completion of repairs and issuance of any required approvals
with respect thereto;

                  (ii) the Servicer shall take all steps necessary to preserve
the priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens.

                   (iii) the Servicer shall verify that the Securitized Loan is
not 60 or more days delinquent; and

                  (iv) pending repairs or restoration, the Servicer shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.

         With respect to claims of less than $10,000, the Servicer shall comply
with the following conditions in connection with any such release of Insurance
Proceeds or Condemnation Proceeds:

                  (v) the related Mortgagor shall provide an affidavit verifying
the completion of repairs and issuance of any required approvals with respect
thereto;

                  (vi) the Servicer shall verify the total amount of the claim
with the applicable insurance company; and

                  (vii) pending repairs or restoration, the Servicer shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.

         If the Trustee is named as an additional loss payee, the Servicer is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the related Trust.

                                     M-1-19
<PAGE>

         Section 3.08 Fidelity Bond and Errors and Omissions Insurance.

         The Servicer shall keep in force and shall cause each sub-servicer to
keep in force during the term of this Agreement a Fidelity Bond and Errors and
Omissions Insurance the minimum coverage of which shall be at least equal to the
coverage required by the Master Servicer in the Master Servicing Guide (unless a
waiver of such requirement has been obtained by the Servicer from the Master
Servicer and NIMs Insurer). Such Fidelity Bond and Errors and Omissions
Insurance shall be maintained with recognized insurers, shall be in such form
and amount as would permit the Servicer to be qualified with the Master Servicer
as a servicer, and shall by its terms not be cancelable without thirty days'
prior written notice to the Trustee, the NIMs Insurer and the Master Servicer.
The Servicer and each sub-servicer shall be deemed to have complied with this
provision if an affiliate of the Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. The Servicer
shall furnish and shall cause each sub-servicer to furnish to the Trustee, each
NIMs Insurer (upon reasonable request) and the Master Servicer a copy of each
such bond and insurance policy upon their request.

         Section 3.09 Notification of Adjustments.

         With respect to each Adjustable Rate Securitized Loan, the Servicer
shall adjust the Mortgage Interest Rate on the related interest rate adjustment
date and shall adjust the Monthly Payment on the related mortgage payment
adjustment date, if applicable, in compliance with the requirements of
applicable law and the related Mortgage and Mortgage Note. The Servicer shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate and Monthly Payment adjustments. The Servicer shall promptly, upon
written request therefor, deliver to the Master Servicer such notifications and
any additional applicable data regarding such adjustments and the methods used
to calculate and implement such adjustments. Upon the discovery by the Servicer
or the receipt of notice from the Master Servicer that the Servicer has failed
to adjust a Mortgage Interest Rate or Monthly Payment in accordance with the
terms of the related Mortgage Note, the Servicer shall immediately deposit in
the Custodial Account from its own funds the amount of any interest loss or
deferral caused thereby and shall indemnify the Trust in respect of any
liability as a result of such shortfall.

         Section 3.10 Payment of Taxes, Insurance and Other Charges.

         With respect to each Securitized Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of fire and hazard insurance coverage and shall obtain,
from time to time, all bills for the payment of such charges (including renewal
premiums) and shall effect payment thereof prior to the applicable penalty or
termination date and at a time appropriate for securing maximum discounts
allowable, employing for such purpose deposits of the Mortgagor in the Escrow
Account which shall have been estimated and accumulated by the Servicer in
amounts sufficient for such purposes, as allowed under the terms of the Mortgage
or applicable regulations. The Servicer assumes full responsibility for the
payment of all such bills and shall effect payments of all such bills
irrespective of the Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments and shall make advances from its own funds to
effect such payments. The Servicer shall employ Accepted Servicing Practices to
ensure that the related Mortgaged Property is not subjected to a tax lien as a
result of nonpayment and that such Mortgaged Property is not left uninsured.

         Section 3.11 Protection of Accounts.

         The Servicer may transfer the Custodial Account or the Escrow Account
to a different Qualified Depository from time to time. The Servicer shall give
written notice to the Trustee and the NIMs Insurer and the Master Servicer of
the location of the Custodial Account maintained by it with respect to the
Securitized Loans when established and prior to any change thereof.

                                     M-1-20
<PAGE>

         The Servicer shall bear any expenses, losses or damages sustained by
the Trustee or the Master Servicer if the Custodial Account and/or the Escrow
Account are not demand deposit accounts.

         Amounts on deposit in the Custodial Account and the Escrow Account may
at the option of the Servicer be invested in Eligible Investments; provided that
in the event that amounts on deposit in the Custodial Account or the Escrow
Account exceed the amount fully insured by the FDIC (the "Insured Amount"), the
Servicer shall be obligated to invest the excess amount over the Insured Amount
in Eligible Investments on the same Business Day as such excess amount becomes
present in the Custodial Account or the Escrow Account. Any such Eligible
Investment shall mature no later than the Business Day immediately preceding the
related Remittance Date or other date on which funds are needed to be disbursed.
Any such Eligible Investment shall be made in the name of the Servicer in trust
for the benefit of one or more Homestar Mortgage Securities Trusts, as their
interests may appear. All income on or gain realized from any such Eligible
Investment shall be for the benefit of the Servicer and may be withdrawn at any
time by the Servicer. Any losses incurred in respect of any such investment
shall be deposited in the Custodial Account or the Escrow Account by the
Servicer out of its own funds immediately as realized.

         Section 3.12 Title, Management and Disposition of REO Property.

         In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the related Trust, or in the event the related
Trust is not authorized or permitted to hold title to real property in the state
where the REO Property is located, or would be adversely affected under the
"doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Servicer from any
attorney duly licensed to practice law in the state where the REO Property is
located. The Person or Persons holding such title other than the related Trust
shall acknowledge in writing that such title is being held as nominee for the
related Trust.

         The Servicer shall manage, conserve, protect and operate each REO
Property for the related Trust solely for the purpose of its prompt disposition
and sale. The Servicer, either itself or through an agent selected by the
Servicer, shall manage, conserve, protect and operate such REO Property in the
same manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. The Servicer shall attempt to
sell the same (and may temporarily rent the same for a period not greater than
one year, except as otherwise provided below) on such terms and conditions as
the Servicer deems to be in the best interest of the related Trust.

         Notwithstanding anything to the contrary contained in this Section
3.12, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Master Servicer otherwise requests, an environmental inspection or
review of such Mortgaged Property to be conducted by a qualified inspector shall
be arranged by the Servicer. Upon completion of the inspection, the Servicer
shall provide the Master Servicer and the NIMs Insurer with a written report of
such environmental inspection. In the event that the environmental inspection
report indicates that the Mortgaged Property is contaminated by hazardous or
toxic substances or wastes, the Servicer shall not proceed with foreclosure or
acceptance of a deed in lieu of foreclosure. In the event that the environmental
inspection report is inconclusive as to the whether or not the Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, the
Servicer shall not, without the prior written approval of the Master Servicer
and the NIMs Insurer, proceed with foreclosure or acceptance of a deed in lieu
of foreclosure. The Servicer shall be reimbursed for all Servicing Advances made
pursuant to this paragraph with respect to the related Mortgaged Property from
the amounts on deposit in the Custodial Account with respect to Securitized
Loans in the same Trust.

         In the event that a Trust which has made one or more REMIC elections
acquires any REO Property in connection with a default or imminent default on a
Securitized Loan, the Servicer shall dispose of such REO Property not later than
the end of the third taxable year after the year of its acquisition by the
related Trust unless the Servicer has applied for and received a grant of
extension from the Internal Revenue Service (and provides a copy of the same to
the Master Servicer) to the effect that, under the REMIC Provisions and any
relevant proposed legislation and

                                     M-1-21
<PAGE>

under applicable state law, a REMIC elected by such Trust may hold REO Property
for a longer period without adversely affecting the REMIC status of such REMIC
or causing the imposition of a federal or state tax upon such REMIC. If the
Servicer has received such an extension (and provided a copy of the same to the
Master Servicer), then the Servicer shall continue to attempt to sell the REO
Property for its fair market value for such period longer than three years as
such extension permits (the "Extended Period"). If the Servicer has not received
such an extension, and the Servicer is unable to sell the REO Property within
the period ending 3 months before the end of such third taxable year after its
acquisition by the related Trust or if the Servicer has received such an
extension, and the Servicer is unable to sell the REO Property within the period
ending three months before the close of the Extended Period, the Servicer shall,
before the end of the three-year period or the Extended Period, as applicable,
(i) purchase such REO Property at a price equal to the REO Property's fair
market value or (ii) auction the REO Property to the highest bidder (which may
be the Servicer) in an auction reasonably designed to produce a fair price prior
to the expiration of the three-year period or the Extended Period, as the case
may be. The related Trustee shall sign any document or take any other action
reasonably requested by the Servicer which would enable the Servicer, on behalf
of the related Trust, to request such grant of extension.

         Notwithstanding any other provisions of this Agreement, no REO Property
acquired by a Trust shall be rented (or allowed to continue to be rented) or
otherwise used by or on behalf of such Trust 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) subject
any REMIC elected by such Trust to the imposition of any federal income taxes on
the income earned from such REO Property, including any taxes imposed by reason
of Sections 860F or 860G(c) of the Code, unless the Servicer has agreed to
indemnify and hold harmless such Trust with respect to the imposition of any
such taxes.

         The Servicer shall also maintain on each REO Property hazard insurance
with extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding Principal Balance of the Securitized Loan at
the time it becomes REO Property, to the extent required and available under the
Flood Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.

         The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interests of the related Trust. The proceeds of sale of the REO
Property shall be promptly deposited in the Custodial Account. After the
expenses of such disposition shall have been paid, the Servicer shall reimburse
itself pursuant to Section 3.04 hereof for any Servicing Advances it incurred
with respect to such REO Property.

         The Servicer shall withdraw from the amounts on deposit in the
Custodial Account with respect to Securitized Loans in the same Trust funds
necessary for the proper operation, management and maintenance of the REO
Property, including the cost of maintaining any hazard insurance pursuant to the
Master Servicing Guide. The Servicer shall make monthly distributions on each
Remittance Date to the Trustee of the net cash flow from the REO Property (which
shall equal the revenues from such REO Property net of the expenses described in
this Section 3.12 and of any reserves reasonably required from time to time to
be maintained to satisfy anticipated liabilities for such expenses).

         Section 3.13 Real Estate Owned Reports.

         Together with the statement furnished pursuant to Section 4.02, the
Servicer shall furnish by electronic transmission to the Master Servicer and the
NIMs Insurer on or before the Remittance Date each month a statement with
respect to any REO Property covering the operation of such REO Property for the
previous month and the Servicer's efforts in connection with the sale of such
REO Property and any rental of such REO Property incidental to the sale thereof
for the previous month. That statement shall be accompanied by such other
information as the Master Servicer shall reasonably request.

         Section 3.14 MERS.

                                     M-1-22
<PAGE>

         (a) The Servicer shall take such actions as are necessary to cause the
related Trust to be clearly identified as the owner of each MERS Securitized
Loan on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.

         (b) The Servicer shall maintain in good standing its membership in
MERS. In addition, the Servicer shall comply with all rules, policies and
procedures of MERS, including the Rules of Membership, as amended, and the MERS
Procedures Manual, as amended.

         (c) With respect to all MERS Securitized Loans serviced hereunder, the
Servicer shall promptly notify MERS as to any transfer of beneficial ownership
or release of any security interest in such Securitized Loans.

         (d) With respect to all MERS Securitized Loans serviced hereunder, the
Servicer shall notify MERS as to any transfer of servicing pursuant to Section
9.01 within 10 Business Days of such transfer of servicing. The Servicer shall
cooperate with each Trustee and any successor servicer to the extent necessary
to ensure that such transfer of servicing is appropriately reflected on the MERS
system.

         Section 3.15 Waiver of Prepayment Penalties.

         Except as provided below, the Servicer or any designee of the Servicer
shall not waive any Prepayment Charge with respect to any Securitized Loan. If
the Servicer or its designee fails to collect a Prepayment Charge at the time of
the related prepayment of any Securitized Loan subject to such Prepayment
Charge, the Servicer shall pay to the Trust at such time (by deposit to the
Custodial Account) an amount equal to the amount of the Prepayment Charge not
collected. The Seller warrants that the schedule of Prepayment Charges listed in
each Transfer Notice shall be complete, true and accurate and may be relied on
by the Servicer in its calculation of Prepayment Charges. Notwithstanding the
above, the Servicer or its designee may waive a Prepayment Charge only if (i)
the related prepayment is not the result of a refinancing by the Servicer or its
designee, (ii) such waiver relates to a defaulted Securitized Loan or a
reasonably foreseeable default, (iii) such waiver is standard and customary in
servicing similar mortgage loans to the Securitized Loans, and (iv) such waiver,
in the reasonable judgment of the Servicer, would maximize recovery of total
proceeds from the Securitized Loan, taking into account the amount of such
Prepayment Charge and the related Securitized Loan. If a Prepayment Charge is
waived as permitted by meeting the standards described above, then the Servicer
is required to pay the amount of such waived Prepayment Charge, for the benefit
of the holders of the Class P Certificates (as defined in the related Trust
Agreement), by depositing such amount into the Custodial Account together with
and at the time that the amount prepaid on the related Securitized Loan is
required to be deposited into the Custodial Account.

         Within 90 days of the earlier of discovery by the Servicer or receipt
of notice by the Servicer of the breach of the representation or covenant of the
Servicer set forth in this Section 3.15 which materially and adversely affects
the interests of the Holders of the Class P Certificates in any Prepayment
Charge, the Servicer shall remedy such breach as follows: if any of the
covenants made by the Servicer in this Section 3.15 is breached, the Servicer
must pay the amount of such waived Prepayment Charge, for the benefit of the
Holders of the Class P Certificates, by depositing such amount into the
Custodial Account.

         Section 3.16 Servicing and Administration of PMI Policies.

         (a) The Servicer shall take all such actions on behalf of the Trustee
as are necessary to service, maintain and administer PMI Policies and to perform
and enforce the rights under such Policies for the benefit of the related Trust.
Except as expressly set forth herein, the Servicer shall have full authority on
behalf of the related Trust to do anything it reasonably deems appropriate or
desirable in connection with the servicing, maintenance and administration of
the PMI Policies. The Servicer shall not take, or permit any sub-servicer to
modify or assume a Securitized Loan covered by a PMI Policy or take any other
action with respect to such Securitized Loan which would result in non-coverage
under any PMI Policy of any loss which, but for the actions of the Servicer or
the Sub-Servicer, would have been covered thereunder. If a PMI Insurer fails to
pay a claim under a PMI Policy as a result of breach by the Servicer or a
sub-servicer of its obligations hereunder or under a PMI Policy, the Servicer
shall

                                     M-1-23
<PAGE>

be required to deposit in the Custodial Account on or prior to the next
succeeding Remittance Date an amount equal to such unpaid claim from its own
funds without any right to reimbursement from the related Trust. To the extent
coverage is available, the Servicer shall keep or cause to be kept in full force
and effect the Insurance Policies for as long as any Certificates issued by the
related Trust are outstanding. The Servicer shall cooperate with each PMI
Insurer and shall use its best efforts to furnish all reasonable aid, evidence
and information in the possession of the Servicer to which the Servicer has
access with respect to any Securitized Loan; provided, however, notwithstanding
anything to the contrary contained in a PMI Policy, the Servicer shall not be
required to submit any reports to a PMI Insurer until a reporting date that is
at least 15 days after the Servicer has received sufficient loan level
information from the Seller to appropriately code its servicing system in
accordance with such PMI Insurer's requirements.

         (b) The Servicer shall deposit into the Custodial Account pursuant to
Section 3.03(xiii) hereof all Insurance Proceeds received from the PMI Insurer
under the terms of a PMI Policy.

         (c) Notwithstanding the provisions of (a) and (b) above, the Servicer
shall not take any action in regard to any PMI Policy inconsistent with the
interests of the related Trust or the related Certificateholders or with the
rights and interests of the related Trust or the related Certificateholders
under this Agreement.

         (d) The related Trustee shall furnish the Servicer with any powers of
attorney and other documents (within fifteen (15) days upon request from the
Servicer) in form as provided to it necessary or appropriate to enable the
Servicer to service and administer any PMI Policy; provided, however, that the
related Trustee shall not be liable for the actions of the Servicer under such
powers of attorney.

         Section 3.17 Maintenance of Hazard Insurance.

         The Servicer shall cause to be maintained for each Securitized Loan
hazard insurance such that all buildings upon the related Mortgaged Property are
insured by a generally acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where such
Mortgaged Property is located in an amount which is at least equal to the lesser
of (i) the current principal balance of such Securitized Loan and (ii) the
amount necessary to fully compensate for any damage or loss to the improvements
that are a part of such property on a replacement cost basis, in each case in an
amount not less than the amount as is necessary to avoid the application of any
co-insurance clause contained in the related hazard insurance policy.

         Any payments by the Servicer for hazard insurance, other than as set
forth in the last paragraph of this Section 3.17, shall be deemed Servicing
Advances, reimbursable in accordance with Section 3.04(vii) or (x), to the
extent not collected from the related Mortgagor. The Servicer will comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any such hazard policies. Any amounts to be collected by the
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property or amounts to be released to the Mortgagor
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Custodial Account, subject to withdrawal pursuant to
Section 3.04, if received in respect of a Securitized Loan. Any cost incurred by
the Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Securitized Loan, notwithstanding that the
terms of such Securitized Loan so permit. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. If a Mortgaged
Property or REO Property is at any time in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards and flood insurance has been made available, the Servicer will cause to
be maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the unpaid principal balance of
the related Securitized Loan and (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).

         In the event that the Servicer or the Sub-Servicer shall obtain and
maintain a blanket policy with an insurer having a General Policy Rating of
B:III or better in Best's Key Rating Guide (or such other rating that is
comparable

                                     M-1-24
<PAGE>

to such rating) insuring against hazard losses on all of the Securitized Loans
in a Trust, it shall conclusively be deemed to have satisfied its obligations as
set forth in the first two sentences of this Section 3.17 with respect to the
Securitized Loans in such Trust, it being understood and agreed that such policy
may contain a deductible clause, in which case the Servicer shall, in the event
that there shall not have been maintained on the related Mortgaged Property or
REO Property a policy complying with the first two sentences of this Section
3.17, and there shall have been one or more losses which would have been covered
by such policy, deposit to the Custodial Account from its own funds without
right of reimbursement the amount not otherwise payable under the blanket policy
because of such deductible clause for the benefit of the related Trust. In
connection with its activities as administrator and servicer of the Securitized
Loans, the Servicer agrees to prepare and present, on behalf of itself, the
Trust and the Certificateholders, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy. Copies of such
claims shall be provided to the NIMs Insurer.

         Section 3.18 Realization Upon Defaulted Securitized Loans.

         (a) The Servicer shall use its best efforts and, consistent with
Accepted Servicing Practices, foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Securitized Loans (including
selling any such Securitized Loans other than converting the ownership of the
related properties) as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. The
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances by the Servicer as contemplated in Section
3.04. The foregoing is subject to the provision that, in any case in which a
Mortgaged Property shall have suffered damage from an uninsured cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such Mortgaged Property unless it has determined that such restoration will
increase the proceeds of liquidation of the related Securitized Loan after
reimbursement to itself for such expenses. In instituting foreclosures or other
similar proceedings, the Servicer shall institute such proceedings in its own
name on behalf of the related Trust, unless otherwise required by applicable law
or otherwise appropriate.

         (b) If the Servicer determines that it is in the best economic interest
of a Trust and the Certificateholders to sell a Distressed Securitized Loan
rather than foreclosing, the Servicer may effect such a sale. The net proceeds
of such sale shall be Liquidation Proceeds.

         (c) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds, Liquidation Proceeds or Condemnation Proceeds, in respect of
any Securitized Loan, will be applied in the following order of priority: first,
to unpaid Servicing Fees; second, to reimburse the Servicer or any sub-servicer
for any related unreimbursed Servicing Advances and Monthly Advances pursuant to
Section 3.04; third, to accrued and unpaid interest on the Securitized Loan, to
the date of the Final Recovery Determination, or to the Due Date prior to the
Remittance Date on which such amounts are to be remitted to the Master Servicer
if not in connection with a Final Recovery Determination; and fourth, as a
recovery of principal of the Securitized Loan. The portion of the recovery so
allocated to any unpaid Servicing Fee shall be reimbursed to the Servicer or any
sub-servicer pursuant to Section 3.04.

         Section 3.19 Enforcement of Due-On-Sale Clauses; Assumption Agreement.

         The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Securitized Loan under
the "due-on-sale" clause, if any, applicable thereto; provided, however, that
the Servicer shall not be required to take such action if in its sole business
judgment the Servicer believes it is not in the best interests of the related
Trust and shall not exercise any such rights if prohibited by law from doing so.
If the Servicer reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause, or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent

                                     M-1-25
<PAGE>

permitted by applicable state law, the Mortgagor remains liable thereon. The
Servicer is also authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as the Mortgagor and becomes liable
under the Mortgage Note, provided that no such substitution shall be effective
unless such person satisfies the underwriting criteria of the Servicer and has a
credit risk rating at least equal to that of the original Mortgagor. In
connection with any assumption or substitution, the Servicer shall apply such
underwriting standards and follow such practices and procedures as shall be
normal and usual in its general mortgage servicing activities and as it applies
to other mortgage loans owned solely by it. The Servicer shall not take or enter
into any assumption and modification agreement, however, unless (to the extent
practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy. Any fee collected by the Servicer in respect of an assumption,
modification or substitution of liability agreement shall be retained by the
Servicer as additional servicing compensation. In connection with any such
assumption, no material term of the Mortgage Note (including but not limited to
the related Mortgage Interest Rate and the amount of the Monthly Payment) may be
amended or modified, except as otherwise required pursuant to the terms thereof.
The Servicer shall notify the related Trustee that any such substitution,
modification or assumption agreement has been completed by the Servicer, and the
Servicer shall deliver to the Custodian the executed original of such
substitution, modification or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof, and the Servicer shall also deliver to
the Trustee a copy of the executed substitution, modification or assumption
agreement.

         Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Securitized Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.19, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.

         Section 3.20 Credit Risk Manager.

         The Servicer acknowledges and agrees that, under any Trust Agreement, a
Credit Risk Manager may be required to provide certain credit risk management
services as provided therein. If so, the Servicer hereby agrees to cooperate
with the Credit Risk Manager in connection with all reasonable requests made by
the Credit Risk Manager, including, without limitation, promptly providing
copies of any servicing reports and remittance advices required under this
Agreement to the Credit Risk Manager.

         Section 3.21 Compliance with Applicable Laws.

         All requirements of any federal, state or local law (including usury,
truth in lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity, disclosure or recording, predatory and abusive lending
laws) applicable to the servicing of the Mortgage Loans will be complied with by
the Servicer in all material respects.

                                   ARTICLE IV.

                           PAYMENTS TO MASTER SERVICER

         Section 4.01 Remittances.

         On each Remittance Date, no later than 3:00 p.m. New York City time,
the Servicer shall remit on a scheduled/scheduled basis by wire transfer of
immediately available funds to the Master Servicer (a) all amounts deposited in
the Custodial Account as of the close of business on the Determination Date (net
of charges against or withdrawals from the Custodial Account pursuant to Section
3.04), plus (b) all Monthly Advances, if any, which the Servicer or other
Advancing Person is obligated to make pursuant to Section 4.03, minus (c) any
amounts attributable

                                     M-1-26
<PAGE>

to Principal Prepayments, Liquidation Proceeds, Insurance Proceeds, Condemnation
Proceeds or REO Disposition Proceeds received after the applicable Due Period,
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 3.03 (iii)
and (vii), and minus (d) any amounts attributable to Monthly Payments collected
but due on a Due Date or Due Dates subsequent to the first day of the month in
which such Remittance Date occurs, which amounts shall be remitted on the
Remittance Date next succeeding the Due Date related to such Monthly Payment.

         With respect to any remittance received by the Master Servicer after
the Business Day on which such payment was due, the Servicer shall pay to the
Master Servicer interest on any such late payment at an annual rate equal to
LIBOR, adjusted as of the date of each change, plus four (4) percentage points,
but in no event greater than the maximum amount permitted by applicable law.
Such interest shall be deposited in the Custodial Account by the Servicer on the
date such late payment is made and shall cover the period commencing with the
day following the Remittance Date and ending with the Business Day on which such
payment is made, both inclusive. Such interest shall be remitted along with the
distribution payable on the next succeeding Remittance Date. The payment by the
Servicer of any such interest shall not be deemed an extension of time for
payment or a waiver of any Event of Default by the Master Servicer or any
applicable Trustee.

         All remittances required to be made to the Master Servicer shall be
made on a scheduled/scheduled basis to the following wire account or to such
other account as may be specified by the Master Servicer from time to time:

                  Wells Fargo Bank, National Association
                  Minneapolis, Minnesota
                  ABA# 121000248
                  Account Name:  SAS Clearing 3970771416
                  For further credit to:  Collection Account No. 18150300

         Section 4.02 Statements to Master Servicer.

         Not later than the 10th calendar day of each month (or if such calendar
day is not a Business Day, the immediately succeeding Business Day), the
Servicer shall furnish to the Master Servicer and the NIMs Insurer with respect
to each related Trust, or as the Servicer and the Master Servicer may otherwise
agree (a) a monthly remittance advice in the format set forth at Exhibit D
hereto with regard to monthly loan remittance data, Exhibit E with regard to
default mortgage loans, and Exhibit F with regard to realized losses or gains
for the period ending on the first day of such calendar month (i.e., the Due
Period) and (b) all such information required pursuant to clause (a) above in an
electronic file or other similar media reasonably acceptable to the Master
Servicer. The Servicer shall also furnish to the Master Servicer and the NIMs
Insurer (in such format mutually agreed to by the Servicer and the Master
Servicer) a monthly report detailing loan level Prepayment Charges collected
and/or waived by the Servicer in accordance with Section 3.15.

         Such monthly remittance advice shall also be accompanied with a
supplemental report provided to the Master Servicer which includes on an
aggregate basis for the previous Due Period (i) the amount of claims filed, (ii)
the amount of any claim payments made, (iii) the amount of claims denied or
curtailed and (iv) policies cancelled with respect to those Securitized Loans
covered by any PMI Policy or any other provider of primary mortgage insurance
purchased by the Trust. Notwithstanding anything to the contrary contained in a
PMI Policy, the Servicer shall not be required to submit any supplemental
reports including the foregoing data with respect to a PMI Policy until a
reporting date that is at least 15 days after the Servicer has received
sufficient loan level information from the Seller to appropriately code its
servicing system in accordance with requirements.

         In addition, not more than 60 days after the end of each calendar year,
commencing December 31, 2004, the Servicer shall provide (as such information
becomes reasonably available to the Servicer) to the Master Servicer such
information concerning the Securitized Loans and annual remittances to the
Master Servicer with respect to the Securitized Loans in each Trust as is
necessary for each Certificateholder and the NIMs Insurer to prepare its federal

                                     M-1-27
<PAGE>

income tax return. Such obligation of the Servicer shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Servicer to the Master Servicer and pursuant to any requirements
of the Code as from time to time are in force.

         Beginning with calendar year 2004, the Servicer shall provide the
Master Servicer and each Trustee with such information concerning the related
Securitized Loans as is necessary for such Trustee to prepare the related
Trust's federal income tax return and for any investor in the related
Certificates to prepare any required tax return.

         Section 4.03 Monthly Advances by Servicer.

         On the Business Day immediately preceding each Remittance Date, the
Servicer shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution, or both, an amount equal to the aggregate
of all Monthly Advances relating to Monthly Payments which were due on the
Securitized Loans during the applicable Due Period and which were delinquent at
the close of business on the immediately preceding Determination Date. Any
amounts held for future distribution and so used shall be replaced by the
Servicer by deposit in the Custodial Account on or before any future Remittance
Date if funds in the Custodial Account on such Remittance Date shall be less
than remittances to the Master Servicer required to be made on such Remittance
Date. The Servicer shall keep appropriate records of such amounts and will
provide such records to the Master Servicer upon request. No provision in this
Agreement shall be construed as limiting the Servicer's right to (i) pass
through late collections on the related Securitized Loans in lieu of making
Monthly Advances (ii) reimburse itself for such Monthly Advances from late
collections on the related Securitized Loans or (iii) utilize an Advancing
Person (as defined below).

         The Servicer's obligation to make such Monthly Advances as to any
Mortgage Loan will continue through the last Monthly Payment due prior to the
payment in full of the Mortgage Loan, or through the last Remittance Date prior
to the Remittance Date for the distribution of all Liquidation Proceeds and
other payments or recoveries (including REO Disposition Proceeds, Insurance
Proceeds and Condemnation Proceeds) with respect to the Mortgage Loan; provided,
however, that such obligation shall cease if the Servicer determines, in its
sole reasonable opinion, that advances with respect to such Mortgage Loan are
non-recoverable by the Servicer from Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds, or otherwise with respect to a particular Mortgage Loan.

         The Servicer, with the consent of the NIMs Insurer, may enter into a
facility with any person including the Sub-Servicer which provides that such
person (an "Advancing Person") may fund Monthly Advances required under this
Section 4.03 and/or Servicing Advances, although no such facility shall reduce
or otherwise affect the Servicer's obligation to fund such Monthly Advances
and/or Servicing Advances. Any Monthly Advances and/or Servicing Advances made
by an Advancing Person shall be reimbursed to the Advancing Person in the same
manner as reimbursements would be made to the Servicer under Section 3.04 if
such Monthly Advances or Servicing Advance were funded by the Servicer.

         Section 4.04 Compensating Interest.

         The Servicer shall be required to deposit in the Custodial Account, and
retain therein with respect to each Principal Prepayment, the Prepayment
Interest Shortfall Amount, if any, for the related Due Period. Such deposit
shall be made from the Servicer's own funds, without reimbursement therefor, up
to an amount equal to the lesser of with respect to the Securitized Loans in
each Trust (i) the Prepayment Interest Shortfall Amount or (ii) the Servicing
Fee, in each case, with respect to the Securitized Loans in such Trust. The
Servicer shall not be obligated to pay any Prepayment Interest Shortfall Amount
with respect to any Relief Act Reduction or bankruptcy.

         Section 4.05 Credit Reporting.

         For each Securitized Loan, in accordance with its current servicing
practices, the Servicer will accurately and fully report its underlying borrower
credit files to each of the following credit repositories or their successors:

                                     M-1-28
<PAGE>

Equifax Credit Information Services, Inc., Trans Union, LLC and Experian
Information Solution, Inc., on a monthly basis in a timely manner.

                                   ARTICLE V.

                          GENERAL SERVICING PROCEDURES

         Section 5.01 Servicing Compensation.

         As consideration for servicing the Securitized Loans subject to this
Agreement, the Servicer shall retain (a) the Servicing Fee for each Securitized
Loan remaining subject to this Agreement during any month and (b) Ancillary
Income. The Servicing Fee shall be payable monthly.

         The aggregate of the Servicing Fees for any month with respect to the
Securitized Loans in a Trust shall be reduced by any Prepayment Interest
Shortfall Amount with respect to the Securitized Loans in such Trust with
respect to such month. The Servicer shall be entitled to recover any unpaid
Servicing Fee out of Insurance Proceeds, Condemnation Proceeds or Liquidation
Proceeds to the extent permitted in Section 3.04 and out of amounts derived from
the operation and sale of an REO Property to the extent permitted by Section
3.12.

         Additional servicing compensation in the form of Ancillary Income shall
be retained by the Servicer only to the extent such fees or charges are received
by the Servicer. The Servicer shall also be entitled pursuant to Section 3.04
and Section 3.06 to withdraw from the Custodial Account and Escrow Account,
respectively, as additional servicing compensation, interest or other income
earned on deposits therein, subject to Section 3.11.

         The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder, including any fees due to
sub-servicers, and shall not be entitled to reimbursement thereof except as
specifically provided for herein.

         Section 5.02 Annual Audit Report.

         The Servicer shall, at its own expense, using its best efforts by
February 28 of each year, but in no event later than March 1 of each year, cause
a firm of independent public accountants (who may also render other services to
Servicer), which is a member of the American Institute of Certified Public
Accountants, to furnish to the Seller and the Master Servicer (i) year-end
audited (if available) financial statements of the Servicer and (ii) a statement
to the effect that such firm has examined certain documents and records for the
preceding fiscal year (or during the period from the date of commencement of
such Servicer's duties hereunder until the end of such preceding fiscal year in
the case of the first such certificate) and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that
Servicer's overall servicing operations have been conducted in compliance with
the Uniform Single Attestation Program for Mortgage Bankers except for such
exceptions that, in the opinion of such firm, the Uniform Single Attestation
Program for Mortgage Bankers requires it to report, in which case such
exceptions shall be set forth in such statement.

         Section 5.03 Annual Officer's Certificate.

         The Servicer, at its own expense, will, using its best efforts by
February 28 of each year, but in no event later than March 1 of each year,
deliver to the Seller and the Master Servicer a Servicing Officer's certificate
stating, as to each signer thereof, that (i) a review of the activities of the
Servicer during such preceding fiscal year and of performance under this
Agreement has been made under such officers' supervision, and (ii) to the best
of such officers' knowledge, based on such review, the Servicer has fulfilled
all its obligations under this Agreement for such year, or, if there has been a
default in the fulfillment of all such obligations, specifying each such default
known to such officers and the nature and status thereof including the steps
being taken by the Servicer to remedy such default.

                                     M-1-29
<PAGE>

         Section 5.04. Servicer's Certification.

         (a) An officer of the Servicer shall, using its best efforts by
February 28 of each year, but no later than March 1 of each year, (or if not a
Business Day, the immediately preceding Business Day), or at any other time upon
thirty (30) days written request, execute and deliver an Officer's Certificate
to the Master Servicer for the benefit of such Master Servicer and its officers,
directors, agents and affiliates, certifying as to the following matters:

                  (i) Based on my knowledge, the information in the annual
statement of compliance furnished pursuant to Section 5.03, the annual
independent public accountant's servicing report furnished pursuant to Section
5.02 and all servicing reports, officer's certificates and other information
relating to the servicing of the Securitized Loans submitted to the Master
Servicer taken as a whole, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
as of the date of this certification;

                  (ii) The servicing information required to be provided to the
Master Servicer by the Servicer under this Agreement has been provided to the
Master Servicer;

                  (iii) I am responsible for reviewing the activities performed
by the Servicer under the Agreement and based upon the review required by the
Agreement, and except as disclosed in the annual statement of compliance, the
annual independent public accountant's servicing report and all servicing
reports, officer's certificates and other information relating to the servicing
of the Securitized Loans submitted to the Master Servicer, the Servicer has, as
of the date of this certification fulfilled its obligations under the Agreement;
and

                  (iv) I have disclosed to the Master Servicer all significant
deficiencies relating to the Servicer's compliance with the minimum servicing
standards in accordance with a review conducted in compliance with the Uniform
Single Attestation Program for Mortgage Bankers or similar standard as set forth
in the Agreement.

         (b) The Servicer shall indemnify and hold harmless the Master Servicer
and its officers, directors, agents and affiliates from and against any losses,
damages, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Servicer or any of its officers, directors, agents or affiliates of its
obligations under Sections 5.02, 5.03 or 5.04 or the negligence, bad faith or
willful misconduct of the Servicer in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Master Servicer, then the Servicer agrees that it shall contribute
to the amount paid or payable by the Master Servicer as a result of losses,
claims, damages or liabilities of the Master Servicer in such proportion as is
appropriate to reflect the relative fault of the Master Servicer on the one hand
and the Servicer on the other in connection with a breach of the Servicer's
obligations under Sections 5.02, 5.03 or 5.04 or the Servicer's negligence, bad
faith or willful misconduct in connection therewith.

         Section 5.05  Access to Servicer Records.

         The Seller or the NIMs Insurer shall have the right to examine and
audit, at its expense, upon reasonable notice to the Servicer, during business
hours or at such other times as might be reasonable under applicable
circumstances, any and all of the books, records, documentation or other
information of the Servicer, or held by another for the Servicer or on its
behalf or otherwise, which relate to the performance or observance by the
Servicer of the terms, covenants or conditions of this Agreement.

         The Servicer shall provide to the Seller, the NIMs Insurer and any
supervisory agents or examiners representing a state or federal governmental
agency having jurisdiction over the Seller access to any documentation regarding
the Mortgage Loans in the possession of the Servicer which may be required by
any applicable regulations. Such access shall be afforded without charge, upon
reasonable request, during normal business hours and at the offices of the
Servicer, and in accordance with the applicable federal or state government
regulations.

                                     M-1-30
<PAGE>

                                   ARTICLE VI.

                           REPRESENTATIONS, WARRANTIES
                                 AND AGREEMENTS

         Section 6.01 Representations, Warranties and Agreements of the
Servicer.

         The Servicer, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and warranties
to the Seller, the Depositor, the Trustee and the Master Servicer as of the
Closing Date:

         (a) Due Organization and Authority. The Servicer is duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being conducted
and either it or its designated sub-servicer is licensed, qualified and in good
standing in each state where a Mortgaged Property is located if the laws of such
state require licensing or qualification in order to conduct a servicing
business of the type provided for herein, and in any event the Servicer or its
designated sub-servicer is in compliance with the laws of any such state to the
extent necessary to ensure the enforceability of the terms of this Agreement;
the Servicer has the full power and authority to execute and deliver this
Agreement and, together with such sub-servicer, to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Servicer and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Servicer and all requisite action has been taken
by the Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms;

         (b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement, taking into account the role of its
sub-servicer, is in the ordinary course of business of the Servicer;

         (c) No Conflicts. Neither the execution and delivery of this Agreement,
the acquisition of the servicing responsibilities by the Servicer or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Servicer's organizational
documents or any legal restriction or any agreement or instrument to which the
Servicer is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or, taking into account
the role of its designated sub-servicer, result in the violation of any law,
rule, regulation, order, judgment or decree to which the Servicer or its
property is subject, or impair the ability of the Servicer to service the
Securitized Loans, or impair the value of the Securitized Loans;

         (d) Ability to Perform. The Servicer does not believe, nor does it have
any reason or cause to believe, that it, together with the Sub-Servicer, cannot
perform each and every covenant contained in this Agreement;

         (e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of our knowledge, threatened against the
Servicer which, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial condition,
properties or assets of the Servicer, or in any material impairment of the right
or ability of the Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer, or which
would draw into question the validity of this Agreement or of any action taken
or to be taken in connection with the obligations of the Servicer contemplated
herein, or which would be likely to impair materially the ability of the
Servicer together with the Sub-Servicer to perform under the terms of this
Agreement;

         (f) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Servicer together with the Sub-Servicer of or
compliance by the Servicer together with the Sub-Servicer with this Agreement;

                                     M-1-31
<PAGE>

         (g) Ability to Service. The Servicer is an approved seller/servicer of
conventional residential Securitized Loans for Fannie Mae and Freddie Mac, and,
together with those of its designated sub-servicer, shall ensure that there are
the facilities, procedures, and experienced personnel necessary for the sound
servicing of the Securitized Loans. The Servicer is in good standing to service
Securitized Loans for Freddie Mac. The Servicer is a member in good standing of
the MERS system, if applicable;

         (h) No Untrue Information. Neither this Agreement nor any statement,
report or other document furnished or to be furnished by the Servicer pursuant
to this Agreement or in connection with the transactions contemplated hereby
contains any untrue material statement of fact or omits to state a material fact
necessary to make the statements contained therein not misleading;

         (i) No Commissions to Third Parties. The Servicer has not dealt with
any broker or agent or anyone else, other than the Sub-Servicer, who might be
entitled to a fee or commission in connection with this transaction other than
the Seller; and

         (j) No Waiver of Prepayment Charges. The Servicer will not waive any
Prepayment Charge unless it is waived in accordance with the standard set forth
in Section 3.15.

         Section 6.02 Remedies for Breach of Representations and Warranties of
the Servicer.

         It is understood and agreed that the representations and warranties set
forth in Section 6.01 shall survive the engagement of the Servicer to perform
the servicing responsibilities as of any Closing Date hereunder and the delivery
of the Servicing Files to the Servicer and shall inure to the benefit of the
Seller, any Depositor, the Master Servicer and each Trust, NIMs Insurer and
Trustee. Upon discovery by any of the Servicer, the Master Servicer, the
Trustee, NIMs Insurer, any Depositor or the Seller of a breach of any of the
foregoing representations and warranties which materially and adversely affects
the ability of the Servicer, together with its designated sub-servicer, to
perform its duties and obligations under this Agreement or otherwise materially
and adversely affects the value of the Securitized Loans, the Mortgaged
Property, the priority of the security interest on such Mortgaged Property or
the interest of the Seller, any Depositor, the Master Servicer, NIMs Insurer,
the related Trust or the related Trustee, the party discovering such breach
shall give prompt written notice to the others.

         Within 60 days of the earlier of either discovery by or notice to the
Servicer of a breach of a representation or warranty set forth in Section 6.01
which materially and adversely affects the ability of the Servicer, together
with its designated sub-servicer, to perform its duties and obligations under
this Agreement or otherwise materially and adversely affects the value of the
Securitized Loans, the Mortgaged Property or the priority of the security
interest on such Mortgaged Property, the Servicer shall use its best efforts
promptly to cure such breach in all material respects and, if such breach cannot
be cured, the Servicer shall, at the option of the Trustee, assign the
Servicer's rights and obligations under this Agreement (or respecting the
affected Securitized Loans) with respect to a Trust to a successor servicer
selected by the related Trustee with the prior consent and approval of the
Master Servicer. Such assignment shall be made in accordance with Section 9.01
and 9.02.

         In addition, the Servicer shall indemnify the Seller, the Master
Servicer, NIMs Insurer, any Depositor and each Trustee and hold each of them
harmless against any Costs resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of the
Servicer's representations and warranties contained in this Agreement. It is
understood and agreed that the remedies set forth in this Section 6.02
constitute the sole remedies of the Seller, the Master Servicer, any Depositor,
and each Trust and Trustee hereunder respecting a breach of the foregoing
representations and warranties.

         Any cause of action against the Servicer relating to or arising out of
the breach of any representations and warranties made in Section 6.01 shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
the Seller, the Master Servicer, NIMs Insurer, any Depositor or a Trustee to the
Servicer, (ii) failure by the Servicer to cure such breach within the applicable
cure period, and (iii) demand upon the Servicer by the Seller, any Depositor,
NIMs Insurer, the Master Servicer or a Trustee for compliance with this
Agreement.

                                     M-1-32
<PAGE>

         Section 6.03 Additional Indemnification by the Servicer; Third Party
Claims.

         The Servicer shall indemnify the Seller, any Depositor, NIMs Insurer,
each Trustee, the Master Servicer and each Trust and hold them harmless against
any and all Costs that any such indemnified party may sustain in any way related
to (i) the failure of the Servicer to perform its duties and service the related
Securitized Loans in material compliance with the terms of this Agreement or
(ii) the failure of the Servicer to cause any event to occur which would have
occurred if the Servicer were applying Accepted Servicing Practices under this
Agreement. The Servicer shall immediately notify the Seller, any related
Depositor, NIMs Insurer, the Master Servicer, the related Trustee or any other
relevant party if a claim is made by a third party with respect to this
Agreement or the related Securitized Loans, assume (with the prior written
consent of the indemnified party) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
any indemnified party in respect of such claim and follow any written
instructions received from such indemnified party in connection with such claim.
The Servicer shall be promptly reimbursed by the related Trust or Trusts for all
amounts advanced by it pursuant to the preceding sentence except when the claim
is in any way related to the Servicer's indemnification pursuant to Section
6.02, or the failure of the Servicer, together with its designated sub-servicer,
to service and administer the Securitized Loans in material compliance with the
terms of this Agreement. In the event a dispute arises between an indemnified
party and the Servicer with respect to any of the rights and obligations of the
parties pursuant to this Agreement, and such dispute is adjudicated in a court
of law, by an arbitration panel or any other judicial process, then the losing
party shall indemnify and reimburse the winning party for all attorneys' fees
and other costs and expenses related to the adjudication of said dispute.

         Section 6.04 Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.

         In the event that any REMIC elected by a Trust fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the Holder of the
related Residual Certificate, the Master Servicer, the related Trustee and the
related Trust against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that the
Servicer shall not be liable for any such Losses attributable to the action or
inaction of the related Trustee, any related Depositor, the Master Servicer or
the Holder of such Residual Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Residual
Certificate or any such other party on which the Servicer has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
the Holder of such Residual Certificate or the related Trust now or hereafter
existing at law or in equity or otherwise. Notwithstanding the foregoing,
however, in no event shall the Servicer have any liability (1) for any action or
omission that is taken in accordance with and in compliance with the express
terms of, or which is expressly permitted by the terms of, this Agreement, (2)
for any Losses other than arising out of a negligent performance by the Servicer
of its duties and obligations set forth herein, and (3) for any special or
consequential damages to the related Certificateholders.

                                  ARTICLE VII.

                                  THE SERVICER

         Section 7.01 Merger or Consolidation of the Servicer.

         The Servicer shall keep in full effect its existence, rights and
franchises as a limited liability company, and shall obtain and preserve its
qualification to do business as a foreign entity in each jurisdiction in which
such qualification is or shall be necessary to perform its obligations as
contemplated by this Agreement.

         Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall, with the prior written consent of the Master Servicer, be the
successor of the Servicer hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto,

                                     M-1-33
<PAGE>

anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall be an institution (i) having a net worth of
not less than $25,000,000, and (ii) which is a Freddie Mac-approved or Fannie
Mae-approved servicer in good standing.

         Section 7.02 Limitation on Liability of the Servicer and Others.

         Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Seller, the Master
Servicer, any Depositor, any Trust or any Trustee hereunder 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 Servicer or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in strict compliance with any standard of care set forth in this Agreement, or
any liability which would otherwise be imposed by reason of any breach of the
terms and conditions of this Agreement. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Securitized Loans in accordance with this Agreement and
which in its opinion may involve it in any expense or liability; provided,
however, that the Servicer may, with the consent of the related Trustee, NIMs
Insurer and the Master Servicer, undertake any such action which it deems
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto. In such event, the Servicer shall be entitled to
reimbursement from the related Trust for the reasonable legal expenses and costs
of such action.

         Section 7.03 Limitation on Resignation and Assignment by the Servicer.

         The Servicer shall neither assign its rights under this Agreement or
the servicing hereunder nor delegate its duties hereunder or any portion
thereof, or sell or otherwise dispose of all or substantially all of its
property or assets without, in each case, the prior written consent of the
Seller, the Master Servicer and the related Trustee and the NIMs Insurer, which
consent, in the case of an assignment of rights or delegation of duties, shall
be granted or withheld in the discretion of the Seller, the Master Servicer and
the related Trustee, and which consent, in the case of a sale or disposition of
all or substantially all of the property or assets of the Servicer, shall not be
unreasonably withheld; provided, that in each case, there must be delivered to
the Seller, the Master Servicer and the related Trustee and NIMs Insurer a
letter from the applicable Rating Agency or Rating Agencies to the effect that
such transfer of servicing or sale or disposition of assets will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of the
Certificates, and provided further, without any consent or notice the Servicer
may delegate its servicing duties hereunder to the Sub-Servicer pursuant to the
Sub-Servicing Agreement. Notwithstanding the foregoing, the Servicer, without
the consent of the Seller, the Master Servicer and the related Trustee, may
retain third-party contractors to perform certain servicing and loan
administration functions, including without limitation, hazard insurance
administration, tax payment and administration, flood certification and
administration, collection services and similar functions; provided, however,
that the retention of such contractors by Servicer shall not limit the
obligation of the Servicer to service the Securitized Loans pursuant to the
terms and conditions of this Agreement.

         The Servicer shall not resign from the obligations and duties hereby
imposed on it with respect to the Securitized Loans in a Trust except by mutual
consent of the Seller, the Master Servicer and the related Trustee, with the
consent of the NIMs Insurer, or upon the determination that its duties hereunder
are no longer permissible under applicable law and such incapacity cannot be
cured by the Servicer. Any such determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Seller, the Master Servicer and the related Trustee and NIMs Insurer which
Opinion of Counsel shall be in form and substance acceptable to the Seller, the
Master Servicer and the related Trustee and NIMs Insurer. No such resignation
shall become effective until a successor acceptable to the Master Servicer shall
have assumed the Servicer's responsibilities and obligations hereunder in the
manner provided in Section 9.01.

                                     M-1-34
<PAGE>

         Without in any way limiting the generality of this Section 7.03, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of the Seller, the Master Servicer
and the Trustee and NIMs Insurer (except as provided by the first paragraph of
this Section 7.03 and Section 7.04), then such parties shall have the right to
terminate this Agreement upon notice given as set forth in Section 8.01, without
any payment of any penalty or damages and without any liability whatsoever to
the Servicer or any third party.

         Section 7.04 Sub-Servicing Agreements; Sub-Servicing Acknowledgment
Agreement; Successor Sub-Servicer.

         (a) The Servicer may enter into sub-servicing agreements, with the
consent of the NIMs Insurer, for any servicing and administration of the
Securitized Loans with any institution which (i) is an approved Fannie Mae or
Freddie Mac Seller/Servicer as indicated in writing, and (ii) represents and
warrants that it is in compliance with the laws of each state as necessary to
enable it to perform its obligations under such sub-servicing agreement. For
this purpose, sub-servicing shall not be deemed to include the use of a tax
service, or services for reconveyance, insurance or brokering REO Property. The
Servicer shall give prior written notice to the Master Servicer, the Trustee and
NIMs Insurer of the appointment of any sub-servicer and shall furnish to the
Master Servicer, the Trustee and NIMs Insurer a copy of such sub-servicing
agreement. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on Securitized Loans immediately upon receipt by any
sub-servicer of such payments. Any such sub-servicing agreement shall be
acceptable to the Master Servicer and the related Trustee and NIMs Insurer and
shall be consistent with and not violate the provisions of this Agreement. Each
sub-servicing agreement shall provide that a successor servicer shall have the
option to terminate such agreement without payment of any fees if the
predecessor Servicer is terminated or resigns.

         (b) The Servicer, with the consent of the NIMs Insurer, may terminate
any sub-servicing agreement to which it is a party in accordance with the terms
and conditions of such sub-servicing agreement and either itself directly
service the related Securitized Loans or enter into a sub-servicing agreement
with a successor sub-servicer that qualifies under Section 7.04(a).

         (c) Notwithstanding any sub-servicing agreement or the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
sub-servicer or reference to actions taken through a sub-servicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee, the
Master Servicer, the Trust and the Certificateholders for the servicing and
administering of the Securitized Loans in accordance with the provisions hereof
without diminution of such obligation or liability by virtue of such
sub-servicing agreements or arrangements or by virtue of indemnification from
the sub-servicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Securitized Loans.
The Servicer shall be entitled to enter into any agreement with a sub-servicer
for indemnification of the Servicer by such sub-servicer and nothing contained
in this Agreement shall be deemed to limit or modify such indemnification.

         (d) In the event of a Subservicer Termination Trigger, the Servicer
shall terminate the related Subservicer at the direction of the NIMS Insurer.
Following such termination, the Servicer shall have the right to service such
Securitized Loans without the use of a Subservicer or to engage a new
Subservicer acceptable to the NIMS Insurer pursuant to a Subservicing Agreement,
which is not in conflict with the terms of this Agreement. Notwithstanding the
foregoing, the Servicer shall retain the ownership of all servicing rights with
respect to the related Securitized Loans and no such direction of termination of
a Subservicer shall be deemed to diminish such ownership.

         Section 7.05 Inspection.

         The Servicer shall offer each Trustee, NIMs Insurer and the Master
Servicer, upon reasonable advance notice, during normal business hours, access
to all records maintained by the Servicer in respect of its rights and
obligations hereunder and access to officers of the Servicer responsible for
such obligations. Upon request, the

                                     M-1-35
<PAGE>

Servicer shall furnish to each Trustee, NIMs Insurer and the Master Servicer its
most recent publicly available financial statements and such other information
relating to its capacity to perform its obligations under this Agreement.

                                  ARTICLE VIII.

                                   TERMINATION

         Section 8.01 Termination for Cause.

         This Agreement shall be terminable at the option of the Master Servicer
or the related Trustee if any of the following events of default exist on the
part of the Servicer:

                  (i) any failure by the Servicer to remit to the Master
Servicer any payment required to be made under the terms of this Agreement which
continues unremedied for a period of one Business Day after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been received by the Servicer from the Master Servicer, the NIMs Insurer or a
related Trustee; or

                  (ii) failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer set forth in this Agreement (except with respect to its obligations
under Section 5.02, 5.03 or 5.04) which continues unremedied for a period of 15
days following the Servicer's receipt of written notice of such failure from the
Master Servicer, the NIMs Insurer or a related Trustee; or

                  (iii) failure by the Servicer to maintain its license or to
cause its designated sub-servicer to do business or service residential
Securitized Loans in any jurisdiction, if required by such jurisdiction, where a
Mortgaged Property is located; or

                  (iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or

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

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

                  (vii) the Servicer ceases to meet or to cause its designated
sub-servicer to meet the qualifications of a Fannie Mae or Freddie Mac
seller/servicer; or

                  (viii) the Servicer attempts to assign the servicing of the
Securitized Loans or its right to servicing compensation hereunder or the
Servicer attempts to sell or otherwise dispose of all or substantially all of
its property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
thereof, in each case without complying fully with the provisions of Section
7.03 or Section 7.04; or

                  (ix) failure by the Servicer to duly perform, within the
required time period, its obligations under Sections 5.02, 5.03 or 5.04 which
failure continues unremedied for a period of fifteen (15) days after the date

                                     M-1-36
<PAGE>

on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by any party to this Servicing Agreement,
by the NIMs Insurer or by any master servicer responsible for master servicing
the Securitized Loans pursuant to a securitization of such Securitized Loans.

         In each and every such case, so long as an event of default shall not
have been remedied within the applicable cure period, in addition to whatever
rights the Master Servicer or a related Trustee may have at law or equity to
damages, including injunctive relief and specific performance, the Trustee or
the Master Servicer, by notice in writing to the Servicer, and with the consent
of the other party, may (and, at the request of the NIMs Insurer, shall)
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the servicing contract established hereby and the proceeds
thereof.

         Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the
Securitized Loans or otherwise, shall pass to and be vested in a successor
servicer appointed by the Trustee or the Master Servicer, as the case may be,
with the consent of the other party and the NIMs Insurer. Upon written request
from the Master Servicer, the Servicer shall prepare, execute and deliver to the
successor servicer or the Trustee any and all documents and other instruments,
place in such successor's possession all Servicing Files, and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including but not limited to the transfer and
endorsement or assignment of the Securitized Loans and related documents, at the
Servicer's sole expense. The Servicer shall cooperate with the Master Servicer
and such successor in effecting the termination of the Servicer's
responsibilities and rights hereunder, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or Escrow
Account or thereafter received with respect to the Securitized Loans.

         By a written notice, the Trustee or the Master Servicer, with the
consent of the other parties and the NIMs Insurer, may waive any default by the
Servicer in the performance of its obligations hereunder and its consequences.
Upon any waiver of a past default, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived.

         Section 8.02 Termination Without Cause.

         (a) This Agreement shall terminate upon: (i) the later of (a) the
distribution of the final payment or liquidation proceeds on the last
Securitized Loan to the Master Servicer or the Trust, and (b) the disposition of
all REO Property acquired upon foreclosure of the last Securitized Loan and the
remittance of all funds due hereunder or (ii) mutual consent of the Servicer and
the Master Servicer in writing, provided such termination is also acceptable to
the applicable Rating Agency or Rating Agencies and the NIMs Insurer. In
addition, with the prior written consent of the Master Servicer and the NIMs
Insurer, the Seller or its designee may terminate this Agreement with respect to
all of the Securitized Loans, without cause, provided, that the Seller or its
designee gives the Servicer 30 days' notice. Any such notice of termination
shall be in writing and delivered to the Servicer, NIMs Insurer and the Master
Servicer by registered mail to the address set forth in Section 9.03. The Seller
or its designee and the Servicer shall comply with the termination procedures
set forth in Section 9.01 hereof. All unreimbursed Servicing Fees, Servicing
Advances and Monthly Advances still owing the Servicer shall be paid by the
Seller or its designee or the successor servicer from its own funds within 5
Business Days of the date of such termination without right of reimbursement
from the Trust. In connection with any termination pursuant to clause (ii) of
the first sentence of this Section 8.02(a), all unreimbursed Servicing Fees,
Servicing Advances and Monthly Advances still owing the Servicer shall be paid
at the time of such termination by the Trust.

         Upon a termination of the Servicer for cause pursuant to Section 8.01,
all unreimbursed Servicing Fees, Servicing Advances and Monthly Advances still
owing the Servicer shall be paid by the Trust as such amounts are received from
the related Securitized Loans. In connection with any termination pursuant to
the second sentence of this Section 8.02(a), the Seller or its designee or the
successor servicer will be responsible for reimbursing the Servicer for all
unreimbursed out-of-pocket Servicing Advances, Monthly Advances and Servicing
Fees and other

                                     M-1-37
<PAGE>

reasonable and necessary out-of-pocket costs associated with any transfer of
servicing at the time of such transfer of servicing. Any invoices received by
the Servicer after termination will be forwarded to the Seller or its designee,
and the Seller or its designee or the successor servicer shall pay such invoices
within five (5) Business Days upon receipt from the Servicer.

         (b) In the event that the Servicer decides to terminate its obligations
under this Agreement as set forth in clause (ii) of Section 8.02(a), the
Servicer agrees that it will continue to service the Securitized Loans beyond
the prescribed termination date until such time as the Trustee, using reasonable
commercial efforts, is able to appoint, with the consent of the NIMs Insurer, a
successor servicer acceptable to the NIMs Insurer and the Master Servicer and
otherwise meeting the characteristics of Sections 7.01 and 9.01.

                                   ARTICLE IX.

                            MISCELLANEOUS PROVISIONS

         Section 9.01 Successor to the Servicer.

         Simultaneously with the termination of the Servicer's responsibilities
and duties under this Agreement (a) pursuant to Sections 6.02, 7.03, 8.01 or
8.02(a)(ii), the Master Servicer shall (i) within 90 days of the Servicer's
receipt of notice of such termination, succeed to and assume all of the
Servicer's responsibilities, rights, duties and obligations under this Agreement
(except that the Master Servicer shall immediately assume all of the obligations
of the Servicer to make Monthly Advances), or (ii) appoint a successor
acceptable to the NIMs Insurer having the characteristics set forth in clauses
(i) and (ii) of Section 7.01 and which shall succeed to all rights and assume
all of the responsibilities, duties and liabilities of the Servicer under this
Agreement simultaneously with the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement; or (b) as a
result of termination of the Servicer without cause by the Seller pursuant to
Section 8.02 hereof, the Seller shall appoint a successor acceptable to the NIMs
Insurer having the characteristics set forth in clauses (i) and (ii) of Section
7.01 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
simultaneously with the termination of the Servicer's responsibilities, duties
and liabilities under this Agreement. If the NIMs Insurer requests, the Master
Servicer shall appoint a successor servicer as provided in the preceding
sentence. Any successor to the Servicer shall be subject to the approval of the
Master Servicer and the Trustee and, to the extent required by the Trust
Agreement, shall be a member in good standing of the MERS system (if any of the
Securitized Loans are MERS Eligible Securitized Loans, unless such Securitized
Loans are withdrawn from MERS and Assignments of Mortgage are recorded in favor
of the Trust at the expense of the successor servicer). The final approval of a
successor servicer shall be conditioned upon the receipt by the Trustee, the
Master Servicer, NIMs Insurer and the Seller of a letter from the applicable
Rating Agency or Rating Agencies to the effect that such transfer of servicing
will not result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Certificates. In connection with such appointment and
assumption, the Master Servicer or the Seller, as applicable, may make such
arrangements for the compensation of such successor out of payments on
Securitized Loans as it and such successor shall agree, provided, however, that
no such compensation shall be in excess of the Servicing Fee permitted under
this Agreement. In the event that the Servicer's duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to the
aforementioned sections, the Servicer shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement, and shall
take no action whatsoever that might impair or prejudice the rights or financial
condition of its successor. The resignation or removal of the Servicer pursuant
to the aforementioned sections shall not become effective until a successor
servicer shall be appointed pursuant to this Section 9.01, or until the Master
Servicer succeeds to and assumes all of the Servicer's responsibilities, rights,
duties and obligations pursuant to this Section 9.01, and shall in no event
relieve the Servicer of the representations and warranties made pursuant to
Section 6.01 and the remedies available to the Trustee, the Trust, the Master
Servicer, NIMs Insurer and the Seller under Section 6.02 and 6.03, it being
understood and agreed that the provisions of such Sections 6.01, 6.02 and 6.03
shall be applicable not only to such successor servicer but also to the Servicer
notwithstanding any such resignation or termination of the Servicer, or the
termination of this Agreement. Notwithstanding the foregoing, the Master
Servicer, in its capacity as successor

                                     M-1-38
<PAGE>

servicer, shall not be responsible for the lack of information and/or documents
that it cannot obtain through reasonable efforts.

         Within a reasonable period of time, but in no event longer than 30 days
after the appointment of a successor entity, the Servicer shall prepare, execute
and deliver to the successor entity any and all documents and other instruments,
place in such successor's possession all Servicing Files, and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including but not limited to the transfer and
endorsement of the Mortgage Notes and related documents, and the preparation and
recordation of Assignments of Mortgage. The Servicer shall cooperate with the
Master Servicer or the Seller, as applicable, and such successor in effecting
the termination of the Servicer's responsibilities and rights hereunder and the
transfer of servicing responsibilities to the successor servicer, including
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to the
Custodial Account or Escrow Account or thereafter received with respect to the
Securitized Loans.

         Any successor servicer appointed as provided herein shall execute,
acknowledge and deliver to the Trustee, the Servicer, the Master Servicer, NIMs
Insurer and the Seller an instrument (i) accepting such appointment, wherein the
successor shall make the representations and warranties set forth in Section
6.01 (including a representation that the successor servicer is a member of
MERS, unless none of the Securitized Loans are MERS Securitized Loans or MERS
Eligible Securitized Loans or any such Securitized Loans have been withdrawn
from MERS and Assignments of Mortgage are recorded in favor of the Trust) and
provide for the same remedies set forth in Section 6.02 and Section 6.03 herein
(ii) an assumption of the due and punctual performance and observance of each
covenant and condition to be performed and observed by the Servicer under this
Agreement, whereupon such successor servicer shall become fully vested with all
the rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Servicer or termination of this Agreement
pursuant to Sections 6.02, 7.03, 8.01 or 8.02 shall not affect any claims that
the Seller, the Depositor, the Master Servicer, NIMs Insurer or the Trustee may
have against the Servicer arising out of the Servicer's actions or failure to
act prior to any such termination or resignation. In addition, in the event any
successor servicer is appointed pursuant to Section 8.03 of this Agreement, such
successor servicer must satisfy the conditions relating to the transfer of
servicing set forth in the Trust Agreement.

         The Servicer shall deliver promptly to the successor servicer the funds
in the Custodial Account and Escrow Account and all Securitized Loan documents
and related documents and statements held by it hereunder and the Servicer shall
account for all funds and shall execute and deliver such instruments and do such
other things as may reasonably be required to more fully and definitively vest
in the successor all such rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer.

         Upon a successor's acceptance of appointment as such, the Servicer
shall notify the Trustee, the Master Servicer, NIMs Insurer, the Seller and the
Depositor of such appointment in accordance with the procedures set forth in
Section 9.03.

         Section 9.02 Costs.

         The Seller shall pay any legal fees and expenses of its attorneys.
Costs and expenses incurred in connection with the transfer of the servicing
responsibilities pursuant to Section 9.01 or pursuant to any other provision of
this Agreement, including fees for delivering Servicing Files, shall be paid by
the Seller. Subject to Sections 2.03 and 3.01(a), the Seller shall pay the costs
associated with the preparation, delivery and recording of Assignments of
Mortgages.

         Section 9.03 Notices.

         All demands, notices, consents, reports, directions, instructions,
statements and other communications hereunder shall be in writing and shall be
deemed to have been duly given if sent by facsimile or mailed by overnight
courier, addressed as follows (or such other address as may hereafter be
furnished to the other parties by like notice):

                                     M-1-39
<PAGE>

                  (i)      if to the Seller:
                           Home Star Mortgage Services, LLC
                           W. 115 Century Road
                           Paramus, New Jersey 07652
                           Attention: Frank Plenskofski
                           Facsimile: (201) 225-2878

                  (ii)     if to the Servicer:
                           Home Star Mortgage Services, LLC
                           W. 115 Century Road
                           Paramus, New Jersey 07652
                           Attention: Frank Plenskofski
                           Facsimile: (201) 225-2878

                  (iii)    if to the Master Servicer:
                           Wells Fargo Bank,
                           National Association
                           9062 Old Annapolis Road
                           Columbia, Maryland  21045
                           Attention:  Corporate Trust Services -- Home Star
                             Master Servicing
                           Facsimile: (410) 884-2360

                  (iv)     if to the Trustee:
                           The address shown in the Transfer Notice

         Any such communication hereunder shall be deemed to have been received
on the date delivered to or received at the premises of the addressee.

         Section 9.04 Severability Clause.

         Any part, provision, representation or warranty of this Agreement which
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Securitized Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is as close as possible to the economic effect of this Agreement
without regard to such invalidity.

         Section 9.05 No Personal Solicitation.

         From and after the related Closing Date, the Servicer hereby agrees
that it will not take any action or permit or cause any action to be taken by
any of its agents or affiliates, or by any independent contractors or
independent mortgage brokerage companies on the Servicer's behalf, to
personally, by telephone or mail, solicit the Mortgagor under any Securitized
Loan for the purpose of refinancing such Securitized Loan; provided, that the
Servicer may solicit any Mortgagor for whom the Servicer has received a request
for verification of mortgage status, a request for demand for payoff, a
mortgagor initiated written or verbal communication indicating a desire to
prepay the related Securitized Loan, or the mortgagor initiates a title search,
provided further, it is understood and agreed that promotions undertaken by the
Servicer or any of its affiliates which (i) concern optional insurance products
or other

                                     M-1-40
<PAGE>

additional projects or (ii) are directed to mailing lists or customers of
affiliated companies or the general public at large, including without
limitation, mass mailings based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute solicitation
under this Section 9.05 nor is the Servicer prohibited from responding to
unsolicited requests or inquiries made by a Mortgagor or an agent of a
Mortgagor.

         Section 9.06 Counterparts.

         This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.

         Section 9.07 Place of Delivery and Governing Law.

         THIS AGREEMENT 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 THE LAWS OF THE
STATE OF NEW YORK, NOTWITHSTANDING NEW YORK OR OTHER CHOICE OF LAW RULES TO THE
CONTRARY.

         Section 9.08 Further Agreements.

         The Seller and the Servicer each agree to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.

         Section 9.09 Intention of the Parties.

         It is the intention of the parties that the Seller is conveying, and
the Servicer is receiving, only a contract for servicing the Securitized Loans.
Accordingly, the parties hereby acknowledge that each Trust remains the sole and
absolute owner of the related Securitized Loans and all rights (other than the
servicing rights) related thereto.

         Section 9.10 Successors and Assigns; Assignment of Servicing Agreement.

         This Agreement shall bind and inure to the benefit of and be
enforceable by the Servicer, the Seller , each Trustee (with respect to related
Securitized Loans), the NIMs Insurer and the Master Servicer and their
respective successors and assigns. This Agreement shall not be assigned, pledged
or hypothecated by the Servicer to a third party except in accordance with
Section 7.03 and shall not be assigned, pledged or hypothecated by the Seller
except as and to the extent provided in Section 9.11.

         Section 9.11 Assignment by Seller.

         The Seller shall have the right, with the consent of the NIMs Insurer,
upon notice to but without the consent of the Servicer, to assign, in whole or
in part (but exclusive of such Seller's rights and obligations as owner of the
servicing rights relating to Securitized Loans), its interest under this
Agreement with respect to Securitized Loans which will be owned by the related
Trust to the related Depositor, which in turn shall assign such rights to such
Trust, and such Trust then shall succeed to all such rights of the Seller under
this Agreement. All references to the Seller in this Agreement shall be deemed
to include its assignee or designee and any subsequent assignee or designee,
specifically including, with respect to each Securitized Loan, the related Trust
and the related Trustee.

         Section 9.12 Amendment.

         This Agreement may be amended in writing from time to time by the
parties, with the prior written consent of the Trustee and the NIMs Insurer;
provided that the party requesting such amendment shall, at its own expense,

                                     M-1-41
<PAGE>

provide the other parties and such Trustee and the NIMs Insurer with an Opinion
of Counsel that (i)such amendment is permitted under the terms of this
Agreement, (ii) the Servicer has complied with all applicable requirements of
this Agreement, and (iii)) such amendment will not materially adversely affect
the interest of any Trust or the related Certificateholders in the Securitized
Loans.

         Any such amendment shall be deemed not to adversely affect in any
material respect any of the interest of Certificateholders in the Securitized
Loans if each related Trustee and the NIMs Insurer receives written confirmation
from the applicable Rating Agency or Rating Agencies that such amendment will
not cause such Rating Agency or Rating Agencies to reduce, qualify or withdraw
the then current rating assigned to the related Certificates (and any Opinion of
Counsel requested by a party in connection with any such amendment may rely
expressly on such confirmation as the basis therefor).

         Section 9.13 Waivers.

         No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing, signed by the party against whom such
waiver or modification is sought to be enforced.

         Section 9.14 Exhibits.

         The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.

         Section 9.15 Intended Third Party Beneficiary.

         Notwithstanding any provision herein to the contrary, the parties to
this Agreement agree that it is appropriate, in furtherance of the intent of
such parties as set forth herein, that each Trustee, each Trust and each NIMs
Insurer receive the benefit of the provisions of this Agreement as an intended
third party beneficiary of this Agreement to the extent of such provisions with
respect to the related Securitized Loans. The Servicer shall have the same
obligations to the related Trustee, the related Trust and the related NIMs
Insurer as if it were a party to this Agreement, and each Trustee, Trust and
NIMs Insurer shall have the same rights and remedies to enforce the provisions
of this Agreement as if it were a party to this Agreement. The Servicer shall
only take direction from the Master Servicer or NIMs Insurer (if direction by
the Master Servicer or NIMs Insurer, as applicable, is required under this
Agreement) unless otherwise directed by this Agreement. Notwithstanding the
foregoing, all rights and obligations of a Trust, the related Trustee, the
related NIMs Insurer and the Master Servicer hereunder (other than the right to
indemnification) with respect to the related Securitized Loans shall terminate
upon the termination of such Trust pursuant to the related Trust Agreement.

         Section 9.16 Confidentiality.

         The Trustee and the Master Servicer hereby agree to hold and treat all
Confidential Information (as defined below) in confidence and in accordance with
this Section 9.16. Such Confidential Information will not, without the prior
written consent of the Servicer, be disclosed or used by any Trustee or the
Master Servicer or by its subsidiaries, affiliates, directors, officers,
employees, agents or controlling persons (collectively, the "Information
Recipients") other than for the purposes of this Agreement or for the purposes
specified in the related Trust Agreement. Disclosure that is not in violation of
the Right to Financial Privacy Act of 1978, as amended, the Gramm-Leach-Bliley
Act of 1999 (the "G-L-B Act") or other applicable law by the Trustee or the
Master Servicer of any Confidential Information at the request of its outside
auditors or governmental regulatory authorities in connection with an
examination of any Trustee or the Master Servicer by any such authority or for
the purposes specified in any Trust Agreement or this Agreement shall not
constitute a breach of its obligations under this Section 9.19, and shall not
require the prior consent of the Servicer.

         As used herein, "Confidential Information" means non-public personal
information (as defined in the G-L-B Act and its enabling regulations issued by
the Federal Trade Commission) regarding borrowers. Confidential

                                     M-1-42
<PAGE>

Information shall not include information which (i) is or becomes generally
available to the public other than as a result of disclosure by a Trustee or the
Master Servicer or any of its Information Recipients; (ii) was available to the
related Trustee or the Master Servicer on a non-confidential basis from a person
or entity other than the Servicer prior to its disclosure by the Servicer to
such Trustee; (iii) is required to be disclosed by a governmental authority or
related governmental agencies or as otherwise required by law; (iv) becomes
available to the related Trustee or the Master Servicer on a non-confidential
basis from a person or entity other than the Servicer who, to the best knowledge
of the related Trustee or the Master Servicer, is not otherwise bound by a
confidentiality agreement with the Servicer, and is not otherwise prohibited
from transmitting the information to such Trustee or the Master Servicer, or (v)
is released pursuant to the Trust Agreement or this Agreement.

         Section 9.17 General Interpretive Principles.

         For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:

         (a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;

         (b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;

         (c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;

         (d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

         (e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision;

         (f) the term "include" or "including" shall mean by reason of
enumeration; and

         (g) this Agreement shall be construed as a separate agreement with
respect to the Securitized Loans held by each Trust, and references to the
rights of the Master Servicer, Trustee or any NIMs Insurer shall apply
separately with respect to each Trust.

         Section 9.18 Reproduction of Documents.

         This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be as admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

                                     M-1-43
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
date first above written.

                                            HOME STAR MORTGAGE SERVICES, LLC,
                                            as Seller

                                            By:________________________________
                                            Name:
                                            Title:

                                            HOME STAR MORTGAGE SERVICES, LLC,
                                            as Servicer

                                            By:________________________________
                                            Name:
                                            Title:

                                            WELLS FARGO BANK, NATIONAL
                                            ASSOCIATION,
                                            as Master Servicer

                                            By:________________________________
                                            Name:
                                            Title:

                                     M-1-44
<PAGE>

                                    EXHIBIT A

                             FORM OF TRANSFER NOTICE

                                     [Date]

Home Star Mortgage Services, LLC, as Servicer
W. 115 Century Road
Paramus, New Jersey  07652

Cenlar FSB, as Sub-Servicer
P.O. Box 77400
425 Phillips Boulevard
Trenton, New Jersey 08628

You are hereby notified that as of [date] (the "Effective Date"), the
undersigned has transferred the Securitized Loans listed on the attached
schedule (the "Securitized Loans") to Homestar Mortgage Securities Trust 200_ -
__ (the "Trust"). The attached schedule also contains a field which sets forth
the Servicing Fee Rate(s) and the Prepayment Charge Schedule. You agree to
service such Securitized Loans as Securitized Loans under that certain Servicing
Agreement dated as of March 5, 2004 (the "Servicing Agreement"), by and among
Home Star Mortgage Services, LLC ("Home Star"), as servicer (the "Servicer"),
Home Star, as seller (the "Seller") and Wells Fargo Bank, National Association,
as master servicer (the "Master Servicer"), and that certain Sub-Servicing
Acknowledgment Agreement dated of even date therewith (the "Sub-Servicing
Agreement"), by and between the Servicer and Cenlar FSB (the "Sub-Servicer"). In
addition, you shall recognize the Trust or the Master Servicer or
____________________ (the "Trustee"), acting as agents for the Trust, as having
the same rights as Home Star as Seller under the Servicng Agreement with respect
to such transferred Securitized Loans. The address for notice for the Trustee
for these Securitized Loans is __________________________________.

                                        HOME STAR MORTGAGE SERVICES, LLC, as
                                        Seller

                                        By:
Acknowledged by:

HOME STAR MORTGAGE SERVICES, LLC, as Servicer

By:
Name:
Title:

CENLAR FSB, as Sub-Servicer
By:
Name:
Title:

                                     M-1-45
<PAGE>

                                    EXHIBIT B

                       CUSTODIAL ACCOUNT LETTER AGREEMENT

                                                                _______ __, 20__
To:      ___________________________
         ___________________________
         ___________________________
         (the "Depository")

         As Servicer under the Servicing Agreement, dated as of March 5, 2004,
by and among Home Star Mortgage Services, LLC ("Home Star"), as servicer (the
"Servicer"), Home Star, as seller (the "Seller") and Wells Fargo Bank, National
Association, as master servicer (the "Master Servicer") (the "Agreement"), we
hereby authorize and request you to establish an account as the Custodial
Account pursuant to Section 3.03 of the Agreement, to be designated as "Home
Star Mortgage Services, LLC, as Servicer for Wells Fargo Bank, National
Association, as Master Servicer, and in trust for one or more Homestar Mortgage
Securities Trusts." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. This letter is submitted to you in
duplicate. Please execute and return one original to us.

                                  HOME STAR MORTGAGE SERVICES, LLC, as Servicer

                                  By:
                                  Name:
                                  Title:

         The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.

                                  Depository

                                  By:
                                  Name:
                                  Title:
                                  Date:

                                     M-1-46
<PAGE>

                                    EXHIBIT C

                         ESCROW ACCOUNT LETTER AGREEMENT

                                                                _______ __, 20__
To:      ___________________________
         ___________________________
         ___________________________
         (the "Depository")

         As Servicer under the Servicing Agreement, dated as of March 5, 2004,
by and among Home Star Mortgage Services, LLC ("Home Star"), as servicer (the
"Servicer"), Home Star, as seller (the "Seller") and Wells Fargo Bank, National
Association, as master servicer (the "Master Servicer") (the "Agreement"), we
hereby authorize and request you to establish an account as the Escrow Account
pursuant to Section 3.05 of the Agreement, to be designated as "Home Star
Mortgage Services, LLC, as Servicer for Wells Fargo Bank, National Association,
as Master Servicer, and in trust for one or more Homestar Mortgage Securities
Trusts." All deposits in the account shall be subject to withdrawal therefrom by
order signed by the Servicer. This letter is submitted to you in duplicate.
Please execute and return one original to us.

                                  HOME STAR MORTGAGE SERVICES, LLC, as Servicer

                                  By:
                                  Name:
                                  Title:

         The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.

                                  Depository

                                  By:
                                  Name:
                                  Title:
                                  Date:

                                     M-1-47
<PAGE>

                                    EXHIBIT D

                        MONTHLY SERVICER REPORTING FORMAT

The format should be:
1. Record length of 240
2. ASCII
3. All dates should have DD of "01".

<TABLE>
<CAPTION>

                                                                                        COBOL
#        M/O      Field Name                            Position         Length       "Picture"         Justify
<S>      <C>      <C>                                   <C>              <C>          <C>               <C>
1.       O        Master Servicer No.                   001-002          2
2.       O        Unit Code                             003-004          2
3.       M        Loan Number                           005-014          10           X(10)
4.       O        Borrower Name                         015-034          20           X(20)
5.       O        Old Payment Amount                    035-045          11           S(9)V9(02)
6.       O        Old Loan Rate                         046-051          6            9(2)V9(04)
7.       O        Servicer Fee Rate                     052-057          6            9(2)V9(04)
8.       M        Servicer Ending Balance               058-068          11           S9(9)V9(02)
9.       M        Servicer Next Due Date                069-076          8            CCYYMMDD
10.      O        Curtail Amt 1 - Before                077-087          11           S9(9)V9(02)
11.      O        Curtail Date 1                        088-095          8            CCYYMMDD
12.      O        Curtail Amt 1 - After                 096-106          11           S9(9)V9(02)
13       O        Curtail Amt 2 - Before                107-117          11           S9(9)V9(02)
14.      O        Curtail Date                          118-125          8            CCYYMMDD
15.      O        Curtail Amt 2 - After                 126-136          11           9(9)V9(02)
16.      O        Curtail Amt 3 - Before                137-147          11           9(9)V9(02)
17.      O        Curtail Date                          148-155          8            CCYYMMDD
18       O        Curtail Amt 3 - After                 156-166          11           9(9)V9(02)
19       O        New Payment Amount                    167-177          11           9(9)V9(02)
20.      O        New Loan Rate                         178-183          6            (2)V9(04)
21.      O        Index Rate                            184-189          6            (2)V9(04)
22.      O        Remaining Term                        190-192          3            (3)
23.      O        Liquidation Amount                    193-203          11           9(9)V9(02)
24.      O        Action Code                           204-205          2            (02)
25.      O        Scheduled Principal                   206-216          11           9(9)V9(02)
26.      O        Scheduled Interest                    217-227          11           9(9)V9(02)
27.      O        Scheduled Ending Balance              228-238          11           9(9)V9(02)
28.      O        FILLER                                239-240          2            (02)
Trailer Record
1.       O        Number of Records                     001-006          6            9(06)
2.       O        FILLER                                007-240          234          X(234)
</TABLE>

Field Names and Descriptions:

Field Name        Description

Master Servicer No.        Hard code as "01" used internally

Unit Code         Hard code as "  " used internally

Loan Number       Investor's loan number

                                     M-1-48
<PAGE>

<TABLE>
<CAPTION>

<S>               <C>
Borrower Name     Last name of borrower

Old Payment Amount         P&I amount used for the applied payment

Old Loan Rate     Gross interest rate used for the applied payment

Servicer Fee Rate Servicer's fee rate

Servicer Ending Balance    Ending actual balance after a payment has been applied

Servicer Next Due Date     Borrower's next due date for a payment

Curtailment Amount 1 - Before       Amount of curtailment applied before the payment

Curtailment Date 1                  Date of curtailment should coincide with the payment date applicable to the curtailment

Curtailment Amount 1 - After        Amount of curtailment applied after the payment

Curtailment Amount 2 - Before       Amount of curtailment applied before the payment

Curtailment Date 2                  Date of curtailment should coincide with the payment date applicable to the curtailment

Curtailment Amount 2 - After        Amount of curtailment applied after the payment

Curtailment Amount 3 - Before       Amount of curtailment applied before the payment

Curtailment Date 3                  Date of curtailment should coincide with the payment date applicable to the curtailment

Curtailment Amount 3 - After        Amount of curtailment applied after the payment

New Payment Amount                  For ARM,  Equal,  or Buydown loans,  when a payment  change  occurs,  this is the scheduled
                                    payment

New Loan Rate                       For ARM loans, when the gross interest rate change occurs, this is the scheduled rate

Index Rate                          For ARM loans, the index rate used in calculating the new gross interest rate

Remaining Term                      For ARM loans, the number of months left on the loan used  to determine the new P&I amount

Liquidation Amount         The payoff amount of the loan

Action Code       For delinquent loans:
                                            12 -- Relief Provisions
                                            15 -- Bankruptcy/Litigation
                                            20 -- Referred for Deed-in-lieu, short sale
</TABLE>

                                     M-1-49
<PAGE>

<TABLE>
<CAPTION>

<S>                                         <C>
                                            30 -- Referred to attorney to begin foreclosure       60 -- Loan Paid in full
                                            70 -- Real Estate Owned

Scheduled Principal                         Amount of principal from borrower payment due to  bondholder

Scheduled Interest         Amount of interest from borrower payment due to bondholder

Scheduled Ending Balance   Ending scheduled balance of loan

FILLER   Should be filled with spaces
</TABLE>

                                     M-1-50
<PAGE>

                                       EXHIBIT E

               Wells Fargo Bank Master Servicing Default Reporting
                             DATA FIELD REQUIREMENTS

Data must be submitted to Wells Fargo Bank in an Excel spreadsheet format with
fixed field names and data type. The Excel spreadsheet should be used as a
template consistently every month when submitting data.

Table: Delinquency

<TABLE>
<CAPTION>

Name                                           Type                                     Character Size
<S>                                            <C>                                      <C>
Servicer Loan #                                Number (Double)                          10
Investor Loan #                                Number (Double)                          10
Servicer Investor #                            Text                                     3
Borrower Name                                  Text                                     20
Address                                        Text                                     30
State                                          Text                                     2
Zip                                            Text                                     10
Due Date                                       Date/Time                                8
Wells Fargo Action Code                        Text                                     2
FC Approval Date                               Date/Time                                8
File Referred to Attorney                      Date/Time                                8
NOD                                            Date/Time                                8
Complaint Filed                                Date/Time                                8
Sale Published                                 Date/Time                                8
Target Sale Date                               Date/Time                                8
Actual Sale Date                               Date/Time                                8
Loss Mit Approval Date                         Date/Time                                8
Loss Mit Type                                  Text                                     5
Loss Mit Code                                  Number                                   2
Loss Mit Estimated Completion Date             Date/Time                                8
Loss Mit Actual Completion Date                Date/Time                                8
Loss Mit Broken Plan Date                      Date/Time                                8
BK Chapter                                     Text                                     6
BK Filed Date                                  Date/Time                                8
Post Petition Due                              Date/Time                                8
Motion for Relief                              Date/Time                                8
Lift of Stay                                   Date/Time                                8
Reason For Delinquency                         Text                                     10
Occupant Code                                  Text                                     10
Eviction Start Date                            Date/Time                                8
Eviction Completed Date                        Date/Time                                8
List Price                                     Currency                                 8
List Date                                      Date/Time                                8
Accepted Offer Price                           Currency                                 8
Accepted Offer Date                            Date/Time                                8
Estimated REO Effective Date                   Date/Time                                8
Actual REO Sale Date                           Date/Time                                8
Servicer Comments                              Text                                     200
Modification Exp. Date                         Date/Time                                8
Fannie Mae Del. Status Code                    Text                                     2
Fannie Mae Del. Reason Code                    Text                                     2
BK Discharge/Dismissal Date                    Date/Time                                8
</TABLE>

                                     M-1-51
<PAGE>

<TABLE>
<CAPTION>

Name                                           Type                                     Character Size
<S>                                            <C>                                      <C>
Property Damage Date                           Date/Time                                8
Property Repair Amount                         Currency                                 8
BK Hearing Date                                Date/Time                                8
POC Date                                       Date/Time                                8
POC Amount                                     Currency                                 8
BK Case Number                                 Text                                     30 Maximum
F/C Sale Amount                                Currency                                 8
Redemption Exp. Date                           Date/Time                                8
Property Value Date                            Date/Time                                8
Current Property Value                         Currency                                 8
Repaired Property Value                        Currency                                 8
BPO Y/N                                        Text                                     1
Current LTV                                    Currency                                 8
Property Condition Code                        Text                                     2
Property Inspection Date                       Date/Time                                8
MI Cancellation Date                           Date/Time                                8
MI Claim Filed Date                            Date/Time                                8
MI Claim Amount                                Currency                                 8
MI Claim Reject Date                           Date/Time                                8
MI Claim Resubmit Date                         Date/Time                                8
MI Claim Paid Date                             Date/Time                                8
MI Claim Amount Paid                           Currency                                 8
Pool Claim Filed Date                          Date/Time                                8
Pool Claim Amount                              Currency                                 8
Pool Claim Reject Date                         Date/Time                                8
Pool Claim Paid Date                           Date/Time                                8
Pool Claim Amount Paid                         Currency                                 8
Pool Claim Resubmit Date                       Date/Time                                8
FHA Part A Claim Filed Date                    Date/Time                                8
FHA Part A Claim Amount                        Currency                                 8
FHA Part A Claim Paid Date                     Date/Time                                8
FHA Part A Claim Paid Amount                   Currency                                 8
FHA Part B Claim Filed Date                    Date/Time                                8
FHA Part B Claim Amount                        Currency                                 8
FHA Part B Paid Date                           Date/Time                                8
FHA Part B Claim Paid Amount                   Currency                                 8
V A Claim Filed Date                           Date/Time                                8
V A Claim Paid Date                            Date/Time                                8
V A Claim Paid Amount                          Currency                                 8
</TABLE>

The Action Code Field should show the applicable numeric code to indicate that a
special action is being taken. The Action Codes are the following:

12-Relief Provisions (i.e. Sailors & Soldiers Relief Act)
15-Bankruptcy/Litigation
20-Loss Mitigation-Workout
30-Referred for Foreclosure
60-Payoff
65-Repurchase
70-REO-Held for Sale
71- Third Party Sale/Condemnation
72-REO-Pending Conveyance-Pool Insurance claim filed

                                     M-1-52
<PAGE>

Wells Fargo Bank will accept alternative Action Codes to those above, provided
that the Codes are consistent with industry standards. If Action Codes other
than those above are used, the Servicer must supply Wells Fargo Bank with a
description of each of the Action Codes prior to sending the file.

Description of Action Codes:

Action Code 12- To report a Securitized Loan for which the Borrower has been
granted relief for curing a delinquency.

Action Code 15 - To report a borrower filing bankruptcy and for all active
bankruptcies.

Action Code 20 - To report that the Borrower has agreed to some form of loss
mitigation/workout. Examples of these include Short Sale, Deed-in-Lieu of
Foreclosure, Formal Forbearance Agreements, Modifications, etc.

Action Code 30 - To report a loan that has been referred to attorney for
foreclosure.

Action Code 60 - To report that a Securitized Loan has been paid in full either
at, or prior to, maturity.

Action Code 65- To report that the Servicer is repurchasing the Securitized
Loan.

Action Code 70 -To report that a Securitized Loan has been foreclosed or a
deed-in-lieu of foreclosure has been accepted, and the Servicer, on behalf of
the owner of the Securitized Loan, has acquired the property and may dispose of
it.

Action Code 71 -To report that a Securitized Loan has been foreclosed and a
third party acquired the property, or a total condemnation of the property has
occurred.

Action Code 72 -To report that a Securitized Loan has been foreclosed, or a
deed-in-lieu has been accepted, and the property may be conveyed to the mortgage
insurer and the pool insurance claim has been filed. Also to be used for
completed HUDNA foreclosures where the property is pending conveyance to HUDNA.

The Loss Mit Type field should show the approved Loss Mitigation arrangement.
The following are acceptable:
*******
o        ASU M - Approved Assumption
o        BAP - Borrower Assistance Program
o        CO - Charge Off
o        DIL - Deed-in-Lieu
o        FFA - Formal Forbearance Agreement
o        MOD - Loan Modification
o        PRE - Pre-Sale
o        SS - Short Sale
o        MISC- Anything else approved by the PMI or Pool Insurer

Wells Fargo Bank will accept alternative Loss Mitigation Types to those above,
provided that they are consistent with industry standards. If Loss Mitigation
Types other than those above are used, the Servicer must supply Wells Fargo Bank
with a description of each of the Loss Mitigation Types prior to sending the
file.

The Occupant Code field should show the current status of the property. The
acceptable codes are:

o        Mortgagor
o        Tenant
o        Unknown
o        Vacant

                                     M-1-53
<PAGE>

The RFD field should show the Reason for Default. The acceptable codes are
below, or we can accept Fannie Mae Delinquency Reason Codes.

Delinquency Code  Delinquency Description
AB       Abandonment of property
AA       Arm Adjustment Problem
BK       Bankruptcy
06       Borrower Complaint
BOC      Borrower Out of Country
BU       Business Failure
CL       Casualty Loss
JC       Change in Job
CD       Chronic Delinquent
CSP      Chronic Slow Pay
CI       Commission Income
DIF      Death in Family
08       Deceased
00       Defective Loan
DT       Delinquent Property Tax
FIRE     Disability
DS       Disregard
Dl       Divorce
DD       Domestic Difficulties
EA       Earthquake
ENV      Environmental
ECO      Excessive Credit Obligation
FA       Family Death
FE       Family Emergency
FI       Family Illness
FD       Financial Difficulty
05       Foreclosure or Borrower moved or skipped
FFP      Formal Forbearance Plan
FR       Fraud
G        Garnishment
HU       Hurricane
IT       Illegal Transfer
B1       Illness of Borrower
IP       Inability to Sell Property
IC       Incarcerated
IN       Income Reduction
LIT      Involved in Litigation
IRS      IRS Lien
JD       Judgment
LB       Language Barrier
LM       Legal Matter
LS       Legal Separation
MA       Marital Difficulties
ME       Medical
03       Medical/Illness in Family
MD       Mortgagor Death
ND       Natural Disaster
NC       No Contact with borrower
NSF      Non Sufficient Funds

                                     M-1-54
<PAGE>

09       Other
01       Over Obligated
OV       Overextended
PAD      Payment Dispute
PP       Payment Plan Established
POP      Payoff Pending
PE       Pending Sale
PS       Previous Servicer Problem
PB       Promise to Pay Broken
PR       Property Damage
PD       Property Devaluation
REFI     Refinance Pending
RELO     Relocation (Job Related)
JRP      Relocation (Personal)l
RE       Rental
10       REO
SI       Seasonal Income
SE       Self Employed
SP       Servicing Problems
SR       Slow Receivables
02       Unemployed/Reduced Income
UE       Unemployment
UK       Unknown
UTP      Unwilling to Pay

                                     M-1-55
<PAGE>

                                    EXHIBIT F

WELLS FARGO BANK, N.A.
Form 332

Calculation of Realized Loss

Purpose

To provide the Servicer with a form for the calculation of any Realized Loss (or
gain) as a result of a Securitized Loan having been foreclosed and Liquidated.

Distribution

The Servicer will prepare the form in duplicate and send the original together
with evidence of conveyance of title and appropriate supporting documentation to
the Master Servicer with the Monthly Accounting Reports which supports the
Securitized Loan's removal from the Securitized Loan Activity Report. The
Servicer will retain the duplicate for its own records.

Due Date

With respect to any liquidated Securitized Loan, the form will be submitted to
the Master Servicer no later than the date on which statements are due to the
Master Servicer under Section 4.02 of this Agreement (the "Statement Date") in
the month following receipt of final liquidation proceeds and supporting
documentation relating to such liquidated Securitized Loan; provided, that if
such Statement Date is not at least 30 days after receipt of final liquidation
proceeds and supporting documentation relating to such liquidated Securitized
Loan, then the form will be submitted on the first Statement Date occurring
after the 30th day following receipt of final liquidation proceeds and
supporting documentation.

Preparation Instructions

The numbers on the form correspond with the numbers listed below.

1.       The actual Unpaid Principal Balance of the Securitized Loan.
2.       The Total Interest Due less the aggregate amount of servicing fee that
         would have been earned if all delinquent payments had been made as
         agreed.
3-7.     Complete as necessary. All line entries must be supported by copies of
         appropriate statements, vouchers, receipts, canceled checks, etc., to
         document the expense. Entries not properly documented will not be
         reimbursed to the Servicer.
8.       Accrued Servicing Fees based upon the Scheduled Principal Balance of
         the Securitized Loan as calculated on a monthly basis. 10. The total of
         lines 1 through 9.

Credits

11-17.   Complete as necessary. All line entries must be supported by copies of
         the appropriate claims forms, statements, payment checks, etc. to
         document the credit. If the Securitized Loan is subject to a Bankruptcy
         Deficiency, the difference between the Unpaid Principal Balance of the
         Note prior to the Bankruptcy Deficiency and the Unpaid Principal
         Balance as reduced by the Bankruptcy Deficiency should be input on line
         16.
18.      The total of lines 11 through 17.

                                     M-1-56
<PAGE>

Total Realized Loss (or Amount of Any Gain)

19.      The total derived from subtracting line 18 from 10. If the amount
         represents a realized gain, show the amount in parenthesis ( )

                                     M-1-57
<PAGE>

WELLS FARGO BANK, N.A.
CALCULATION OF REALIZED LOSS

WELLS FARGO BANK, N.A. Trust:  ___________________________
Prepared by:  __________________    Date:  _______________
Phone:  ______________________

Servicer Loan No.                   Servicer Name              Servicer Address

WELLS FARGO BANK, N.A.
Loan No._____________________________
Borrower's Name:________________________________________________________
Property
Address:________________________________________________________________
Liquidation and Acquisition Expenses:
Actual Unpaid Principal Balance of Securitized Loan  $ _______________(1)
Interest accrued at Net Rate         ________________(2)
Attorney's Fees    ________________(3)
Taxes     ________________(4)
Property Maintenance        ________________(5)
MI/Hazard Insurance Premiums         ________________(6)
Hazard Loss Expenses        ________________(7)
Accrued Servicing Fees      ________________(8)
Other (itemize)    ________________(9)
_________________________________________   $ _________________
_________________________________________    __________________
_________________________________________    __________________
_________________________________________    __________________
Total Expenses    $ ______________(10)
Credits:
Escrow Balance    $ ______________(11)
HIP Refund        ________________(12)
Rental Receipts   ________________(13)
Hazard Loss Proceeds       ________________(14)
Primary Mortgage Insurance Proceeds ________________(15)
Proceeds from Sale of Acquired Property     ________________(16)
Other (itemize)   ________________(17)
_________________________________________   ___________________
_________________________________________   ___________________
Total Credits     $________________(18)
Total Realized Loss (or Amount of Gain)     $________________(19)

                                     M-1-58
<PAGE>

                                   EXHIBIT M-2
                     SERVICING AGREEMENT FOR SUBPRIME LOANS

THIS IS A SERVICING AGREEMENT, dated as of March 5, 2004 (the "Agreement"), and
is executed between Homestar Mortgage Acceptance Corp. (the "Owner") and Home
Star Mortgage Services LLC (the "Servicer").

                              W I T N E S S E T H:

         WHEREAS, the Owner and the Servicer desire that, from and after the
Effective Date, the Mortgage Loans which are subject to this Agreement will be
serviced by the Servicer on behalf of the Owner in accordance with the terms and
provisions of this Agreement.

         NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Owner and the Servicer agree as
follows:

                                    ARTICLE I
                                   DEFINITIONS

         Section 1.01. Defined Terms.

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

         Accepted Servicing Practices: With respect to any Mortgage Loan, all
applicable federal, state and local laws and regulations and the standards
employed by the Servicer in servicing similar mortgage loans for its own
account, giving due consideration to those mortgage servicing practices and
procedures (including collection practices and procedures) of mortgage banking
institutions which service mortgage loans of the same type as such Mortgage Loan
in the jurisdiction where the related Mortgaged Property is located, giving due
consideration to customary and usual standards of practice of mortgage lenders
and loan servicers administering similar mortgage loans.

         Adjustment Date: As to each ARM Loan, the date on which the Mortgage
Interest Rate is adjusted in accordance with the terms of the related Mortgage
Note and Mortgage.

         Agreement: This Servicing Agreement including all exhibits hereto,
amendments hereof and supplements hereto.

         Ancillary Income: All income derived from the Mortgage Loans (other
than the (i) Servicing Fee or (ii) prepayment charges attributable to the
Mortgage Loans), including but not limited to late charges, any interest paid on
funds deposited in the Custodial Account and Escrow Account (other than interest
on escrowed funds required by law to be paid to the Mortgagor), fees received
with respect to checks or bank drafts returned by the related bank for
non-sufficient funds, assumption fees, optional insurance administrative fees
and all other incidental fees and charges.

         ARM Loan: A first lien, conventional, 1-4 family residential Mortgage
Loan with an interest rate which adjusts from time to time in accordance with
the related Index and is subject to a Periodic Rate Cap and a Lifetime Rate Cap
and which may permit conversion to a fixed interest rate.

         Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
legal holiday in the State of New York or the jurisdiction in which the Servicer
conducts its servicing activities, or (iii) a day on which banking and savings
and loan institutions in the State of New York or the jurisdiction in which the
Servicer conducts its servicing activities are authorized or obligated by law or
executive order to be closed.

                                      M-2-1
<PAGE>

         Code: The Internal Revenue Code of 1986, as it may be amended from time
to time, or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.

         Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.

         Custodial Account: The separate demand account or accounts created and
maintained pursuant to Section 4.04 which shall be entitled "HMAC 2004-1
Custodial Account in trust for [Owner], Owner of Whole Loan Mortgages" and shall
be established at a Qualified Depository.

         Custodial Agreement: The Custodial Agreement dated as of March 1, 2004
among HSBC Bank (USA), the Owner and Wells Fargo Bank, N.A., providing for the
custody of Mortgage Loan Documents.

         Custodian: Wells Fargo Bank, N.A, or such other Custodian as the Owner
shall designate.

         Determination Date: The 15th day of any month, or if such 15th day is
not a Business Day, the first Business Day immediately preceding such 15th day.

         Due Date: With respect to any Mortgage Loan, each day on which payments
of principal and interest are required to be paid in accordance with the terms
of the related Mortgage Note, exclusive of any days of grace.

         Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month preceding the month of such Remittance Date and
ending on the first day of the month of such Remittance Date.

         Effective Date:  March 5, 2004.

         Escrow Account: The separate trust account or accounts created and
maintained pursuant to Section 4.06 which shall be entitled "HMAC 2004-1 Escrow
Account, in trust for [Owner], Owner of Whole Loan Mortgages and various
Mortgagors" and shall be established at a Qualified Depository.

         Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
Mortgage Loan Document.

         Escrow Mortgage Loan: The Mortgage Loans for which the Servicer has
established an Escrow Account for items constituting Escrow Payments.

         Event of Default: Any one of the conditions or circumstances enumerated
in Section 9.01.

         Fannie Mae: Fannie Mae, or any successor thereto.

         Fannie Mae Guide: The Fannie Mae Selling Guide and the Fannie Mae
Servicing Guide and all amendments or additions thereto.

         Fidelity Bond: A fidelity bond to be maintained by the Servicer
pursuant to Section 4.12.

         Freddie Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.

         Freddie Mac Guide: The Freddie Mac Selling Guide and the Freddie Mac
Servicing Guide and all amendments or additions thereto.

                                     M-2-2
<PAGE>

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

         GAAP: Generally accepted accounting principles and procedures,
consistently applied.

         HUD: The United States Department of Housing and Urban Development or
any successor thereto.

         Index: With respect to each ARM Loan, the index, as specified in the
related Mortgage Note, used to determine the Mortgage Interest Rate on each
Adjustment Date on such ARM Loan.

         Index Rate: With respect to each ARM Loan, on each Adjustment Date, the
rate per annum equal to the Index, calculated as provided in the related
Mortgage Note.

         Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.

         Lifetime Rate Cap: With respect to each ARM Loan, the maximum Mortgage
Interest Rate over the term of such Mortgage Loan, as specified in the related
Mortgage Note.

         Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, other than amounts
received following the acquisition of an REO Property pursuant to Section 4.13.

         Margin: With respect to each ARM Loan, the fixed percentage amount set
forth in the related Mortgage Note which is added to the Index in order to
determine the related Mortgage Interest Rate.

         MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.

         MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage,
or an Assignment of Mortgage, has been or will be recorded in the name of MERS,
as nominee for the holder from time to time of the related Mortgage Note.

         Monthly Advance: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Servicer pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.

         Monthly Payment: With respect to each Mortgage Loan, the scheduled
monthly payment of principal and interest thereon which is payable by the
related Mortgagor under the related Mortgage Note.

         Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a lien on real property securing the Mortgage Note.

         Mortgage Interest Rate: The annual rate at which interest accrues on
any Mortgage Loan in accordance with the provisions of the related Mortgage
Note, and in the case of an ARM Loan, as adjusted from time to time on each
Adjustment Date for such Mortgage Loan to equal the Index Rate for such Mortgage
Loan plus the Margin for such Mortgage Loan, and subject to the limitations on
such interest rate imposed by the Periodic Rate Cap and the Lifetime Rate Cap.

         Mortgage Loan: An individual Mortgage Loan described herein and as
further identified on the Mortgage Loan Schedule, which Mortgage Loan includes
without limitation the Mortgage Loan Documents, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO

                                     M-2-3
<PAGE>

Disposition Proceeds and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan.

         Mortgage Loan Documents: With respect to each Mortgage Loan, the
original mortgage loan legal documents held by the Owner or by a Custodian on
the Owner's behalf.

         Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Owner, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate.

         Mortgage Loan Schedule: The schedule of Mortgage Loans attached hereto
as Exhibit A.

         Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.

         Mortgaged Property: The underlying real property securing repayment of
the debt evidenced by a Mortgage Note.

         Mortgagor:  The obligor on a Mortgage Note.

         Non-Escrow Mortgage Loan: Any Mortgage Loan which is not an Escrow
Mortgage Loan.

         Nonrecoverable Advance: Any Monthly Advance previously made by the
Servicer pursuant to Section 5.03 or any Servicing Advance which, in the good
faith judgment of the Servicer, will not be ultimately recoverable by the
Servicer from Liquidation Proceeds or other proceeds of the related Mortgage
Loan. The determination by the Servicer that is has made a Nonrecoverable
Advance, shall be evidenced by an Officer's Certificate of the Servicer
delivered to the Owner and the NIMs Insurer and detailing the reasons for such
determination.

         Officers' Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President or an
Assistant Vice President or by the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Servicer, and delivered to
the Owner as required by this Agreement.

         Opinion of Counsel: A written opinion of counsel, who may be an
employee of the party on behalf of whom the opinion is being given, reasonably
acceptable to the other party.

         Owner: Homestar Mortgage Acceptance Corp., its successors in interest
and assigns.

         Partial Principal Prepayment: A Principal Prepayment by a Mortgagor in
part but not in full of the outstanding principal balance of a Mortgage Loan.

         Periodic Rate Cap: With respect to each ARM Loan, the maximum number of
percentage points by which the Mortgage Interest Rate may increase or decrease
on any Adjustment Date.

         Permitted Investments: Any one or more of the following obligations or
securities:

         (i) direct obligations of, and obligations the timely payment of which
are fully guaranteed by the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;

         (ii) (a) demand or time deposits, federal funds or bankers' acceptances
issued by any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof and subject to
supervision and examination by federal and/or state banking authorities,
provided that the commercial paper and/or the short-term deposit rating and/or
the long-term unsecured debt obligations or deposits of such

                                     M-2-4
<PAGE>

depository institution or trust company at the time of such investment or
contractual commitment providing for such investment are rated in one of the two
highest rating categories by each Rating Agency and (b) any other demand or time
deposit or certificate of deposit that is fully insured by the FDIC;

         (iii) repurchase obligations with respect to (a) any security described
in clause (i) above or (b) any other security issued or guaranteed by an agency
or instrumentality of the United States of America, the obligations of which are
backed by the full faith and credit of the United States of America, in either
case entered into with a depository institution or trust company (acting as
principal) described in clause (ii)(a) above;

         (iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
state thereof that are rated in the highest rating categories by each Rating
Agency at the time of such investment or contractual commitment providing for
such investment; provided, however, that securities issued by any particular
corporation will not be Permitted Investments to the extent that investments
therein will cause the then outstanding principal amount of securities issued by
such corporation and held as Permitted Investments to exceed 10% of the
aggregate outstanding principal balances and amounts of all the Permitted
Investments;

         (v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) which are rated
in the highest rating categories by each Rating Agency at the time of such
investment;

         (vi) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each Rating Agency and the NIMs
Insurer; and

         (vii) any money market funds the collateral of which consists of
obligations fully guaranteed by the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America (which may
include repurchase obligations secured by collateral described in clause (i))
and which money market funds are rated in one of the two highest rating
categories by each Rating Agency;

provided, however, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par; and
provided further that any such instrument or security must be payable on demand
or on a specified date not later than the Remittance Date on which amounts held
therein are required to be distributed.

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

         Prepayment Interest Shortfall: With respect to any Mortgage Loan that
was subject to a Full Principal Prepayment or Partial Principal Prepayment
during any Due Period, which Full Principal Prepayment or Partial Principal
Prepayment was applied to such Mortgage Loan prior to such Mortgage Loan's Due
Date in such Due Period, the amount of interest (adjusted to the applicable
Mortgage Loan Remittance Rate) that would have accrued on the amount of such
Full Principal Prepayment or Partial Principal Prepayment during the period
commencing on the date as of which such Full Principal Prepayment or Partial
Principal Prepayment was applied to such Mortgage Loan and ending on the day
immediately preceding such Due Date, inclusive.

         Primary Mortgage Insurance Policy: Each primary policy of mortgage
insurance, or any replacement policy therefor obtained by the Servicer pursuant
to Section 4.08.

         Prime Rate: The prime rate of U.S. money center banks as published from
time to time in The Wall Street Journal.

                                     M-2-5
<PAGE>

         Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan, full or partial, which is received in advance of its scheduled
Due Date, including any prepayment charge or premium thereon, and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.

         Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-2 by Standard & Poor's Ratings Services or
Prime-1 by Moody's Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Owner by written notice to the Servicer) at
the time any deposits are held on deposit therein.

         Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided.

         Rating Agency: Standard & Poor's Ratings Service, a division of The
McGraw Hill Companies Inc., Moody's Investors Service, Inc. or Fitch, Inc.

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

         REMIC Provisions: The provisions of the federal income tax law relating
to a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter
1, Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.

         Remittance Date: The 18th day of any month, or if such 18th day is not
a Business Day, the first Business Day immediately preceding such 18th day. The
first Remittance Date shall occur on April 16, 2004.

         REO Disposition: The final sale by the Servicer of any REO Property.

         REO Disposition Proceeds: Amounts received by the Servicer in
connection with a related REO Disposition.

         REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Owner as described in Section 4.13.

         Servicer: Home Star Mortgage Services LLC, or any of its successors in
interest or any successor under this Agreement appointed as herein provided.

         Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations relating to each Mortgage Loan, including the cost of (a) the
inspection, preservation, restoration and protection of the Mortgaged Property,
(b) any enforcement, administrative or judicial proceedings, or any legal work
or advice specifically related to servicing the Mortgage Loans, including
foreclosures, bankruptcies, condemnations, drug seizures, elections,
foreclosures by subordinate or superior lienholders, and other legal actions
incidental to the servicing of the Mortgage Loans (provided that such expenses
are reasonable and that the Servicer specifies the Mortgage Loan(s) to which
such expenses relate), (c) the management and liquidation of the Mortgaged
Property if the Mortgaged Property is acquired in full or partial satisfaction
of the Mortgage, (d) taxes, assessments, water rates, sewer rates and other
charges which are or may become a lien upon the Mortgaged Property, and Primary
Mortgage Insurance Policy premiums and fire and hazard insurance coverage and
(e) compliance with the obligations under Section 4.08.

                                     M-2-6
<PAGE>

         Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Owner shall pay to the Servicer, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the applicable
Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage
Loan. Such fee shall be payable monthly, computed on the basis of the same
principal amount and period respecting which any related interest payment on a
Mortgage Loan is computed. The obligation of the Owner to pay the Servicing Fee
is limited to, and the Servicing Fee is payable from the interest portion of
such Monthly Payments, Liquidation Proceeds, Insurance Proceeds, REO Disposition
Proceeds and Condemnation Proceeds collected by the Servicer or as otherwise
provided under Section 4.05.

         Servicing Fee Rate:  0.50%.

         Servicing File: The documents, records and other items pertaining to a
particular Mortgage Loan, and any additional documents relating to such Mortgage
Loan as are in, or as may from time to time come into, the Servicer's
possession.

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

         Trust Agreement: Any trust agreement, pooling and servicing agreement,
indenture or comparable documents by and among some or all of the Owner, the
Master Servicer and a Trustee (and which may include other parties) creating a
trust and/or otherwise effectuating a pass-through transfer.

         Any capitalized terms used and not defined herein shall have the
meanings ascribed to such terms in the related Trust Agreement.

                                   ARTICLE II
        SERVICING OF MORTGAGE LOANS; POSSESSION OF SERVICING FILES; BOOKS
                AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS

         Section 2.01  Servicing of Mortgage Loans.

         The Servicer does hereby agree to service the Mortgage Loans, from and
after the Effective Date, pursuant to the terms of this Agreement. The Mortgage
Loans subject to this Agreement are described in the Mortgage Loan Schedule
attached hereto.

         Section 2.02  Maintenance of Servicing Files.

         The Servicer shall maintain a Servicing File consisting of all
documents necessary to service the Mortgage Loans. The possession of each
Servicing File by the Servicer is for the sole purpose of servicing the related
Mortgage Loan, and such retention and possession by the Servicer is in a
custodial capacity only. The Servicer acknowledges that the ownership of each
Mortgage Loan is vested in the Owner. All rights arising out of the Mortgage
Loans including all funds received on or in connection with the Mortgage Loans
and all records or documents with respect to the Mortgage Loans prepared by or
which come into the possession of the Servicer shall be received and held by the
Servicer for the sole purpose of servicing the Mortgage Loans and such retention
and possession by the Servicer is in a custodial capacity only in trust for the
exclusive benefit of the Owner as the owner of the related Mortgage Loans. Any
portion of the related Servicing Files retained by the Servicer shall be
appropriately identified in the Servicer's computer system to reflect clearly
the ownership of the related Mortgage Loans by the Owner. The Servicer shall
release its custody of the contents of the related Servicing Files only in
accordance with written instructions of the Owner, except when such release is
required as incidental to the Servicer's servicing of the Mortgage Loans, such
written instructions shall not be required.

         Section 2.03  Books and Records.

                                     M-2-7
<PAGE>

         The Servicer shall be responsible for maintaining, and shall maintain,
a complete set of books and records for the Mortgage Loans which shall be
appropriately identified in the Servicer's computer system to clearly reflect
the ownership of the Mortgage Loan by the Owner. In particular, the Servicer
shall maintain in its possession, available for inspection by the Owner, or its
designee and shall deliver to the Owner upon demand, evidence of compliance with
all federal, state and local laws, rules and regulations, and requirements of
Fannie Mae and Freddie Mac, as applicable, including documentation as to the
method used in determining the applicability of the provisions of the Flood
Disaster Protection Act of 1973, as amended, to the Mortgaged Property,
documentation evidencing insurance coverage and eligibility of any condominium
project for approval by Fannie Mae and periodic inspection reports as required
by Section 4.13. To the extent that original documents are not required for
purposes of realization of Liquidation Proceeds or Insurance Proceeds, documents
maintained by the Servicer may be in the form of microfilm or microfiche or such
other reliable means of recreating original documents, including optical imagery
techniques . The Servicer shall maintain with respect to each Mortgage Loan and
shall make available for inspection by the Owner or its designee, upon
reasonable prior notice, the related Servicing File (or copies thereof) during
the time the Owner retains ownership of a Mortgage Loan and thereafter in
accordance with applicable laws and regulations.

         Section 2.04  Transfer of Mortgage Loans.

         No transfer of a Mortgage Loan may be made unless such transfer is in
compliance with the terms hereof. For the purposes of this Agreement, the
Servicer shall be under no obligation to deal with any person with respect to
this Agreement or any Mortgage Loan unless a notice of the transfer of such
Mortgage Loan has been delivered to the Servicer in accordance with this Section
2.04. The Owner may, subject to the terms of this Agreement, sell and transfer
one or more of the Mortgage Loans in accordance with Section 11.10; provided,
however, that the transferee will not be deemed to be an Owner hereunder binding
upon the Servicer unless such transferee shall agree in writing to be bound by
the terms of this Agreement and an assignment and assumption of this Agreement
reasonably acceptable to the Servicer. The Owner also shall advise the Servicer
in writing of the transfer. Upon receipt of notice of the permitted transfer,
the Servicer shall mark its books and records to reflect such assignee's
ownership of the related Mortgage Loans, and the previous Owner shall be deemed
released from its obligations hereunder with respect to such Mortgage Loans from
and after the date of such sale or transfer without the necessity of any action
on the part of the Servicer. If the Servicer receives notification of a
transfer, including a final loan schedule, less than five (5) Business Days
before the last Business Day of the month, the Servicer's duties to remit and
report as required by Section 5 shall begin with the next Due Period.

         Section 2.05  Delivery of Mortgage Loan Documents.

         The Servicer shall forward to the Custodian on behalf of the Owner
original documents evidencing an assumption, modification, consolidation or
extension of any Mortgage Loan entered into in accordance with Section 4.01 or
6.01 promptly after their execution; provided, however, that the Servicer shall
provide the Custodian on behalf of the Owner with a certified true copy of any
such document submitted for recordation promptly after its execution, and shall
provide the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true and
complete copy of the original promptly after receipt thereof, but in no event
later than 240 days after its execution, provided, however, that if delivery is
not completed within 240 days solely due to delays in making such delivery by
reason of the fact that such documents shall not have been returned by the
appropriate recording office, the Servicer shall continue to use its best
efforts to obtain such documents and effect delivery as soon as possible after
its receipt thereof.

         From time to time the Servicer may have a need for Mortgage Loan
Documents to be released by the Custodian. If the Servicer shall require any of
the Mortgage Loan Documents, the Servicer shall notify the Custodian in writing
of such request in the form of the request for release attached hereto as
Exhibit D. During the time that any such documentation is held by the Servicer,
such possession is in trust for the benefit of the Owner, and the Servicer shall
return such documentation to the Custodian upon the request of the Owner or when
the Servicer's need therefore no longer exists.

                                     M-2-8
<PAGE>

         Section 2.06  Tax Service Contracts.

         In the event that a Mortgage Loan is not subject to a fully assignable
life of loan tax servicer contract with Fidelity National Real Estate Tax
Service which is assignable to the Servicer or any subsequent Servicer without
the payment of any cost or fee, the Servicer shall acquire a tax service
contract for any such Mortgage Loan. The Servicer shall deliver an invoice to
the Owner with respect to the costs of acquiring such tax service contracts, and
Owner shall remit the cost of such tax service contracts to the Servicer within
ten business days of receipt of invoice.

                                   ARTICLE III
          REPRESENTATIONS AND WARRANTIES OF THE SERVICER AND THE OWNER

         Section 3.01  Representations of the Servicer.

         The Servicer hereby represents, warrants and covenants to the Owner
that, as of the Effective Date:

         (a) The Servicer is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each state where a Mortgaged
Property is located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Servicer, and in any
event the Servicer is in compliance with the laws of any such state to the
extent necessary to ensure the enforceability of the related Mortgage Loan and
the servicing of such Mortgage Loan in accordance with the terms of this
Agreement; the Servicer has the full corporate power and authority to execute
and deliver this Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the Servicer and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Servicer; and all requisite corporate action has been taken by
the Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms;

         (b) The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Servicer, who is in the business
of servicing loans;

         (c) There is no action, suit, proceeding or investigation pending or
threatened against the Servicer which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Servicer, or in any
material impairment of the right or ability of the Servicer to carry on its
business substantially as now conducted, or in any material liability on the
part of the Servicer, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be contemplated
herein, or which would be likely to impair materially the ability of the
Servicer to perform under the terms of this Agreement;

         (d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of or compliance by the Servicer with this
Agreement, or if required, such approval has been obtained prior to the
Effective Date;

         (e) The Servicer is an approved seller/servicer of conventional
residential mortgage loans for Fannie Mae or Freddie Mac, with the facilities,
procedures, and experienced personnel necessary for the sound servicing of
mortgage loans of the same type as the Mortgage Loans. The Servicer is a HUD
approved mortgagee and is in good standing to service mortgage loans for Fannie
Mae or Freddie Mac, and no event has occurred, including but not limited to a
change in insurance coverage, which would make the Servicer unable to comply
with Fannie Mae or Freddie Mac eligibility requirements or which would require
notification to either Fannie Mae or Freddie Mac;

         (f) Neither this Agreement nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or in connection with
the transactions contemplated hereby contains any untrue statement

                                     M-2-9
<PAGE>

of fact or omits to state a fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; and

           (g) No Waiver of prepayment charges. The Servicer will not waive any
prepayment charge unless it is waived in accordance with the standard set forth
in Section 4.16.

         Section 3.02 Representations of the Owner.

         The Owner represents, warrants and covenants to the Servicer as of the
Effective Date:

         (a) The Owner is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization;

         (b) The Owner has the full power and authority to execute and deliver
this Agreement and to perform in accordance herewith; the execution, delivery
and performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Owner and the consummation of the
transactions contemplated hereby have been duly and validly authorized; this
Agreement evidences the valid, binding and enforceable obligation of the Owner;
and all requisite action has been taken by the Owner to make this Agreement
valid and binding upon the Owner in accordance with its terms; and

         (c) The Owner holds the entire legal and beneficial title to each
Mortgage Loan. The information provided to Servicer by Owner, and each Mortgage
File, is complete, true and accurate in all material respects.

                                   ARTICLE IV
                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

         Section 4.01  Servicer to Act as Servicer.

         The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and with
Accepted Servicing Practices (giving due consideration to the Owner's reliance
on the Servicer), and shall have full power and authority, acting alone, to do
or cause to be done any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement and with Accepted Servicing Practices. If
reasonably required by the Servicer, the Owner shall furnish the Servicer with
any powers of attorney and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties under this
Agreement.

         Consistent with the terms of this Agreement, the Servicer may, with the
consent of the NIMs Insurer, waive, modify or vary any term of any Mortgage Loan
or consent to the postponement of any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Owner; provided, however, that unless the related
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Servicer, reasonably foreseeable, the Servicer shall not
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Interest Rate, forgive the payment of principal or interest, reduce or
increase the outstanding principal balance (except for actual payments of
principal) or change the final maturity date on such Mortgage Loan, and,
provided further, that the NIMs Insurer's prior written consent shall be
required for any modification, waiver or amendment if the aggregate number of
outstanding Mortgage Loans which have been modified, waived or amended exceeds
5% of the number of Mortgage Loans subject to this Agreement as of the Effective
Date. In the event of any such modification which permits the deferral of
interest or principal payments on any Mortgage Loan, the Servicer shall, on the
Business Day immediately preceding the related Remittance Date in any month in
which any such principal or interest payment has been deferred, deposit in the
Custodial Account from its own funds, in accordance with Section 4.04 and
Section 5.03, the difference between (a) such month's principal and one month's
interest at the related Mortgage Loan Remittance Rate on the unpaid principal
balance of such Mortgage Loan and (b) the amount paid by the Mortgagor. The
Servicer shall be entitled to reimbursement for such advances to the same extent
as for

                                     M-2-10
<PAGE>

all other advances pursuant to Section 4.05. Without limiting the generality of
the foregoing, the Servicer shall continue, and is hereby authorized and
empowered, to prepare, execute and deliver, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties.

         Notwithstanding anything in this Agreement to the contrary, if a REMIC
election is made, the Servicer shall not (unless the related Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Servicer, reasonably foreseeable) make or permit any modification, waiver or
amendment of any term of any Mortgage Loan that would both (i) effect an
exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or
Treasury regulations promulgated thereunder) and (ii) cause the related REMIC to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions" after the "startup date" of such
REMIC under the REMIC Provisions.

         The Servicer shall perform all of its servicing responsibilities
hereunder or may, with the consent of the NIMs Insurer, cause a subservicer to
perform any such servicing responsibilities on its behalf, but the use by the
Servicer of a subservicer shall not release the Servicer from any of its
obligations hereunder and the Servicer shall remain responsible hereunder for
all acts and omissions of each subservicer as fully as if such acts and
omissions were those of the Servicer. Any such subservicer must be a Fannie Mae
approved seller/servicer or a Freddie Mac approved seller/servicer in good
standing and no event shall have occurred, including but not limited to, a
change in insurance coverage, which would make it unable to comply with the
eligibility requirements for seller/servicers imposed by Fannie Mae or Freddie
Mac, or which would require notification to Fannie Mae or Freddie Mac. The
Servicer shall pay all fees and expenses of each subservicer from its own funds,
and a subservicer's fee shall not exceed the Servicing Fee.

         At the cost and expense of the Servicer, without any right of
reimbursement from the Custodial Account, with the consent of the NIMs Insurer,
the Servicer shall be entitled to terminate the rights and responsibilities of a
subservicer and arrange for any servicing responsibilities to be performed by a
successor subservicer meeting the requirements in the preceding paragraph;
provided, however, that nothing contained herein shall be deemed to prevent or
prohibit the Servicer, at the Servicer's option, with the consent of the NIMs
Insurer, from electing to service the related Mortgage Loans itself. In the
event that the Servicer's responsibilities and duties under this Agreement are
terminated pursuant to Section 8.04, 9.01 or 10.01, and if requested to do so by
the Owner or the NIMs Insurer, the Servicer shall at its own cost and expense
terminate the rights and responsibilities of each subservicer effective as of
the date of termination of the Servicer. The Servicer shall pay all fees,
expenses or penalties necessary in order to terminate the rights and
responsibilities of each subservicer from the Servicer's own funds without
reimbursement from the Owner. Each subservicing agreement shall provide that a
successor servicer shall have the option to terminate such agreement with
payment of any fees if the predecessor Servicer is terminated or resigns.

         Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a subservicer or any
reference herein to actions taken through a subservicer or otherwise, the
Servicer shall not be relieved of its obligations to the Owner and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Servicer shall be
entitled to enter into an agreement with a subservicer for indemnification of
the Servicer by the subservicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.

         Any subservicing agreement and any other transactions or services
relating to the Mortgage Loans involving a subservicer shall be deemed to be
between such subservicer and Servicer alone, and the Owner shall have no
obligations, duties or liabilities with respect to such Subservicer including no
obligation, duty or liability of Owner to pay such subservicer's fees and
expenses. For purposes of distributions and advances by the Servicer pursuant to
this Agreement, the Servicer shall be deemed to have received a payment on a
Mortgage Loan when a subservicer has received such payment.

         Section 4.02  Collection of Mortgage Loan Payments.

                                     M-2-11
<PAGE>

         Continually from the date hereof until the date each Mortgage Loan
ceases to be subject to this Agreement, the Servicer shall proceed with
reasonable diligence and in accordance with Accepted Servicing Practices, to
collect all payments due under each Mortgage Loan when the same shall become due
and payable. Further, the Servicer shall take reasonable care in ascertaining
and estimating annual ground rents, taxes, assessments, water rates, fire and
hazard insurance premiums, mortgage insurance premiums, and all other charges
that, as provided in the Mortgage Loan Documents, will become due and payable to
the end that the installments payable by the Mortgagors will be sufficient to
pay such charges as and when they become due and payable.

         Section 4.03  Realization Upon Defaulted Mortgage Loans.

         The Servicer shall use its reasonable efforts, consistent with Accepted
Servicing Practices, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 4.01. The Servicer shall
use its reasonable efforts to realize upon defaulted Mortgage Loans in such
manner as will maximize the receipt of principal and interest by the Owner,
taking into account, among other things, the timing of foreclosure proceedings.
The foregoing is subject to the provisions that, in any case in which any
Mortgaged Property shall have suffered damage, the Servicer shall not be
required to expend its own funds toward the restoration of such property unless
it shall determine in its discretion (i) that such restoration will increase the
proceeds of liquidation of the related Mortgage Loan to the Owner after
reimbursement to itself for such expenses, and (ii) that such expenses will be
recoverable by the Servicer through Insurance Proceeds or Liquidation Proceeds
from the related Mortgaged Property, as contemplated in Section 4.05. The
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings or functions as Servicing Advances; provided, however, that it
shall be entitled to reimbursement therefor as provided in Section 4.05.
Notwithstanding anything to the contrary contained herein, in connection with a
foreclosure or acceptance of a deed in lieu of foreclosure, in the event the
Servicer has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Owner
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. Upon completion of the inspection, the Servicer shall promptly
provide the Owner and the NIMs Insurer with a written report of the
environmental inspection. After reviewing the environmental inspection report,
the Owner (with the consent of the NIMs Insurer) shall direct the Servicer as to
how the Servicer shall proceed with respect to the Mortgaged Property, and the
Servicer shall follow the Owner's directions with respect thereto.

         Section 4.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.

         The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts.
Any funds in a Custodial Account may be invested in Permitted Investments for
the benefit of the Owner (with any income earned thereon for the benefit of the
Servicer), provided that in the event that amounts on deposit in the Custodial
Account exceed the amount fully insured by the FDIC (the "Insured Amount"), the
Servicer shall be obligated to invest the excess amount over the Insured Amount
in Permitted Investments on the same Business Day as such excess amount becomes
present in the Custodial Account. Any such Permitted Investment shall mature no
later than the Business Day immediately preceding the related Remittance Date.
Funds deposited in the Custodial Account may be drawn on by the Servicer only in
accordance with Section 4.05. The creation of any Custodial Account shall be
evidenced by an account certification in the form shown in Exhibit B hereto. The
original of such account certification shall be furnished to the Owner, or a
copy to the NIMs Insurer, upon reasonable request. The NIMs Insurer, Master
Servicer and the Trustee shall be notified of any change in the location of the
Custodial Account. The Servicer acknowledges and agrees that the Servicer shall
bear any losses incurred with respect to Permitted Investments. The amount of
any such losses shall be immediately deposited by the Servicer in the Custodial
Account, out of the Servicer's own funds, with no right to reimbursement
therefor.

         The Servicer shall deposit in the Custodial Account within two (2)
Business Days of Servicer's receipt, and retain therein, the following
collections:

                                     M-2-12
<PAGE>

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

         (ii) all payments on account of interest on the Mortgage Loans adjusted
to the related Mortgage Loan Remittance Rate;

         (iii) all Liquidation Proceeds;

         (iv) any net amounts received by the Servicer in connection with any
REO Property pursuant to Section 4.13;

         (v) all Insurance Proceeds including amounts required to be deposited
pursuant to Sections 4.08, 4.10 and 4.11, other than proceeds to be held in a
restricted escrow account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with Accepted
Servicing Practices, the Mortgage Loan Documents or applicable law;

         (vi) all Condemnation Proceeds affecting any Mortgaged Property other
than proceeds to be held in a restricted escrow account and applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Accepted Servicing Practices, the Mortgage Loan Documents or
applicable law;

         (vii) any Monthly Advances as provided in Section 5.03;

         (viii) any amounts required to be deposited in the Custodial Account
pursuant to Sections 4.01, 4.14, 6.01 and 6.02; and

         (ix) with respect to each Full Principal Prepayment or Partial
Principal Prepayment, any Prepayment Interest Shortfall, to the extent of the
Servicer's aggregate Servicing Fee received with respect to the related Due
Period (the "Compensating Interest Amount").

         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 in the nature of Servicing Fees and
Ancillary Income need not be deposited by the Servicer in the Custodial Account
and may be retained by the Servicer as compensation.

         Section 4.05  Permitted Withdrawals From the Custodial Account.

         The Servicer may, from time to time, make withdrawals from the
Custodial Account for the following purposes:

         (i) to make payments to the Owner in the amounts and in the manner
provided for in Section 5.01;

         (ii) to reimburse itself for Monthly Advances, the Servicer's right to
reimburse itself pursuant to this subclause (ii) being limited to amounts
received on the related Mortgage Loan which represent late collections (net of
the related Servicing Fees) of principal and/or interest respecting which any
such Monthly Advance was made;

         (iii) to reimburse itself for unreimbursed Servicing Advances and
Monthly Advances and unpaid Servicing Fees, the Servicer's right to reimburse
itself pursuant to this subclause (iii) with respect to any Mortgage Loan being
limited to Liquidation Proceeds, Condemnation Proceeds, and Insurance Proceeds
and REO Disposition Proceeds related to such Mortgage Loan;

         (iv) to pay to itself as servicing compensation (a) any interest earned
on funds in the Custodial Account (all such interest to be withdrawn monthly not
later than each Remittance Date) and (b) any Servicing Fee to which

                                     M-2-13
<PAGE>

the Servicer is entitled in accordance with the terms hereof to the extent such
Servicing Fee has not been paid to or retained by the Servicer;

         (v) to reimburse itself for any Nonrecoverable Advances;

         (vi) to transfer funds to another Qualified Depository in accordance
with Section 4.09 hereof;

         (vii) to remove funds deposited in the Custodial Account in error by
the Servicer; and

         (viii) to clear and terminate the Custodial Account upon the
termination of this Agreement.

         Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.

         The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts. Any funds deposited in an Escrow Account
may be invested in Permitted Investments. Funds deposited in an Escrow Account
may be drawn on by the Servicer in accordance with Section 4.07. The creation of
any Escrow Account shall be evidenced by an account certification in the form
shown in Exhibit C. The original of such account certification shall be
furnished to the Owner upon request. The Servicer acknowledges and agrees that
the Servicer shall bear any losses incurred with respect to Permitted
Investments. The amount of any such losses shall be immediately deposited by the
Servicer in the Escrow Account out of the Servicer's own funds, with no right to
reimbursement therefor.

         The Servicer shall deposit in the Escrow Account or Accounts within two
(2) Business Days of Servicer's receipt, and retain therein:

         (i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any items as are required under the
terms of this Agreement; and

         (ii) all Servicing Advances for Mortgagors whose Escrow Payments are
insufficient to cover escrow disbursements.

         The Servicer shall make withdrawals from an Escrow Account only to
effect such payments as are required under this Agreement, and for such other
purposes as shall be as set forth in and in accordance with Section 4.07. Except
as provided in Section 4.07, the Servicer shall be entitled to retain any
interest paid on funds deposited in an Escrow Account by the Qualified
Depository.

         Section 4.07  Permitted Withdrawals From Escrow Account.

         Withdrawals from the Escrow Account may be made by the Servicer only:

         (i) to effect timely payments of ground rents, taxes, assessments,
water rates, fire and hazard insurance premiums, Primary Mortgage Insurance
Policy premiums, if applicable, and comparable items;

         (ii) to reimburse the Servicer for any Servicing Advance made by the
Servicer with respect to a related Mortgage Loan but only from amounts received
on the related Mortgage Loan which represent late payments or collections of
Escrow Payments thereunder;

         (iii) to refund to the Mortgagor any funds as may be determined to be
overages;

         (iv) for transfer to the Custodial Account in connection with the
liquidation of a Mortgage Loan or an acquisition of REO Property;

                                     M-2-14
<PAGE>

         (v) to pay to the Servicer, or to the Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account;

         (vi) to remove funds placed in an Escrow Account in error by the
Servicer; and

         (vii) to clear and terminate the Escrow Account on the termination of
this Agreement.

         As part of its servicing duties, the Servicer shall pay to the
Mortgagors interest on funds in an Escrow Account, to the extent required by
law, and to the extent that interest earned on funds in the Escrow Account is
insufficient, shall pay such interest from its own funds, without any
reimbursement therefor.

         Section 4.08 Payment of Taxes, Insurance and Other Charges, Maintenance
of Primary Mortgage Insurance Policies, Collections Thereunder.

         With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of Primary Mortgage Insurance Policy premiums and fire
and hazard insurance coverage and, with regard to Escrow Mortgage Loans, shall
obtain, from time to time, all bills for the payment of such charges, including
renewal premiums and shall effect payment thereof prior to the applicable
penalty or termination date and at a time appropriate for securing maximum
discounts allowable, employing for such purpose deposits of the Mortgagor in the
Escrow Account which shall have been estimated and accumulated by the Servicer
in amounts sufficient for such purposes, as allowed under the terms of the
Mortgage or applicable law. To the extent that the Mortgage does not provide for
Escrow Payments, the Servicer shall use commercially reasonable efforts
consistent with Accepted Servicing Practices to determine that any such payments
are made by the Mortgagor when due. With regard to Escrow Mortgage Loans, the
Servicer assumes full responsibility for the timely payment of all such bills
and shall effect timely payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments. With regard to Non-Escrow Mortgage Loans, the Servicer shall make
Servicing Advances to effect such payments within such time period as to avoid
the loss of the related Mortgaged Property by foreclosure of a tax or other lien
and to ensure that the Mortgaged Property is not uninsured for any reason.

         The Servicer shall maintain in full force and effect each Primary
Mortgage Insurance Policy, that as of the Effective Date, was in full force and
effect with respect to any Mortgage Loan. Such coverage will be maintained and
will not be waived by the Servicer except in accordance with applicable law. The
Servicer shall not cancel, except in accordance with applicable law, or refuse
to renew any Primary Mortgage Insurance Policy that is in force as of the
Effective Date unless a replacement Primary Mortgage Insurance Policy for such
canceled or nonrenewed policy is obtained from and maintained with a Qualified
Insurer. The Servicer shall not take any action which would result in
noncoverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the Servicer would have been covered thereunder.
In connection with any assumption or substitution agreement entered into or to
be entered into pursuant to Section 6.01, the Servicer shall promptly notify the
insurer under the related Primary Mortgage Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under the Primary Mortgage Insurance
Policy. If such Primary Mortgage Insurance Policy is terminated as a result of
such assumption or substitution of liability, the Servicer shall obtain a
replacement Primary Mortgage Insurance Policy as provided above.

         In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Owner, claims to the insurer
under any Private Mortgage Insurance Policy in a timely fashion in accordance
with the terms of such Primary Mortgage Insurance Policy and, in this regard, to
take such action as shall be necessary to permit recovery under any Primary
Mortgage Insurance Policy respecting a defaulted Mortgage Loan. Pursuant to
Section 4.04, any amounts collected by the Servicer under any Primary Mortgage
Insurance Policy shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05.

                                     M-2-15
<PAGE>

         Section 4.09 Transfer of Accounts.

         The Servicer may transfer the Custodial Account or the Escrow Account
to a different Qualified Depository from time to time. The Servicer shall notify
the Owner and the NIMs Insurer of any such transfer.

         Section 4.10  Maintenance of Hazard Insurance.

         The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage as is customary in the area where
the Mortgaged Property is located in an amount which is equal to the lesser of
(i) the maximum insurable value of the improvements securing such Mortgage Loan
and (ii) the greater of (a) the outstanding principal balance of the Mortgage
Loan, and (b) the percentage such that the proceeds thereof shall be sufficient
to prevent the Mortgagor and/or the mortgagee from becoming a co-insurer. If the
Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency as being a special flood hazard area that
has federally-mandated flood insurance requirements, the Servicer will cause to
be maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the outstanding principal balance of the Mortgage Loan, (ii) the maximum
insurable value of the improvements securing such Mortgage Loan and (iii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. The Servicer shall also maintain on each REO
Property, fire and hazard insurance with extended coverage in an amount which is
at least equal to the maximum insurable value of the improvements which are a
part of such property, liability insurance and, to the extent required and
available under the Flood Disaster Protection Act of 1973, as amended, flood
insurance in an amount as provided above. Any amounts collected by the Servicer
under any such policies other than amounts to be deposited in a restricted
escrow account and applied to the restoration or repair of the Mortgaged
Property or REO Property, or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures, shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 4.05. It is understood and
agreed that no other additional insurance need be required by the Servicer or
the Mortgagor or maintained on property acquired in respect of the Mortgage
Loans, other than as provided for under applicable state or federal laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Servicer and its successors and/or
assigns and shall provide for at least thirty days prior written notice of any
cancellation, reduction in the amount or material change in coverage to the
Servicer. The Servicer shall not interfere with the Mortgagor's freedom of
choice in selecting either his insurance carrier or agent; provided, however,
that the Servicer shall not accept any such insurance policies from insurance
companies unless such companies currently reflect a General Policy Rating in
Best's Key Rating Guide of B:III or better and are licensed to do business in
the state wherein the property subject to the policy is located. All insurance
policies maintained pursuant to this Section 4.10 shall be maintained with a
Qualified Insurer.

         Section 4.11  Blanket Hazard Insurance.

         In the event that the Servicer shall obtain and maintain a blanket
policy with a Qualified Insurer insuring against fire and hazards of extended
coverage on all of the Mortgage Loans and provides coverage in an amount equal
to the amount required under Section 4.10, and otherwise complies with the
requirements of Section 4.10, the Servicer shall be deemed conclusively to have
satisfied its obligations under Section 4.10, it being understood and agreed
that such blanket policy may contain a deductible clause, in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 4.10, and there shall
have been a loss which would have been covered by such policy, deposit in the
Custodial Account the difference, if any, between the amount that would have
been payable under a policy complying with Section 4.10 and the amount paid
under such blanket policy. Upon the request of the Owner, the Servicer shall
cause to be delivered to the Owner a certified true copy of such policy and a
statement from the insurer thereunder that such policy shall in no event be
terminated or materially modified without 30 days prior written notice to the
Owner.

         Section 4.12  Fidelity Bond, Errors and Omissions Insurance.

                                     M-2-16
<PAGE>

         The Servicer shall maintain, at its own expense, with a Qualified
Insurer, a blanket Fidelity Bond and an errors and omissions insurance policy,
with broad coverage with responsible companies that meet the requirements of
Fannie Mae on all officers, employees and other persons acting in any capacity
with regard to the Mortgage Loans and who handle funds, money, documents and
papers relating to the Mortgage Loans. The Fidelity Bond and errors and
omissions insurance shall be in the form of the Mortgage Banker's Blanket Bond
and shall protect and insure the Servicer against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
persons. Such Fidelity Bond and errors and omissions insurance shall also
protect and insure the Servicer against losses in connection with the failure to
maintain any insurance policies required pursuant to this Agreement and the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring the Fidelity Bond and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such Fidelity Bond and insurance
policy shall be at least equal to the corresponding amounts acceptable to Fannie
Mae in the Fannie Mae Guide or by Freddie Mac in the Freddie Mac Guide. The
Servicer shall, upon request of Owner and the NIMs Insurer, deliver to the Owner
and the NIMs Insurer a certificate from the surety and the insurer as to the
existence of the Fidelity Bond and errors and omissions insurance policy and
shall obtain a statement from the surety and the insurer that such Fidelity Bond
or insurance policy shall in no event be terminated or materially modified
without thirty days prior written notice to the Owner and the NIMs Insurer. The
Servicer shall notify the Owner and the NIMs Insurer within five Business Days
of receipt of notice that such Fidelity Bond or insurance policy will be, or has
been, materially modified or terminated.

         Section 4.13  Title, Management and Disposition of REO Property.

         In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Owner or its designee. Any such Person or
Persons holding such title other than the Owner shall acknowledge in writing
that such title is being held as nominee for the benefit of the Owner.

         The Servicer shall assume the responsibility for marketing each REO
Property in accordance with Accepted Servicing Practices. Thereafter, the
Servicer shall continue to provide certain administrative services to the Owner
relating to such REO Property as set forth in this Section 4.13. The REO
Property must be sold within three years following the end of the calendar year
of the date of acquisition if a REMIC election has been made with respect to the
arrangement under which the Mortgage Loans and REO Property are held, unless (i)
the Servicer shall have delivered to the Owner an Opinion of Counsel acceptable
to the Owner and the NIMs Insurer, to the effect that the holding by the related
trust of such Mortgaged Property subsequent to such three-year period (and
specifying the period beyond such three-year period for which the Mortgaged
Property may be held) will not result in the imposition of taxes on "prohibited
transactions" of the related trust as defined in Section 860F of the Code, or
cause the related REMIC to fail to qualify as a REMIC, in which case the related
trust may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel), or (ii) the Servicer shall have applied
for, prior to the expiration of such three-year period, an extension of such
three-year period in the manner contemplated by Section 856(e)(3) of the Code,
in which case the three-year period shall be extended by the applicable period.
If a period longer than three years is permitted under the foregoing sentence
and is necessary to sell any REO Property, the Servicer shall report monthly to
the Owner as to progress being made in selling such REO Property.

         Notwithstanding any other provision of this Agreement, if a REMIC
election has been made, no Mortgaged Property held by a REMIC shall be rented
(or allowed to continue to be rented) or otherwise used for the production of
income by or on behalf of the related trust or sold in such a manner or pursuant
to any terms that would (i) cause such Mortgaged Property to fail to qualify at
any time as "foreclosure property" within a meaning of Section 860G(a)(8) of the
Code, (ii) subject the related trust to the imposition of any federal or state
income taxes on "net income from foreclosure property" with respect to such
Mortgaged Property within the meaning of Section 860G(c) of the Code, or (iii)
cause the sale of such Mortgaged Property to result in the receipt by the
related trust or any income from non-permitted assets as described in Section
860F(a) (2)(B) of the Code, unless the Servicer has agreed to indemnify and hold
harmless the related trust with respect to the imposition of any such taxes.

                                     M-2-17
<PAGE>

         The Servicer shall, either itself or through an agent selected by the
Servicer and in accordance with Accepted Servicing Practices, manage, conserve,
protect and operate each REO Property. Each REO Disposition shall be carried out
by the Servicer at such price and upon such terms and conditions as the Servicer
deems to be in the best interest of the Owner and the related terms and
conditions are results of arm's-length negotiation. The REO Disposition Proceeds
from the sale of the REO Property shall be promptly deposited in the Custodial
Account. As soon as practical thereafter, the expenses of such sale shall be
paid and the Servicer shall reimburse itself for any related Servicing Advances,
Monthly Advances, made pursuant to Section 5.03, and unpaid Servicing Fees.

         The Servicer shall cause each REO Property to be inspected promptly
upon the acquisition of title thereto and shall cause each REO Property to be
inspected at a frequency consistent with Accepted Servicing Practices. The
Servicer shall make or cause the inspector to make a written report of each such
inspection. Such reports shall be retained in the Servicing File and copies
thereof shall, upon reasonable request, be forwarded by the Servicer to the
Owner.

         Section 4.14  Notification of Adjustments.

         With respect to each Mortgage Loan, the Servicer shall adjust the
Mortgage Interest Rate on the related Interest Rate Adjustment Date in
compliance with requirements of applicable law and the related electronic data
received on the Mortgage and Mortgage Note. The Servicer shall execute and
deliver any and all necessary notices required under applicable law and the
terms of the related electronic data received on the Mortgage Note and Mortgage
regarding the Mortgage Interest Rate adjustments. The Servicer shall promptly,
upon written request by the Owner, deliver to the Owner such notifications and
any additional applicable data regarding such adjustments and the methods used
to calculate and implement such adjustments. Upon the discovery by the Servicer
or the receipt of notice from the Owner that the Servicer has failed to adjust a
Mortgage Interest Rate in accordance with the terms of the related Mortgage Note
and Mortgage, the Servicer shall immediately deposit in the Custodial Account
from its own funds the amount of any interest loss or deferral caused to the
Owner thereby and shall indemnify the Owner in respect of any liability as a
result of such shortfall; provided, however, that the Servicer shall not have an
obligation to pay any interest loss if the failure to appropriately adjust such
Mortgage Interest Rate is the direct result of inaccurate or incomplete
information in the electronic file provided in accordance with Section 2.01(iii)
hereof.

         Section 4.15  Compliance with Applicable Laws.

         All requirements of any federal, state or local law applicable to the
servicing of the Mortgage Loans will be complied with by the Servicer in all
material respects.

         Section 4.16  Waiver of Prepayment Penalties.

         Except as provided below, the Servicer or any designee of the Servicer
shall not waive any prepayment charge with respect to any Mortgage Loan. If the
Servicer or its designee fails to collect a prepayment charge at the time of the
related prepayment of any Mortgage Loan subject to such prepayment charge, the
Servicer shall pay to the Owner at such time (by deposit to the Custodial
Account) an amount equal to the amount of the prepayment charge not collected.
The Owner warrants that the schedule of prepayment charges provided to the
Servicer shall be complete, true and accurate and may be relied on by the
Servicer in its calculation of prepayment charges. Notwithstanding the above,
the Servicer or its designee may waive a prepayment charge only if (i) the
related prepayment is not the result of a refinancing by the Servicer or its
designee, (ii) such waiver relates to a defaulted Mortgage Loan or a reasonably
foreseeable default, (iii) such waiver is standard and customary in servicing
similar mortgage loans to the Mortgage Loans, and (iv) such waiver, in the
reasonable judgment of the Servicer, would maximize recovery of total proceeds
from the Mortgage Loan, taking into account the amount of such prepayment charge
and the related Mortgage Loan. If a prepayment charge is waived as permitted by
meeting the standards described above, then the Servicer is required to pay the
amount of such waived prepayment charge, for the benefit of the holders of the
Class P Certificates (as defined in the related Trust Agreement), by depositing
such amount into the Custodial Account together with and at the time that the
amount prepaid on the related Mortgage Loan is required to be deposited into the
Custodial Account.

                                     M-2-18
<PAGE>

         Within 90 days of the earlier of discovery by the Servicer or receipt
of notice by the Servicer of the breach of the representation or covenant of the
Servicer set forth in this Section 4.16 which materially and adversely affects
the interests of the Holders of the Class P Certificates in any prepayment
charge, the Servicer shall remedy such breach as follows: if any of the
covenants made by the Servicer in this Section 4.16 is breached, the Servicer
must pay the amount of such waived prepayment charge, for the benefit of the
Holders of the Class P Certificates, by depositing such amount into the
Custodial Account.

                                    ARTICLE V
                              PAYMENTS TO THE OWNER

         Section 5.01  Remittances.

         On each Remittance Date the Servicer shall remit, by wire transfer of
immediately available funds, to the Owner (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Servicer is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the end of the preceding month which
amounts shall be remitted on the following Remittance Date, together with the
Compensating Interest Amount required to be deposited in the Custodial Account
in connection with such Principal Prepayment in accordance with Section
4.04(ix); minus (d) any amounts attributable to Monthly Payments collected but
due on a Due Date or Dates subsequent to the first day of the month of the
Remittance Date, which amounts shall be remitted on the related Remittance Date
next succeeding the Due Period for such amounts.

         With respect to any remittance received by the Owner after the Business
Day on which such payment was due, the Servicer shall pay to the Owner interest
on any such late payment at an annual rate equal to the Prime Rate, adjusted as
of the date of each change, plus two percentage points, but in no event greater
than the maximum amount permitted by applicable law. Such interest shall be
deposited in the Custodial Account by the Servicer on the date such late payment
is made and shall cover the period commencing with the day following such
Business Day and ending with the Business Day on which such payment is made,
both inclusive. Such interest shall be remitted along with the distribution
payable on the next succeeding related Remittance Date. The payment by the
Servicer of any such interest shall not be deemed an extension of time for
payment or a waiver of any Event of Default by the Servicer.

         Section 5.02  Statements to the Owner.

         Not later than the tenth (10) calendar day, or if such day is not a
Business Day, the first Business Day immediately preceding the tenth calendar
day of the month of the related Remittance Date, the Servicer shall furnish to
the Owner and the NIMs Insurer, a monthly remittance advice in the format set
forth in Exhibit F attached hereto (or in such other electronic format mutually
agreed to by the Servicer and Owner), with regard to monthly loan remittance
data and Exhibit G (or in such other electronic format mutually agreed to by the
Servicer and Owner) with respect to defaulted mortgage loans, with a trial
balance report attached thereto, and such other loan level information
reasonably available to the Servicer and requested by the Owner. The Servicer
shall also furnish to the Owner and the NIMs Insurer (in such format mutually
agreed to by the Servicer and the Owner) a monthly report detailing loan level
prepayment charge collected and/or waived by the Servicer in accordance with
Section 4.16.

         Section 5.03  Monthly Advances by the Servicer.

         On the Business Day immediately preceding each Remittance Date, the
Servicer shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution an amount equal to all Monthly Payments
(with interest adjusted to the Mortgage Loan Remittance Rate) which were due on
the Mortgage Loans during the applicable Due Period and which were delinquent at
the close of business on the immediately preceding Determination Date or which
were deferred pursuant to Section 4.01. Any amounts held for future distribution
and so used shall be replaced by the Servicer by deposit in the Custodial
Account on or before any future Remittance

                                     M-2-19
<PAGE>

Date if funds in the Custodial Account on such Remittance Date shall be less
than payments to the Owner required to be made on such Remittance Date. The
Servicer's obligation to make such Monthly Advances as to any Mortgage Loan will
continue through the last Monthly Payment due prior to the payment in full of
the Mortgage Loan, or through the last Remittance Date prior to the Remittance
Date for the distribution of all Liquidation Proceeds and other payments or
recoveries (including REO Disposition Proceeds, Insurance Proceeds and
Condemnation Proceeds) with respect to the Mortgage Loan; provided, however,
that such obligation shall cease if the Servicer determines, in its sole
reasonable opinion, that advances with respect to such Mortgage Loan are
non-recoverable by the Servicer from Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds, or otherwise with respect to a particular Mortgage Loan.
In the event that the Servicer determines that any such advances are
non-recoverable, the Servicer shall provide the Owner with a certificate signed
by an officer of the Servicer evidencing such determination.

         Section 5.04  Liquidation Reports.

         Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Owner pursuant to a deed-in-lieu of foreclosure, the Servicer
shall submit to the Owner and the NIMs Insurer a liquidation report in the
format set forth in Exhibit H attached hereto (or in such other format mutually
agreed to by the Servicer and Owner) with respect to such Mortgaged Property.
The Servicer shall also provide reports on the status of REO Property containing
such information as Owner may reasonably require.

                                   ARTICLE VI
                          GENERAL SERVICING PROCEDURES

         Section 6.01  Assumption Agreements.

         The Servicer shall, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of a Mortgaged Property (whether by
absolute conveyance or by contract of, sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any
"due-on-sale" clause to the extent permitted by law; provided, however, that the
Servicer shall not exercise any such rights if prohibited by law or the terms of
the Mortgage Note from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related Primary Mortgage Insurance
Policy, if any. If the Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, the Servicer shall enter
into an assumption agreement with the person to whom the Mortgaged Property has
been conveyed or is proposed to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. If an assumption is
allowed pursuant to this Section 6.01, the Servicer, with the prior consent of
the primary mortgage insurer, if any, is authorized to enter into a substitution
of liability agreement with the person to whom the Mortgaged Property has been
conveyed or is proposed to be conveyed pursuant to which the original mortgagor
is released from liability and such Person is substituted as mortgagor and
becomes liable under the related Mortgage Note. Any such substitution of
liability agreement shall be in lieu of an assumption agreement.

         In connection with any such assumption or substitution of liability,
the Servicer shall follow its underwriting practices and procedures. With
respect to an assumption or substitution of liability, the Mortgage Interest
Rate borne by the related Mortgage Note and the amount of the Monthly Payment
may not be changed. The Servicer shall notify the Owner that any such
substitution of liability or assumption agreement has been completed by
forwarding to the Owner the original of any such substitution of liability or
assumption agreement, which document shall be added to the related Mortgage Loan
Documents and shall, for all purposes, be considered a part of such related
mortgage file to the same extent as all other documents and instruments
constituting a part thereof. All fees collected by the Servicer for entering
into an assumption or substitution of liability agreement shall belong to the
Servicer.

         Notwithstanding the foregoing paragraphs of this section or any other
provision of this Agreement, the Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Servicer may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Section 6.01, the term "assumption" is deemed

                                     M-2-20
<PAGE>

to also include a sale of the Mortgaged Property subject to the Mortgage that is
not accompanied by an assumption or substitution of liability agreement.

         Section 6.02 Satisfaction of Mortgages and Release of Mortgage Loan
Documents.

         Upon the payment in full of any Mortgage Loan, the Servicer will
immediately notify the Custodian with a certification and request for release by
a Servicing Officer, which certification shall include a statement to the effect
that all amounts received in connection with such payment which are required to
be deposited in the Custodial Account pursuant to Section 4.04 have been so
deposited, and a request for delivery to the Servicer of the portion of the
Mortgage Loan Documents held by the Custodian. Upon receipt of such
certification and request, the Owner shall, or shall cause, the Custodian to
release, in accordance with the terms of the Custodial Agreement, the related
Mortgage Loan Documents to the Servicer and the Servicer shall prepare and
execute under the authority of a power of attorney delivered to the Servicer by
the Owner any satisfaction or release. No expense incurred in connection with
any instrument of satisfaction or deed of reconveyance shall be chargeable to
the Custodial Account.

         In the event the Servicer satisfies or releases a Mortgage without
having obtained payment in full of the indebtedness secured by the Mortgage or
should it otherwise prejudice any right the Owner may have under the mortgage
instruments, the Servicer, upon written demand, shall remit to the Owner within
two Business Days the then outstanding principal balance of the related Mortgage
Loan by deposit thereof in the Custodial Account. The Servicer shall maintain
the Fidelity Bond and errors and omissions insurance insuring the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.

         From time to time and as appropriate for the servicing or foreclosure
of the Mortgage Loans, including for the purpose of collection under any Primary
Mortgage Insurance Policy, upon request of the Servicer and delivery to the
Custodian of a servicing receipt signed by a Servicing Officer, all as provided
in the Custodial Agreement, the Servicer may request the Custodian to release to
the Servicer the portion of the Mortgage Loan Documents held by the Custodian to
the Servicer. Such servicing receipt shall obligate the Servicer to promptly
return the related Mortgage Loan Documents to the Custodian, when the need
therefor by the Servicer no longer exists, unless the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Custodial Account or such documents have been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has promptly delivered to the Owner or the Custodian a certificate
of a Servicing Officer certifying as to the name and address of the Person to
which such documents were delivered and the purpose or purposes of such
delivery.

         Section 6.03 Servicing Compensation.

         As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Custodial Account or to retain from interest
payments on the Mortgage Loans the amounts provided for as the Servicer's
Servicing Fee. Additional servicing compensation in the form of Ancillary Income
shall be retained by the Servicer. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement therefor except as specifically
provided for.

         Section 6.04 Annual Statement as to Compliance.

         The Servicer shall deliver to the Owner and the Master Servicer, on or
before May 15, each year beginning May 15, 2005, an Officer's Certificate,
stating that (i) a review of the activities of the Servicer during the preceding
calendar year and of performance under this Agreement or similar agreements has
been made under such officer's supervision, and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled all its
responsibilities and obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such responsibilities and
obligation, specifying each such default known to such officer and the nature
and status thereof and the action being taken by the Servicer to cure such
default.

                                     M-2-21
<PAGE>

         Section 6.05 Annual Independent Certified Public Accountants' Servicing
Report.

         On or before [May 15th of each year beginning May 15, 2005], the
Servicer shall, or shall cause each related subservicer to, at its expense,
cause a firm of independent public accountants which is a member of the American
Institute of Certified Public Accountants to furnish a statement to the Owner to
the effect that such firm has examined certain documents and records relating to
the servicing of the mortgage loans similar in nature and that such firm is of
the opinion that the provisions of this or similar Agreements have been complied
with, and that, on the basis of such examination conducted in compliance with
the Uniform Single Attestation Program for Mortgage Bankers, nothing has come to
their attention which would indicate that such servicing has not been conducted
in compliance therewith, except for (i) such exceptions as such firm shall
believe to be immaterial, and (ii) such other exceptions as shall be set forth
in such statement. By providing Owner and the Master Servicer a copy of a
Uniform Single Attestation Program Report from their independent public
accountant's on an annual basis, Servicer shall be considered to have fulfilled
its obligations under this Section 6.05.

         Section 6.06  Owner's Right to Examine Servicer Records.

         The Owner or the NIMs Insurer shall have the right to examine and
audit, at its expense, upon reasonable notice to the Servicer, during business
hours or at such other times as might be reasonable under applicable
circumstances, any and all of the books, records, documentation or other
information of the Servicer, or held by another for the Servicer or on its
behalf or otherwise, which relate to the performance or observance by the
Servicer of the terms, covenants or conditions of this Agreement.

         The Servicer shall provide to the Owner, the NIMs Insurer and any
supervisory agents or examiners representing a state or federal governmental
agency having jurisdiction over the Owner access to any documentation regarding
the Mortgage Loans in the possession of the Servicer which may be required by
any applicable regulations. Such access shall be afforded without charge, upon
reasonable request, during normal business hours and at the offices of the
Servicer, and in accordance with the applicable federal or state government
regulations.

         Section 6.07 Compliance with REMIC Provisions.

         If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Servicer shall not take
any action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action that, under the REMIC Provisions, if taken or not taken,
as the case may be, could (i) endanger the status of the REMIC as a REMIC or
(ii) result in the imposition of a tax upon the REMIC (including but not limited
to the tax on "prohibited transactions" as defined in Section 860F(a)(2) of the
Code and the tax on "contribution" to a REMIC set forth in Section 860G(d) of
the Code unless the Servicer has received an Opinion of Counsel (at the expense
of the party seeking to take such actions) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.

         Section 6.08  Non-solicitation.

         The Servicer shall not conduct any solicitation targeted to the
Mortgagors for the purpose of inducing or encouraging the early prepayment or
refinancing of the related Mortgage Loans. It is understood and agreed that
promotions undertaken by the Servicer or any agent or affiliate of the Servicer
which are directed to the general public at large, including mass mailings based
on commercially acquired mailing lists, newspaper, radio and television
advertisements, shall not constitute solicitation under this Section 6.08 nor is
the Servicer prohibited from responding to unsolicited requests or inquiries
made by a Mortgagor or an agent of a Mortgagor.

         Section 6.09 Annual Certification and Indemnification.

         (a) With respect to any Mortgage Loans that are subject to a
pass-through transfer or other securitization (a "Securitization") in which the
filing of a Sarbanes-Oxley Certification directly with the Securities and
Exchange Commission is required, by May 15th of each year or in connection with
any additional

                                     M-2-22
<PAGE>

Sarbanes-Oxley Certification required to be filed upon thirty (30) days written
request, an officer of the Servicer shall execute and deliver an Officer's
Certification substantially in the form attached hereto as Exhibit E, to the
entity filing the Sarbanes-Oxley Certification directly with the Securities and
Exchange Commission (the "Sarbanes Certifying Party") for the benefit of such
entity and such entity's affiliates and the officers, directors and agents of
such entity.

         (b) The Servicer shall indemnify and hold harmless the Sarbanes
Certifying Party and its officers, directors, agents and affiliates from and
against any losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under Sections 6.04, 6.05 and 6.09 or the
negligence, bad faith or willful misconduct of the Servicer in connection
therewith. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Sarbanes Certifying Party, then the Servicer
agrees that it shall contribute to the amount paid or payable by the Sarbanes
Certifying Party as a result of the losses, claims, damages or liabilities of
the Sarbanes Certifying Party in such proportion as is appropriate to reflect
the relative fault of the Sarbanes Certifying Party on the one hand and the
Servicer on the other in connection with a breach of the Servicer's obligations
under Sections 6.04, 6.05 and 6.09 or the Servicer's negligence, bad faith or
willful misconduct in connection therewith.

                                   ARTICLE VII
                       REPORTS TO BE PREPARED BY SERVICER

         Section 7.01 Servicer Shall Provide Information as Reasonably Required.

         The Servicer shall furnish to the Owner or the NIMs Insurer upon
reasonable request, during the term of this Agreement, such periodic, special or
other reports or information, whether or not provided for herein, as shall be
necessary, reasonable or appropriate with respect to the purposes of this
Agreement. The Servicer may negotiate with the Owner or the NIMs Insurer for a
reasonable fee for providing such report or information, unless (i) the Servicer
is required to supply such report or information pursuant to any other section
of this Agreement, or (ii) the report or information has been requested in
connection with Internal Revenue Service or other regulatory agency
requirements. All such reports or information shall be provided by and in
accordance with all reasonable instructions and directions given by the Owner or
the NIMs Insurer. The Servicer agrees to execute and deliver all such
instruments and take all such action as the Owner, or the NIMs Insurer, from
time to time, may reasonably request in order to effectuate the purpose and to
carry out the terms of this Agreement.

                                  ARTICLE VIII
                                  THE SERVICER

         Section 8.01  Indemnification; Third Party Claims.

         The Servicer agrees to indemnify the Owner, its successors and assigns,
and any agent of the Owner, and the NIMs Insurer (each an "Indemnified Person")
and hold each such Indemnified Person harmless from and against any and all
claims, losses, damages, penalties, fines, forfeitures, legal fees and related
costs, judgments, and any other costs, fees and expenses that such Indemnified
Person may sustain in any way related to the failure of the Servicer to perform
its duties and service the Mortgage Loans in strict compliance with the terms of
this Agreement and for breach of any representation, warranty or covenant of the
Servicer contained herein. The Servicer shall notify the Owner and the NIMs
Insurer in accordance with Section 11.04 herein of any claim made by a third
party against the Servicer, the Owner or both, with respect to this Agreement,
the Mortgage Loans and/or any alleged act by Owner. The Owner shall assume the
defense of any such claim and pay all costs and expenses (including reasonable
legal fees and expenses) of defending the Servicer and itself against any such
claim other than (i) any loss, liability or expense related to the Servicer's
failure to perform Servicer's duties in strict compliance with this Agreement;
and (ii) any loss, liability or expense incurred by reason of the Servicer's
willful misfeasance, bad faith or negligence in the performance of its duties
hereunder or by reason of reckless disregard of its obligations and duties
hereunder. The Owner shall promptly pay, discharge and satisfy any judgment or
decree that may be entered against it in respect of

                                     M-2-23
<PAGE>

such claim. If in any event, the Servicer incurred any expenses or fees related
to the above, the Owner shall reimburse the Servicer within thirty (30) Business
Days upon receipt of an invoice from the Servicer of all amounts advanced by the
Servicer pursuant to the preceding sentence.

         Section 8.02 Merger or Consolidation of the Servicer.

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

         Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer whether or not related to loan servicing, shall be the successor of the
Servicer 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 shall
be an institution (i) having a GAAP net worth of not less than $25,000,000, (ii)
the deposits of which are insured by the FDIC, or which is a HUD-approved
mortgagee whose primary business is in origination and servicing of first lien
1-4 family mortgage loans, and (iii) which is a Fannie Mae or Freddie Mac
approved seller/servicer in good standing. Furthermore, in the event the
Servicer transfers or otherwise disposes of all or substantially all of its
assets to an affiliate of the Servicer, such affiliate shall satisfy the
condition above, and shall also be fully liable to the Owner for all of the
Servicer's obligations and liabilities hereunder.

         Section 8.03 Limitation on Liability of the Servicer and Others.

         Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Owner 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 made in good faith; provided, however,
that this provision shall not protect the Servicer or any such person against
any breach of warranties or representations made herein, or failure to perform
its obligations in compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expenses or liability; provided, however, that the Servicer may, with the
consent of the Owner and the NIMs Insurer, undertake any such action which it
may deem necessary or desirable with respect to this Agreement and the rights
and duties of the parties hereto. In such event, the reasonable legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities for which the Owner will be liable, the Owner
shall reimburse the Servicer within thirty days of receipt by the Owner of a
billing statement from the Servicer providing reasonable detail with respect
thereto, unless the Owner is disputing such charges, in which event the Owner
shall reimburse the Company as promptly as feasible upon resolution of such
dispute.

         Section 8.04  Servicer Not to Resign.

         The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer and the Owner, with the consent of the NIMs Insurer or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Owner and the NIMs Insurer
which Opinion of Counsel shall be in form and substance acceptable to the Owner
and the NIMs Insurer. No such resignation shall become effective until a
successor shall have assumed the Servicer's responsibilities and obligations
hereunder in the manner provided in Section 11.01. Notwithstanding the
foregoing, the Servicer, without the consent of the Owner, may retain
third-party

                                     M-2-24
<PAGE>

contractors to perform certain servicing and loan administration functions,
including without limitation hazard insurance administration, tax payment and
administration, flood certification and administration, collection services and
similar functions, provided, however, that the retention of such contractors by
Servicer shall not limit the obligation of the Servicer to service the Mortgage
Loans pursuant to the terms and conditions of this Agreement.

         Section 8.05  No Transfer of Servicing.

         With respect to the retention of the Servicer to service the Mortgage
Loans hereunder, the Servicer acknowledges that the Owner and the NIMs Insurer
have in reliance upon the Servicer's independent status, the adequacy of its
servicing facilities, plan, personnel, records and procedures, its integrity,
reputation and financial standing and the continuance thereof. Without in any
way limiting the generality of this section, the Servicer shall not either
assign this Agreement or the servicing hereunder or delegate its rights or
duties hereunder or any portion thereof, or sell or otherwise dispose of all or
substantially all of its property or assets, without the prior written approval
of the Owner and the NIMs Insurer.

                                   ARTICLE IX
                                     DEFAULT

         Section 9.01  Events of Default.

         Each of the following shall constitute an Event of Default on the part
of the Servicer:

         (i) any failure by the Servicer to remit to the Owner any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of two (2) Business Days after written notice thereof from the
Owner or the NIMs Insurer (it being understood that this subparagraph shall not
affect Servicer's obligation pursuant to Section 5.01 to pay default interest on
any remittance received by the Owner after the Business Day on which such
payment was due); or

         (ii) any failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer set forth in this Agreement (other than with respect to Sections, 6.04,
6.05 and 6.09), the breach of which has a material adverse effect and which
continue unremedied for a period of sixty days (except that such number of days
shall be fifteen in the case of a failure to pay any premium for any insurance
policy required to be maintained under this Agreement and such failure shall be
deemed to have a material adverse effect) after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Owner or the NIMs Insurer; or
         (iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or

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

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

         (vi) the Servicer ceases to meet the qualifications of a Fannie Mae or
Freddie Mac servicer; or

                                     M-2-25
<PAGE>

         (vii) the Servicer attempts to assign its right to servicing
compensation hereunder or the Servicer attempts, without the consent of the
Owner and the NIMs Insurer, to sell or otherwise dispose of all or substantially
all of its property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
thereof except as otherwise permitted herein;

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

         (ix) failure by the Servicer to duly perform, within the required time
period, its obligations under Section 6.04, Section 6.05 or Section 6.09 of this
Agreement which failure continues unremedied for a period of fifteen (15) days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by any party to this Agreement,
the NIMs Insurer or by any master servicer responsible for master servicing the
Mortgage Loans pursuant to a securitization of such Mortgage Loans.

         In each and every such case, so long as an Event of Default shall not
have been remedied, the Owner with the consent of the NIMs Insurer, by notice in
writing to the Servicer may (and at the request of the NIMs Insurer, shall), in
addition to whatever rights the Owner may have under Section 8.01 and at law or
equity to damages, including injunctive relief and specific performance,
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof without compensating
the Servicer for the same.

         From and after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Mortgage Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 11.01. Upon written request from the Owner, the
Servicer shall prepare, execute and deliver, any and all documents and other
instruments, place in such successor's possession all Servicing Files, and do or
accomplish all other acts or things reasonably necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited
to, notification to MERS at the Servicer's sole expense. The Servicer agrees to
cooperate with the Owner and such successor in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to such successor for administration by it of all cash amounts, net
of unreimbursed Servicing Advances and Monthly Advances, which shall at the time
be credited by the Servicer to the Custodial Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.

         Section 9.02  Waiver of Defaults.

         The Owner with the consent of the NIMs Insurer may waive, only by
written notice, any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived in
writing.

                                    ARTICLE X
                                   TERMINATION

         Section 10.01  Termination.

         The respective obligations and responsibilities of the Servicer shall
terminate upon the earliest to occur of the following: (i) the later of the
final payment or other liquidation (or any advance with respect thereto) of the
last Mortgage Loan or the disposition of any REO Property and the remittance of
all funds due hereunder; (ii) by 30 days' written mutual consent of the Servicer
and the Owner with the consent of the NIMs Insurer; (iii) termination by the
Owner pursuant to Section 9.01; and (iv) upon resignation of the Servicer in
accordance with Section 8.04;. Simultaneously with any such termination and, in
the case of (ii), (iii) or (iv) of the preceding sentence, the transfer of
servicing hereunder, the Servicer shall be entitled to be reimbursed for any
outstanding Servicing Advances and

                                     M-2-26
<PAGE>

Monthly Advances as such amounts are received from the related Mortgage Loans or
as otherwise provided herein for a servicer that has not been terminated. In no
event shall the Servicer be entitled to any termination fee or other
compensation with respect to any termination of this Agreement or the Servicer's
rights hereunder, in whole or in part.

         Section 10.02  Subservicing Termination Trigger.

         In the event of a Subservicer Termination Trigger (as defined in the
related Trust Agreement), the Servicer shall terminate the related Subservicer
at the direction of the NIMS Insurer. Following such termination, the Servicer
shall have the right to service such Mortgage Loans without the use of a
Subservicer or to engage a new Subservicer acceptable to the NIMS Insurer
pursuant to a Subservicing Agreement, which is not in conflict with the terms of
this Agreement. Notwithstanding the foregoing, the Servicer shall retain the
ownership of all servicing rights with respect to the related Mortgage Loans and
no such direction of termination of a Subservicer shall be deemed to diminish
such ownership.

                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

         Section 11.01  Successor to the Servicer.

         Upon termination of the Servicer's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 8.05 or 9.01, the Owner shall (i)
succeed to and assume all of the Servicer's responsibilities, rights, duties and
obligations under this Agreement, or (ii) appoint a successor acceptable to the
NIMs Insurer having the characteristics set forth in Section 8.02 and which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement prior to the termination of the
Servicer's responsibilities, duties and liabilities under this Agreement. If the
NIMs Insurer requests, the Master Servicer shall appoint a successor servicer as
provided in the preceding sentence. In connection with such appointment and
assumption, the Owner may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as the Owner with the consent of the
NIMs Insurer and such successor shall agree. In the event that the Servicer's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned sections, the Servicer shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this section and
shall in no event relieve the Servicer of the representations and warranties
made pursuant to Article III and the remedies available to the Owner under
Section 8.01, it being understood and agreed that the provisions of such Article
III and Section 8.01 shall be applicable to the Servicer notwithstanding any
such resignation or termination of the Servicer, or the termination of this
Agreement.

         Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Owner an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Servicer or termination of this Agreement
pursuant to Section 8.04, 8.05 or 9.01 shall not affect any claims that the
Owner may have against the Servicer arising prior to any such termination or
resignation.

         The Servicer shall promptly deliver to the successor the funds in the
Custodial Account and the Escrow Account and the Servicing Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds. All unreimbursed Monthly Advances and Servicing Advances shall be
paid by the Owner to the replaced servicer as such amounts are received from the
related Mortgage Loans or are otherwise reimbursable hereunder. The Servicer
shall execute and deliver such instruments and do such other things as may
reasonably be required to more fully and definitely vest and confirm in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer. In addition, the Servicer shall promptly take all
other actions

                                     M-2-27
<PAGE>

reasonably requested by Owner or the NIMs Insurer with respect to MERS Mortgage
Loans and MERS to effectuate and evidence the transfer of servicing and/or
ownership thereof in accordance with the terms of this Agreement.

         Upon a successor's acceptance of appointment as such, the Owner shall
notify the Servicer of such appointment.

         Section 11.02  Amendment.

         This Agreement may be amended from time to time by the Servicer and the
Owner, with the consent of the NIMs Insurer, by written agreement signed by the
Servicer and the Owner.

         Section 11.03  Governing Law.

         THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS. THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         Section 11.04  Notices.

         Any demands, notices or other communications permitted or required
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, and
return receipt requested or transmitted by telecopier and confirmed by a similar
mailed writing, as follows:

         (i)      if to the Servicer with respect to servicing issues:

                  Home Star Mortgage Services LLC
                  W. 115 Century Road
                  Paramus, New Jersey 07652
                  Attention:

         (ii)     if to the Owner:

                  Homestar Mortgage Acceptance Corp.
                  W. 115 Century Road
                  Paramus, New Jersey 07652
                  Attention:

or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice, or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
address (as evidenced, in the case of registered or certified mail, by the date
noted on the return receipt).

         Section 11.05  Severability of Provisions.

         If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, 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.

         Section 11.06  Exhibits and Schedules.

                                     M-2-28
<PAGE>

         The exhibits, schedules and other addenda and supplements to this
Agreement are hereby incorporated and made a part hereof and are an integral
part of this Agreement.

         Section 11.07  General Interpretive Principles.

         For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:

         (i) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;

         (ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;

         (iii) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;

         (iv) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

         (v) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision;

         (vi) the term "include" or "including" shall mean without limitation by
reason of enumeration; and

         (vii) to the extent that some, but not all, of the Mortgage Loans are
transferred pursuant to Section 11.10 hereof, this Agreement shall be construed
as a separate agreement with respect to such Mortgage Loans and references to
the rights of the Owner shall apply separately with respect to each Owner.

         Section 11.08  Reproduction of Documents.

         This Agreement and all documents relating hereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

         Section 11.09  Confidentiality of Information.

         Each party recognizes that, in connection with this Agreement, it may
become privy to non-public information regarding the financial condition,
operations and prospects of the other party. Except as required to be disclosed
by law, each party agrees to keep all non-public information regarding the other
party strictly confidential, and to use all such information solely in order to
effectuate the purpose of this Agreement. Additionally, with respect to each
Mortgage Loan and the related Mortgagor, the Servicer and the Owner shall comply
with Title V of the Gramm Leach Bliley Act of 1999 and all applicable
regulations promulgated thereunder.

                                     M-2-29
<PAGE>

         Section 11.10  Assignment by the Owner.

         The Owner shall have the right, with the consent of the NIMs Insurer,
without the consent of the Servicer but subject to the limits set forth in this
Agreement hereof, to assign its interest under this Agreement with respect to
some or all of the Mortgage Loans, and designate any person to exercise any
rights of the Owner hereunder and the assignee or designee shall accede to the
rights and obligations hereunder of the Owner with respect to such Mortgage
Loans. The Servicer shall not be obligated to recognize any such assignee or
designee unless such person executes an assignment and assumption agreement
reasonably acceptable to the Servicer. All references to the Owner in this
Agreement shall be deemed to include its assignees or designees.

         Section 11.11  No Partnership.

         Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
Owner.

         Section 11.12  Counterparts; Successors and Assigns.

         This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.05, this Agreement
shall inure to the benefit of and be binding upon the Servicer, the NIMs Insurer
and the Owner and their respective successors and assigns.

         Section 11.13  Entire Agreement.

         Each of the Servicer and the Owner acknowledges that no
representations, agreements or promises were made to it by the other party or
any of its employees other than those representations, agreements or promises
specifically contained herein. This Agreement sets forth the entire
understanding between the parties hereto with respect to the matters set forth
herein, and shall be binding upon all successors of both parties.

         Section 11.14  Further Agreements.

         The Servicer and the Owner each agrees to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purpose of this
Agreement.

         Section 11.15     Third Party Beneficiary.

         For purposes of this Agreement, any Master Servicer and the NIMs
Insurer shall be considered a third party beneficiary to this Agreement entitled
to all the rights and benefits accruing to any Master Servicer and the NIMs
Insurer herein as if it were a direct party to this Agreement.

                                     M-2-30
<PAGE>

         IN WITNESS WHEREOF, the Servicer and the Owner have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the date and year first above written.

                                  HOMESTAR MORTGAGE ACCEPTANCE CORP.

                                  By:
                                  Name:
                                  Title:

                                  HOMESTAR MORTGAGE SERVICES, LLC

                                  By:
                                  Name:
                                  Title:

                                     M-2-31
<PAGE>

                                    EXHIBIT A

                             MORTGAGE LOAN SCHEDULE

                             Available Upon Request

                                     M-2-32
<PAGE>

                                    EXHIBIT B

                    FORMS OF CUSTODIAL ACCOUNT CERTIFICATIONS

                         CUSTODIAL ACCOUNT CERTIFICATION

                                                                            , 20

         Home Star Mortgage Services LLC hereby certifies that it has
established the account described below as a Custodial Account pursuant to
Section 4.04 of the Servicing Agreement, dated as of March 5, 2004.

Title of Account: HMAC 2004-_ in trust for the Purchaser and/or subsequent
purchasers of Mortgage Loans, and various Mortgagors - P & I

Address of office or branch
of the Servicer at which
Account is maintained:

                                               HOME STAR MORTGAGE SERVICES LLC
                                               Servicer

                                               By:
                                               Name:
                                               Title:

                                     M-2-33
<PAGE>

                                    EXHIBIT C

                     FORMS OF ESCROW ACCOUNT CERTIFICATIONS

                          ESCROW ACCOUNT CERTIFICATION

                                                                            , 20

         Home Star Mortgage Services LLC hereby certifies that it has
established the account described below as an Escrow Account pursuant to Section
4.06 of the Servicing Agreement, dated as of March 5, 2004.

Title of Account: HMAC 2004-_ in trust for the Purchaser and/or subsequent
purchasers of Mortgage Loans, and various Mortgagors - T & I

Address of office or branch
of the Servicer at which
Account is maintained:

                                                HOME STAR MORTGAGE SERVICES LLC
                                                Servicer

                                                By:
                                                Name:
                                                Title:

                                     M-2-34
<PAGE>

                                    EXHIBIT D

                        REQUEST FOR RELEASE OF DOCUMENTS

To:      Wells Fargo Bank, N.A.
         1015 10th Avenue S.E.
         Mpls., MN  55414
         Attn:  ________________

         Re:      Custodial Agreement dated as of October 1, 2004, among HSBC
                  Bank (USA), Homestar Mortgage Acceptance Corp. and Wells Fargo
                  Bank, N.A., as Custodian

         In connection with the administration of the Mortgage Loans held by you
as Custodian for the Owner pursuant to the above-captioned Custody Agreement, we
request the release, and hereby acknowledge receipt, of the Custodian's Mortgage
File for the Mortgage Loan described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents (check one):
_______        1.      Mortgage Paid in Full
_______        2.      Foreclosure
_______        3.      Substitution
_______        4.      Other Liquidation (Repurchases, etc.)
_______        5.      Nonliquidation  [Reason:_______________________________]

Address to which Custodian should
Deliver the Custodian's Mortgage File:      ___________________________________
                                            ___________________________________
                                            ___________________________________

                                            By:________________________________
                                                     (authorized signer)
Issuer:_____________________________________
Address:____________________________________
         ___________________________________
Date:_______________________________________

Custodian
Wells Fargo Bank, N.A.

Please acknowledge the execution of the above request by your signature and date
below:
____________________________________                          _________________
Signature                                                     Date

Documents returned to Custodian:
____________________________________                          _________________
Custodian

                                     M-2-35
<PAGE>

                                    EXHIBIT E

                      FORM OF SARBANES-OXLEY CERTIFICATION

         I, __________________________, certify to Wells Fargo Bank, N.A., and
its officers, directors, agents and affiliates (the "Sarbanes Certifying
Party"), and with the knowledge and intent that they will rely upon this
certification, that:

         (i) Based on my knowledge, the information relating to the Mortgage
Loans and the servicing thereof submitted by the Servicer to the Sarbanes
Certifying Party which is used in connection with preparation of the reports on
Form 8-K and the annual report on Form 10-K filed with the Securities and
Exchange Commission with respect to the Securitization, taken as a whole, does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading as of the date of this
certification;

         (ii) The servicing information required to be provided to the Sarbanes
Certifying Party by the Servicer under the Agreement has been provided to the
Sarbanes Certifying Party;

         (iii) I am responsible for reviewing the activities performed by the
Servicer and by each related subservicer under the Agreement and based upon the
review required by the Agreement, and except as disclosed in the Annual
Statement of Compliance, the Annual Independent Public Accountant's Servicing
Report and all servicing reports, officer's certificates and other information
relating to the servicing of the Mortgage Loans submitted to the Sarbanes
Certifying Party, the Servicer and each related subservicer has, as of the date
of this certification, fulfilled its obligations under the Agreement; and

         (iv) I have disclosed to the Sarbanes Certifying Party all significant
deficiencies relating to the Servicer's and/or each related subservicer's
compliance with the minimum servicing standards in accordance with a review
conducted in compliance with the Uniform Single Attestation Program for Mortgage
Bankers or similar standard as set forth in the Agreement.

         Capitalized words not otherwise defined herein have the meaning
assigned to them in the Servicing Agreement dated March 5, 2004 by and between
Homestar Mortgage Acceptance Corp. as Owner and Home Star Mortgage Services LLC
as Servicer.

         IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Servicer.

Dated:                                      By:
Name:
Title:

                                     M-2-36
<PAGE>

                                    EXHIBIT F

                        MONTHLY SERVICER REPORTING FORMAT

                   (RYLAND) FORMAT, SERVICER PERIOD REPORTING

The format should be:
1. Record length of 240
2. ASCII
3. All dates should have DD of "01".

<TABLE>
<CAPTION>

                                                                                        COBOL
#      M/O      Field Name                               Position        Length      "Picture"           Justify
<S>    <C>      <C>                                      <C>             <C>         <C>                 <C>
1.     O        Master Servicer No.                      001-002         2
2.     O        Unit Code                                003-004         2
3.     M        Loan Number                              005-014         10          X(10)
4.     O        Borrower Name                            015-034         20          X(20)
5.     O        Old Payment Amount                       035-045         11          S(9)V9(02)
6.     O        Old Loan Rate                            046-051         6           9(2)V9(04)
7.     O        Servicer Fee Rate                        052-057         6           9(2)V9(04)
8.     M        Servicer Ending Balance                  058-068         11          S9(9)V9(02)
9.     M        Servicer Next Due Date                   069-076         8           CCYYMMDD
10.    O        Curtail Amt 1 - Before                   077-087         11          S9(9)V9(02)
11.    O        Curtail Date 1                           088-095         8           CCYYMMDD
12.    O        Curtail Amt 1 - After                    096-106         11          S9(9)V9(02)
13     O        Curtail Amt 2 - Before                   107-117         11          S9(9)V9(02)
14.    O        Curtail Date                             118-125         8           CCYYMMDD
15.    O        Curtail Amt 2 - After                    126-136         11          9(9)V9(02)
16.    O        Curtail Amt 3 - Before                   137-147         11          9(9)V9(02)
17.    O        Curtail Date                             148-155         8           CCYYMMDD
18     O        Curtail Amt 3 - After                    156-166         11          9(9)V9(02)
19     O        New Payment Amount                       167-177         11          9(9)V9(02)
20.    O        New Loan Rate                            178-183         6           (2)V9(04)
21.    O        Index Rate                               184-189         6           (2)V9(04)
22.    O        Remaining Term                           190-192         3           (3)
23.    O        Liquidation Amount                       193-203         11          9(9)V9(02)
24.    O        Action Code                              204-205         2           (02)
25.    O        Scheduled Principal                      206-216         11          9(9)V9(02)
26.    O        Scheduled Interest                       217-227         11          9(9)V9(02)
27.    O        Scheduled Ending Balance                 228-238         11          9(9)V9(02)
28.    O        FILLER                                   239-240         2           (02)
Trailer Record
1.     O        Number of Records                        001-006         6           9(06)
2.     O        FILLER                                   007-240         234         X(234)
</TABLE>

Field Names and Descriptions:

Field Name        Description

Master Servicer No.        Hard code as "01" used internally

                                     M-2-37
<PAGE>

<TABLE>
<CAPTION>

<S>               <C>
Unit Code         Hard code as "  " used internally

Loan Number       Investor's loan number

Borrower Name     Last name of borrower

Old Payment Amount         P&I amount used for the applied payment

Old Loan Rate     Gross interest rate used for the applied payment

Servicer Fee Rate Servicer's fee rate

Servicer Ending Balance    Ending actual balance after a payment has been applied

Servicer Next Due Date     Borrower's next due date for a payment

Curtailment Amount 1 - Before       Amount of curtailment applied before the payment

Curtailment Date 1                  Date of  curtailment  should  coincide  with the payment  date  applicable  to the
                                    curtailment

Curtailment Amount 1 - After        Amount of curtailment applied after the payment

Curtailment Amount 2 - Before       Amount of curtailment applied before the payment

Curtailment Date 2                  Date of  curtailment  should  coincide  with the payment  date  applicable  to the
                                    curtailment

Curtailment Amount 2 - After        Amount of curtailment applied after the payment

Curtailment Amount 3 - Before       Amount of curtailment applied before the payment

Curtailment Date 3                  Date of  curtailment  should  coincide  with the payment  date  applicable  to the
                                    curtailment

Curtailment Amount 3 - After        Amount of curtailment applied after the payment

New Payment Amount                  For ARM,  Equal,  or Buydown  loans,  when a payment  change  occurs,  this is the
                                    scheduled payment

New Loan Rate                       For ARM loans,  when the gross interest rate change occurs,  this is the scheduled
                                    rate

Index Rate                          For ARM loans, the index rate used in calculating the new gross interest rate

Remaining Term                      For ARM loans,  the number of months  left on the loan used to  determine  the new
                                    P&I amount

Liquidation Amount         The payoff amount of the loan

Action Code       For delinquent loans:
</TABLE>

                                     M-2-38
<PAGE>

<TABLE>
<CAPTION>

<S>               <C>
                                                     12 -- Relief Provisions
                                                     15 -- Bankruptcy/Litigation
                                                     20 -- Referred for Deed-in-lieu, short sale
                                                     30 -- Referred to attorney to begin foreclosure       60 -- Loan Paid in full
                                                     70 -- Real Estate Owned

Scheduled Principal                                  Amount of principal from borrower payment due to bondholder

Scheduled Interest                                   Amount of interest from borrower payment due to bondholder

Scheduled Ending Balance   Ending scheduled balance of loan

FILLER                                               Should be filled with spaces
</TABLE>

                                     M-2-39
<PAGE>

                                    EXHIBIT G

Data must be submitted to Wells Fargo Bank in an Excel spreadsheet format with
fixed field names and data type. The Excel spreadsheet should be used as a
template consistently every month when submitting data for all loans that are 60
days + delinquent and/or in bankruptcy, foreclosure or REO.

Table: Delinquency

<TABLE>
<CAPTION>
Name                                                          Type                       Max Character Size
<S>                                                           <C>                       <C>
Servicer Loan #                                               Number                    10
Investor Loan #                                               Number                    10
Servicer Investor #                                           Text                      3
Borrower Name                                                 Text                      20
Address                                                       Text                      30
State                                                         Text                      2
Zip                                                           Text                      5
Due Date                                                      Date/Time                 8
Loan Type                                                     Text                      8
BK Filed Date                                                 Date/Time                 8
BK Chapter                                                    Text                      6
BK Case Number                                                Text                      30 Maximum
Post Petition Due                                             Date/Time                 8
Motion for Relief                                             Date/Time                 8
Lift of Stay                                                  Date/Time                 8
BK Discharge/Dismissal Date                                   Date/Time                 8
Loss Mit Approval Date                                        Date/Time                 8
Loss Mit Type                                                 Text                      5
Loss Mit Code                                                 Number                    2
Loss Mit Estimated Completion Date                            Date/Time                 8
Loss Mit Actual Completion Date                               Date/Time                 8
FC Approval Date                                              Date/Time                 8
File Referred to Attorney                                     Date/Time                 8
NOD                                                           Date/Time                 8
Complaint Filed                                               Date/Time                 8
Scheduled Sale Date                                           Date/Time                 8
Actual Sale Date                                              Date/Time                 8
F/C Sale Amount                                               Currency                  8
Eviction Start Date                                           Date/Time                 8
Eviction Completed Date                                       Date/Time                 8
List Price                                                    Currency                  8
List Date                                                     Date/Time                 8
Accepted Offer Price                                          Currency                  8
Accepted Offer Date                                           Date/Time                 8
Estimated REO Closing Date                                    Date/Time                 8
Actual REO Sale Date                                          Date/Time                 8
Occupant Code                                                 Text                      10
Property Condition Code                                       Text                      2
Property Inspection Date                                      Date/Time                 8
Property Value Date                                           Date/Time                 8
Current Property Value                                        Currency                  8
Repaired Property Value                                       Currency                  8
Current LTV                                                   Currency                  8
FNMA Delinquent Status Code                                   Text                      2
</TABLE>

                                     M-2-40
<PAGE>

<TABLE>
<CAPTION>

<S>                                                           <C>                       <C>
FNMA Delinquent Reason Code                                   Text                      3

If applicable:
MI Cancellation Date                                          Date/Time                 8
MI Claim Filed Date                                           Date/Time                 8
MI Claim Amount                                               Currency                  8
MI Claim Reject Date                                          Date/Time                 8
MI Claim Resubmit Date                                        Date/Time                 8
MI Claim Paid Date                                            Date/Time                 8
MI Claim Amount Paid                                          Currency                  8
Pool Claim Filed Date                                         Date/Time                 8
Pool Claim Amount                                             Currency                  8
Pool Claim Reject Date                                        Date/Time                 8
Pool Claim Paid Date                                          Date/Time                 8
Pool Claim Amount Paid                                        Currency                  8
Pool Claim Resubmit Date                                      Date/Time                 8
FHA Part A Claim Filed Date                                   Date/Time                 8
FHA Part A Claim Amount                                       Currency                  8
FHA Part A Claim Paid Date                                    Date/Time                 8
FHA Part A Claim Paid Amount                                  Currency                  8
FHA Part B Claim Filed Date                                   Date/Time                 8
FHA Part B Claim Amount                                       Currency                  8
FHA Part B Claim Paid Date                                    Date/Time                 8
FHA Part B Claim Paid Amount                                  Currency                  8
VA Claim Filed Date                                           Date/Time                 8
VA Claim Paid Date                                            Date/Time                 8
VA Claim Paid Amount                                          Currency                  8
</TABLE>

                                     M-2-41
<PAGE>

The Loss Mit Type field should show the approved Loss Mitigation arrangement.
The following are acceptable:

o      ASUM-           Approved Assumption
o      BAP-                Borrower Assistance Program
o      CO-             Charge Off
o      DIL-            Deed-in-Lieu
o      FFA-            Formal Forbearance Agreement
o      MOD-            Loan Modification
o      PRE-            Pre-Sale
o      SS-             Short Sale
o      MISC-               Anything else approved by the PMI or Pool Insurer

Wells Fargo Bank will accept alternative Loss Mitigation Types to those above,
provided that they are consistent with industry standards. If Loss Mitigation
Types other than those above are used, the Servicer must supply Wells Fargo Bank
with a description of each of the Loss Mitigation Types prior to sending the
file.

The Occupant Code field should show the current status of the property. The
acceptable codes are:

o        Mortgagor
o        Tenant
o        Unknown
o        Vacant

The Property Condition field should show the last reported condition of the
property. The acceptable codes are:

o        Damaged
o        Excellent
o        Fair
o        Gone
o        Good
o        Poor
o        Special Hazard
o        Unknown

                                     M-2-42
<PAGE>

The FNMA Delinquent Reason Code field should show the Reason for Default. The
following FNMA Delinquency Reason Codes to be used are below.

Delinquency Code       Delinquency Description
001 FNMA-Death of principal mortgagor
002 FNMA-Illness of principal mortgagor
003 FNMA-Illness of mortgagor's family member
004 FNMA-Death of mortgagor's family member
005 FNMA-Marital difficulties
006 FNMA-Curtailment of income
007 FNMA-Excessive Obligation
008 FNMA-Abandonment of property
009 FNMA-Distant employee transfer
011 FNMA-Property problem
012 FNMA-Inability to sell property
013 FNMA-Inability to rent property
014 FNMA-Military Service
015 FNMA-Other
016 FNMA-Unemployment
017 FNMA-Business failure
019 FNMA-Casualty loss
022 FNMA-Energy environment costs
023 FNMA-Servicing problems
026 FNMA-Payment adjustment
027 FNMA-Payment dispute
029 FNMA-Transfer of ownership pending
030 FNMA-Fraud
031 FNMA-Unable to contact borrower
INC FNMA-Incarceration

                                     M-2-43
<PAGE>

The FNMA Delinquent Status Code field should show the Status of Default. The
following FNMA Delinquency Status Codes to be used are below.

Status Code       Status Description
09       Forbearance
17       Pre-foreclosure Sale Closing Plan Accepted
24       Government Seizure
26       Refinance
27       Assumption
28       Modification
29       Charge-Off
30       Third Party Sale
31       Probate
32       Military Indulgence
43       Foreclosure Started
44       Deed-in-Lieu Started
49       Assignment Completed
61       Second Lien Considerations
62       Veteran's Affairs-No Bid
63       Veteran's Affairs-Refund
64       Veteran's Affairs-Buydown
65       Chapter 7 Bankruptcy
66       Chapter 11 Bankruptcy
67       Chapter 13 Bankruptcy

                                     M-2-44
<PAGE>

                                    EXHIBIT H

WELLS FARGO BANK,  N.A.
Form 332

Calculation of Realized Loss

Purpose

To provide the Servicer with a form for the calculation of any Realized Loss (or
gain) as a result of a Mortgage Loan having been foreclosed and Liquidated.

Distribution

The Servicer will prepare the form in duplicate and send the original together
with evidence of conveyance of title and appropriate supporting documentation to
the Master Servicer with the Monthly Accounting Reports which supports the
Mortgage Loan's removal from the Mortgage Loan Activity Report. The Servicer
will retain the duplicate for its own records.

Due Date

With respect to any liquidated Mortgage Loan, the form will be submitted to the
Master Servicer no later than the date on which statements are due to the Master
Servicer under Section 4.02 of this Agreement (the "Statement Date") in the
month following receipt of final liquidation proceeds and supporting
documentation relating to such liquidated Mortgage Loan; provided, that if such
Statement Date is not at least 30 days after receipt of final liquidation
proceeds and supporting documentation relating to such liquidated Mortgage Loan,
then the form will be submitted on the first Statement Date occurring after the
30th day following receipt of final liquidation proceeds and supporting
documentation.

Preparation Instructions

The numbers on the form correspond with the numbers listed below.
1.       The actual Unpaid Principal Balance of the Mortgage Loan.
2.       The Total Interest Due less the aggregate amount of servicing fee that
         would have been earned if all delinquent payments had been made as
         agreed.
3-7.     Complete as necessary. All line entries must be supported by copies of
         appropriate statements, vouchers, receipts, canceled checks, etc., to
         document the expense. Entries not properly documented will not be
         reimbursed to the Servicer.
8.       Accrued Servicing Fees based upon the Scheduled Principal Balance of
         the Mortgage Loan as calculated on a monthly basis.
10.      The total of lines 1 through 9.

Credits

11-17.   Complete as necessary. All line entries must be supported by copies of
         the appropriate claims forms, statements, payment checks, etc. to
         document the credit. If the Mortgage Loan is subject to a Bankruptcy
         Deficiency, the difference between the Unpaid Principal Balance of the
         Note prior to the Bankruptcy Deficiency and the Unpaid Principal
         Balance as reduced by the Bankruptcy Deficiency should be input on line
         16.
18.      The total of lines 11 through 17.

Total Realized Loss (or Amount of Any Gain)

                                     M-2-45
<PAGE>

19.      The total derived from subtracting line 18 from 10. If the amount
         represents a realized gain, show the amount in parenthesis ( ).

                                     M-2-46
<PAGE>

                             WELLS FARGO BANK, N.A.
                          CALCULATION OF REALIZED LOSS

WELLS FARGO BANK,  N.A. Trust:  ___________________________
Prepared by:  __________________    Date:  _______________
Phone:  ______________________

Servicer Loan No.             Servicer Name                   Servicer Address

WELLS FARGO BANK, N.A.
Loan No._____________________________
Borrower's Name:________________________________________________________
Property
Address:________________________________________________________________
Liquidation and Acquisition Expenses:
Actual Unpaid Principal Balance of Mortgage Loan     $ _______________(1)
Interest accrued at Net Rate         ________________(2)
Attorney's Fees    ________________(3)
Taxes     ________________(4)
Property Maintenance        ________________(5)
MI/Hazard Insurance Premiums         ________________(6)
Hazard Loss Expenses        ________________(7)
Accrued Servicing Fees      ________________(8)
Other (itemize)    ________________(9)
_________________________________________   $ _________________
_________________________________________    __________________
_________________________________________    __________________
_________________________________________    __________________
Total Expenses    $ ______________(10)
Credits:
Escrow Balance    $ ______________(11)
HIP Refund        ________________(12)
Rental Receipts   ________________(13)
Hazard Loss Proceeds       ________________(14)
Primary Mortgage Insurance Proceeds ________________(15)
Proceeds from Sale of Acquired Property     ________________(16)
Other (itemize)   ________________(17)
_________________________________________   ___________________
_________________________________________   ___________________
Total Credits     $________________(18)
Total Realized Loss (or Amount of Gain)     $________________(19)

                                     M-2-47
<PAGE>

                                    EXHIBIT N
                               CUSTODIAL AGREEMENT
                               -------------------

                  THIS CUSTODIAL AGREEMENT (as amended and supplemented from
time to time, the "Agreement"), dated as of October 1, 2004, by and among HSBC
Bank USA, National Association, not individually but solely as trustee under the
Pooling and Servicing Agreement defined below (including its successors under
the Pooling and Servicing Agreement defined below, the "Trustee"), HOMESTAR
MORTGAGE ACCEPTANCE CORP., as depositor (together with any successor in
interest, the "Company"), WELLS FARGO BANK, NATIONAL ASSOCIATION, as master
servicer and securities administrator (together with any successor in interest
or successor under the Pooling and Servicing Agreement referred to below, the
"Master Servicer") and WELLS FARGO BANK, NATIONAL ASSOCIATION, as custodian
(together with any successor in interest or any successor appointed hereunder,
the "Custodian").

                                WITNESSETH THAT:
                                ----------------

                  WHEREAS, the Company, the Master Servicer, the Securities
Administrator and the Trustee have entered into a Pooling and Servicing
Agreement, dated as of October 1, 2004, relating to the issuance of HMAC
Mortgage Trust 2004-5, Asset-Backed Pass-Through Certificates, Series 2004-5 (as
in effect on the date of this agreement, the "Original Pooling and Servicing
Agreement," and as amended and supplemented from time to time, the "Pooling and
Servicing Agreement'); and

                  WHEREAS, the Custodian has agreed to act as agent for the
Trustee for the purposes of receiving and holding certain documents and other
instruments delivered by the Company or the Master Servicer under the Pooling
and Servicing Agreement, all upon the terms and conditions and subject to the
limitations hereinafter set forth;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the Trustee, the Company,
the Master Servicer, the Securities Administrator and the Custodian hereby agree
as follows:

                                   SECTION 1.

                                   DEFINITIONS

                  1.1 Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned in the Original Pooling and Servicing
Agreement, unless otherwise required by the context herein.

                                   SECTION 2.

                          CUSTODY OF MORTGAGE DOCUMENTS

                  2.1 CUSTODIAN TO ACT AS AGENT: ACCEPTANCE OF MORTGAGE FILES.
The Custodian, as the duly appointed custodial agent of the Trustee for these
purposes, acknowledges (subject to any exceptions noted in the Initial
Certification referred to in Section 2.3(a)), receipt of the Mortgage Files
relating to the Mortgage Loans identified on the schedule attached hereto (the
"Mortgage Files") and declares that it holds and will hold such Mortgage Files
as agent for the Trustee, in trust, for the use and benefit of all present and
future Certificateholders.

                  2.2 RECORDATION OF ASSIGNMENTS. Within 30 days after the
Closing Date, the Company shall complete or cause to be completed the
Assignments in the name of "HSBC Bank USA, National Association, as trustee
under the Pooling and Servicing Agreement relating to Homestar Mortgage
Acceptance Corp., Asset-Backed Pass-Through Certificates, Series 2004-5" (or
shall prepare or cause to be prepared new forms of Assignment in the name of the
Trustee). For each Mortgaged Property in a state, if any, which is specifically
excluded from the Opinion

                                       N-1
<PAGE>

of Counsel delivered by the Company to the Trustee and the Custodian, each such
Assignment shall be recorded in the appropriate public office for real property
records, and returned to the Custodian, at no expense to the Custodian.

                   2.3 REVIEW OF MORTGAGE FILES.

         (a) On or prior to the Closing Date, in accordance with Section 2.02 of
the Pooling and Servicing Agreement, the Custodian shall deliver to the Trustee
an Initial Certification in the form annexed hereto as Exhibit One evidencing
receipt (subject to any exceptions noted therein) of a Mortgage File for each of
the Mortgage Loans listed on the Schedule attached hereto (the "Mortgage Loan
Schedule").

         (b) Not later than 180 days after the Closing Date, the Custodian shall
review the Mortgage Files as provided in Section 2.02 of the Pooling and
Servicing Agreement and deliver to the Company and the Trustee a Final
Certification in the form annexed hereto as Exhibit Two evidencing the
completeness of the Mortgage Files.

         (c) In reviewing the Mortgage Files as provided herein and in the
Pooling and Servicing Agreement, the Custodian shall make no representation as
to and shall not be responsible to verify (i) the validity, legality,
enforceability, due authorization, recordability, sufficiency or genuineness of
any of the documents included in any Mortgage File or (ii) the collectibility,
insurability, effectiveness or suitability of any of the documents in any
Mortgage File.

         Upon receipt of written request from the Trustee, the Custodian shall
as soon as practicable supply the Trustee with a list of all of the documents
relating to the Mortgage Loans missing from the Mortgage Files.

                  2.4 CUSTODIAN TO COOPERATE: RELEASE OF MORTGAGE FILES. Upon
receipt of notice from the Trustee or the Master Servicer of a repurchase of a
Mortgage Loan pursuant to the Mortgage Loan Purchase Agreement or the Pooling
and Servicing Agreement, and that the purchase price therefore has been
deposited in the Custodial Account or the Certificate Account, then the
Custodian agrees to promptly release the related Mortgage File to the Seller or
other party at the direction of the Trustee.

                  Upon the Custodian's receipt of a request for release (a
"Request for Release") substantially in the form of Exhibit F to the Pooling and
Servicing Agreement signed by a servicing officer of the Servicer or a Servicing
Officer of the Master Servicer stating that it has received payment in full of a
Mortgage Loan or that payment in full will be escrowed in a manner customary for
such purposes, the Custodian agrees promptly to release to the Servicer or the
Master Servicer the related Mortgage File. The Company shall deliver to the
Custodian and the Custodian agrees to accept the Mortgage Note and other
documents constituting the Mortgage File with respect to any Substitute Mortgage
Loan.

                  From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Insurance Policy, the Servicer (or if the Servicer does not, the
Master Servicer) shall deliver to the Custodian a Request for Release signed by
a Servicing Officer requesting that possession of the Mortgage File be released
to the 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 of the Insurance Policies. Upon receipt of the
foregoing, the Custodian shall deliver the Mortgage File to the Servicer. The
Servicer shall cause the Mortgage File or any document therein so released to be
returned to the Custodian when the need therefore by the 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 the Certificate Account or (ii) the Mortgage File or such document
has been delivered to an attorney, or to a public trustee or other public
official as required by law, for purposes of initiating or pursuing legal action
or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Servicer has delivered to the Custodian 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.

                                       N-2
<PAGE>

                  At any time that the Servicer is required to deliver to the
Custodian a Request for Release, the Servicer shall deliver two copies of the
Request for Release if delivered in hard copy or the Servicer may furnish such
Request for Release electronically in a form acceptable to the Custodian, in
which event the servicing officer transmitting the same shall be deemed to have
signed the Request for Release. In connection with any Request for Release of a
Mortgage File because of a repurchase of a Mortgage Loan, such Request for
Release shall be followed by an assignment of mortgage, without recourse,
representation or warranty from the Trustee to the Seller and the related
Mortgage Note shall be endorsed without recourse by the Trustee and be returned
to the Seller. In connection with any Request for Release of a Mortgage File
because of the payment in full of a Mortgage Loan, such Request for Release
shall be accompanied by a certificate of satisfaction or other similar
instrument to be executed by or on behalf of the Trustee and returned to the
Servicer.

                  2.5 ASSUMPTION AGREEMENTS. In the event that any assumption
agreement, substitution of liability agreement or sale of servicing agreement is
entered into with respect to any Mortgage Loan subject to this Agreement in
accordance with the terms and provisions of the Pooling and Servicing Agreement,
the Master Servicer, to the extent provided in the Servicing Agreement, shall
enforce the obligation of the Servicer to notify the Custodian that such
assumption or substitution agreement has been completed by forwarding to the
Custodian the original of such assumption or substitution agreement, which shall
be added to the related Mortgage File and, for all purposes, shall be considered
a part of such Mortgage File to the same extent as all other documents and
instruments constituting parts thereof.

                  2.6 ENDORSEMENT OF MORTGAGE NOTES. Within 45 days after the
Closing Date, the Custodian shall endorse each Mortgage Note in the name of
"HSBC Bank USA, National Association, as trustee under the Pooling and Servicing
Agreement relating to Homestar Mortgage Acceptance Corp., Asset-Backed
Pass-Through Certificates, Series 2004-5".

                                   SECTION 3.

                            CONCERNING THE CUSTODIAN

                  3.1 CUSTODIAN AS BAILEE AND AGENT OF THE TRUSTEE. With respect
to each Mortgage Note, Mortgage and other documents constituting each Mortgage
File which are delivered to the Custodian, the Custodian is exclusively the
bailee and custodial agent of the Trustee and has no instructions to hold any
Mortgage Note or Mortgage for the benefit of any person other than the Trustee
and the Certificateholders and undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement and in the Pooling and
Servicing Agreement. Except upon compliance with the provisions of Section 2.4
of this Agreement, no Mortgage Note, Mortgage or Mortgage File shall be
delivered by the Custodian to the Company, the Servicer or the Master Servicer
or otherwise released from the possession of the Custodian.

                  3.2 CUSTODIAN MAY OWN CERTIFICATES. The Custodian 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 Custodian.

                  3.3 MASTER SERVICER TO PAY CUSTODIAN'S FEES AND EXPENSES. The
Master Servicer covenants and agrees to pay to the Custodian from time to time,
and the Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the Master Servicer will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement or advance as may arise from
its negligence or bad faith or to the extent that such cost or expense is
indemnified by the Trust Fund pursuant to the Pooling and Servicing Agreement.

                  3.4 CUSTODIAN MAY RESIGN; TRUSTEE MAY REMOVE CUSTODIAN. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans. Upon receiving such written notice of resignation, the Trustee shall
either take custody of the Mortgage Files itself and give prompt written notice
thereof to the Company, the Master Servicer, the Securities Administrator and
the Custodian, or promptly appoint a successor Custodian by written instrument,
in duplicate, one copy of which instrument shall be delivered to the resigning
Custodian and one copy to the successor Custodian. If the Trustee shall not have
taken custody of the Mortgage Files and no successor Custodian shall have been
so

                                       N-3
<PAGE>

appointed and have accepted appointment within 30 days after the giving of
such written notice of resignation, the resigning Custodian may petition any
court of competent jurisdiction for the appointment of a successor Custodian.

                  The Trustee may, with or without cause, upon at least 60 days
notice remove and discharge the Custodian from the performance of its duties
with the consent of the Master Servicer. In such event, the Trustee shall
appoint, or petition a court of competent jurisdiction to appoint, a successor
Custodian hereunder. Any successor Custodian shall be a depository institution
subject to supervision or examination by federal or state authority, shall be
able to satisfy the other requirements contained in Section 3.6 hereof and shall
be unaffiliated with the Servicer or the Company.

                  Any resignation or removal of the Custodian and appointment of
a successor Custodian pursuant to any of the provisions of this Section 3.4
shall become effective upon acceptance of appointment by the successor
Custodian. The Trustee shall give prompt notice to the Company and the Master
Servicer of the appointment of any successor Custodian. No successor Custodian
shall be appointed by the Trustee without the prior approval of the Company, the
Master Servicer, and the NIMS Insurer.

                  3.5 MERGER OR CONSOLIDATION OF CUSTODIAN. Any Person into
which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any Person succeeding
to the business of the Custodian, shall be the successor of the Custodian
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.

                  3.6 REPRESENTATIONS OF THE CUSTODIAN. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $15,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.

                  3.7 STANDARD OF CARE; INDEMNIFICATION. Neither the Custodian
nor any parent, affiliate, subsidiaries, directors, officers, agents or
employees shall have any liability arising from or related to this Custodial
Agreement or any related document or agreement, except for any such liability
resulting from the Custodian's negligence or willful misconduct. The Custodian
shall be indemnified and held harmless from the Trust Fund to the extent
provided in Section 6.03 of the Pooling and Servicing Agreement.

                  3.8 RELIANCE; LIMITATION OF CUSTODIAN'S DUTIES. The Custodian
shall have no duties or obligations other than those specifically set forth
herein or as may subsequently be agreed to in writing by the parties hereto. The
Custodian: (a) may consult with counsel and any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
Opinion of Counsel; and shall not be liable for any error of judgment, or for
any act done or step taken or omitted by it, in good faith, except for any such
liability resulting from the Custodian's negligence or willful misconduct; (b)
shall use the same degree of care and skill as is reasonably expected of
financial institutions acting in comparable capacities, provided that this
subsection shall not be interpreted to impose upon the Custodian a higher
standard of care than that set forth above; (c) will be regarded as making no
representations and having no responsibilities (except as expressly set forth
herein) as to the validity, sufficiency, value, genuineness, ownership or
transferability of the Mortgage Loans, and will not be required to and will not
make any representations as to the validity, value, genuineness, ownership or
transferability of the Mortgage Loans; (d) may rely on and shall be protected in
acting upon any certificate, instrument, opinion, notice, letter, telegram,
facsimile or other document delivered to it and in good faith believed by it to
be genuine and to have been signed by the proper party or parties; and (e) may
rely on and shall be protected in acting upon the written instructions of the
Company or the Trustee and such employees and representatives of the Company or
the Trustee as the Company or the Trustee may hereinafter designate in writing.

                                   SECTION 4.

                            MISCELLANEOUS PROVISIONS

                                       N-4
<PAGE>

                  4.1. NOTICES. All notices, requests, consents and demands and
other communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram or
telex, or by registered or certified mail, postage prepaid, return receipt
requested, at the addresses specified on the signature page hereof (unless
changed by the particular party whose address is stated herein by similar notice
in writing), in which case the notice will be deemed delivered when received.

                  4.2. AMENDMENTS. No modification or amendment of or supplement
to this Agreement shall be valid or effective unless the same is in writing and
signed by all parties hereto, and consented to by the NIMS Insurer, and neither
the Company, the Master Servicer, the Securities Administrator, nor the Trustee
shall enter into any amendment hereof except as permitted by the Pooling and
Servicing Agreement. The Trustee shall give prompt notice to the Custodian of
any amendment or supplement to the Pooling and Servicing Agreement and furnish
the Custodian with written copies thereof.

                  4.3. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

                  4.4. RECORDATION OF AGREEMENT. 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 Company and at the Trust's expense, but
only upon direction accompanied by an Opinion of Counsel reasonably satisfactory
to the Company to the effect that the failure to effect such recordation is
likely to materially and adversely affect the interests of the
Certificateholders.

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

                  4.5 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.

                  4.6 THIRD PARTY BENEFICIARY. The NIMS Insurer is a third party
beneficiary of this Agreement entitled to the rights and benefits hereunder (as
applicable), and shall have the right to enforce the provisions hereof as if it
were a party hereto.

                                       N-5
<PAGE>

                  IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.

<TABLE>
<CAPTION>

<S>                                                         <C>
Address:                                                    HSBC Bank USA, National Association, not
                                                            individually but solely as Trustee
452 Fifth Avenue
New York, New York 10018
                                                            By:______________________________________
Attention:                                                  Name:
Telecopy:                                                   Title:
Confirmation:
Address:                                                    HOMESTAR MORTGAGE ACCEPTANCE CORP.

W. 115 Century Road
Paramus, New Jersey 07652                                   By:______________________________________
                                                            Name:
                                                            Title:

Address:                                                    WELLS FARGO BANK, NATIONAL
                                                            ASSOCIATION, as Master Servicer
9062 Old Annapolis Road
Columbia, Maryland 21045
                                                            By:______________________________________
                                                            Name:
                                                            Title:

Address:                                                    WELLS FARGO BANK, NATIONAL
                                                            ASSOCIATION, as Custodian

2030 Main Street                                            By:______________________________________
Suite 100                                                   Name:
Irvine, California 92614                                    Title:
</TABLE>

                                       N-6
<PAGE>

STATE OF NEW YORK         )
                          )ss.:
COUNTY OF NEW YORK        )

                  On the ___ day of October 2004 before me, a notary public in
and for said State, personally appeared ____________________, known to me to be
a _______________ of HSBC Bank USA, National Association, a national banking
association 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

[SEAL]

                                       N-7
<PAGE>

STATE OF MARYLAND          )
                           ) ss.:
COUNTY OF HOWARD           )

                  On the ___ day of October 2004 before me, a notary public in
and for said State, personally appeared ______________, known to me to be an
___________________ of Wells Fargo Bank, National Association, a national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said national banking association,
and acknowledged to me that such national banking association 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
[SEAL]

                                       N-8
<PAGE>

STATE OF NEW JERSEY        )
                           )ss.:
COUNTY OF _________        )

                  On the ___ day of October 2004 before me, a notary public in
and for said State, personally appeared _______________, known to me to be a
_____________ of Homestar Mortgage Acceptance Corp., 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]

                                       N-9
<PAGE>

STATE OF MARYLAND          )
                           )ss.:
 COUNTY OF HOWARD          )

                  On the ___ day of October 2004 before me, a notary public in
and for said State, personally appeared ______________, known to me to be an
___________________ of Wells Fargo Bank, National Association, a national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said national banking association,
and acknowledged to me that such national banking association 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]

                                       N-10
<PAGE>

                                   EXHIBIT ONE

                     FORM OF CUSTODIAN INITIAL CERTIFICATION

                                                                 October 1, 2004

HSBC Bank USA, National Association          Homestar Mortgage Acceptance Corp.
452 Fifth Avenue                             W. 115 Century Road
New York, New York 10018                     Paramus, New Jersey 07652

         Attention: Homestar Mortgage Acceptance Corp.,
         HMAC Mortgage Trust 2004-5, Asset-Backed Pass-Through Certificates,
         Series 2004-5

         Re:      Custodial Agreement, dated as of October 1, 2004, by and among
                  HSBC Bank USA, National Association, Homestar Mortgage
                  Acceptance Corp. and Wells Fargo Bank, National Association
                  relating to HMAC Mortgage Trust 2004-5, Asset-Backed
                  Pass-Through Certificates, Series 2004-5
                  ----------------------------------------

Ladies and Gentlemen:

                  In accordance with Section 2.3 of the above-captioned
Custodial Agreement and subject to Section 2.02 of the Pooling and Servicing
Agreement, dated as of October 1, 2004 among Homestar Mortgage Acceptance Corp.,
HSBC Bank USA, National Association, and Wells Fargo Bank, National Association,
the undersigned, as custodian (the "Custodian"), hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto) it has reviewed the
Mortgage File, and has determined that: (1) all documents required to be
included in the Mortgage File are in its possession and (2) such documents have
been reviewed by it and appear regular on their face and relate to such Mortgage
Loan.

         The Custodian has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Custodial and Pooling and Servicing Agreements. The Custodian
makes no representations as to and shall not be responsible to verify: (i) the
validity, legality, sufficiency, enforceability, due authorization,
recordability or genuineness of any of the documents contained in each Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, (ii)
the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan, or (iii) the existence of any assumption, modification, written
assurance or substitution agreement with respect to any Mortgage File if no such
documents appear in the Mortgage File delivered to the Custodian.

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement.

                                           WELLS FARGO BANK, NATIONAL
                                           ASSOCIATION, as Custodian

                                           By:_________________________________
                                           Name:
                                           Title:

                                       N-11
<PAGE>

                                   EXHIBIT TWO

                      FORM OF CUSTODIAN FINAL CERTIFICATION

                                                                __________, 20__

HSBC Bank USA, National Association           Homestar Mortgage Acceptance Corp.
452 Fifth Avenue                              W. 115 Century Road
New York, New York 10018                      Paramus, New Jersey 07652

         Attention: Homestar Mortgage Acceptance Corp.,
         HMAC Mortgage Trust 2004-5, Mortgage Pass-Through Certificates, Series
         2004-5

         Re:      Custodial Agreement, dated as of October 1, 2004, by and among
                  HSBC Bank USA, National Association, Homestar Mortgage
                  Acceptance Corp. and Wells Fargo Bank, National Association
                  relating to HMAC Mortgage Trust 2004-5, Asset-Backed
                  Pass-Through Certificates, Series 2004-5
                  ----------------------------------------

Ladies and Gentlemen:

                  In accordance with Section 2.3 of the above-captioned
Custodial Agreement and subject to Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Custodian, hereby certifies that it has received
a Mortgage File with respect to each Mortgage Loan listed in the Mortgage Loan
Schedule containing with respect to each Mortgage Loan:

                  (i) the original Mortgage Note (including all riders thereto)
         bearing all intervening endorsements necessary to show a complete chain
         of endorsements from the original payee, endorsed "Pay to the order of
         _____without recourse", via original signature, and, if previously
         endorsed, signed in the name of the last endorsee by a duly qualified
         officer of the last endorsee. If the Mortgage Loan was acquired by the
         last endorsee in a merger, the endorsement must be by "[name of last
         endorsee], successor by merger to [name of the predecessor]." If the
         Mortgage Loan was acquired or originated by the last endorsee while
         doing business under another name, the endorsement must be by "[name of
         last endorsee], formerly known as [previous name]."; The Custodian has
         endorsed the Mortgage Note in the name of "HSBC Bank USA, National
         Association, as trustee under the Pooling and Servicing Agreement
         relating to Homestar Mortgage Acceptance Corp., Asset-Backed
         Pass-Through Certificates, Series 2004-5" for each Mortgage Note;

                  (ii) The original recorded Mortgage, noting the presence of
         the MIN of the Mortgage Loan and either language indicating that the
         Mortgage Loan is a MOM loan or if the Mortgage Loan was not a MOM loan
         at origination, the original Mortgage and the assignment thereof to
         MERS, with evidence of recording indicated thereon; provided that if
         such document is not included because of a delay by the public
         recording office where such document has been delivered for recordation
         or such office as a matter of policy does not return the original of
         such document or if such original Mortgage has been lost, the Seller
         shall include or cause to be included a copy thereof certified by the
         appropriate recording office, if available;

                  (iii) the original Assignment of Mortgage in blank, in form
         and substance acceptable for recordation in the jurisdiction in which
         the related mortgage property is located and signed in the name of the
         Last Endorsee by an authorized officer; unless the Mortgage Loan is
         registered on the MERS system;

                  (iv) The original intervening Assignments, if any and if
         available, with evidence of recording thereon, showing an unbroken
         chain of title to the Mortgage from the originator thereof to Person
         assigning it to the Trustee (or to MERS, if the Mortgage Loan is
         registered on the MERS(R) System); provided that if such document is
         not included because of a delay by the public recording office where
         such document has been delivered for recordation or such office as a
         matter of policy does not return the original of such

                                       N-12
<PAGE>

         document, the Seller shall include or cause to be included a copy
         thereof certified by the appropriate recording office, if available;

                  (v) The originals of each assumption, modification or
         substitution agreement, if any and if available, relating to the
         Mortgage Loan; and

                  (vi) the original title insurance policy, or, if such policy
         has not been issued, any one of an original or a copy of the
         preliminary title report, title binder or title commitment on the
         Mortgaged Property with the original policy of the insurance to be
         delivered promptly following the receipt thereof;

                  Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Custodial Agreement
or in the Pooling and Servicing Agreement, as applicable.

                                                WELLS FARGO BANK, NATIONAL
                                                ASSOCIATION, as Custodian

                                                By:____________________________
                                                Name:
                                                Title:

                                       N-13
<PAGE>

                                    EXHIBIT O
                                   [RESERVED]

                                       O-1
<PAGE>

                                    EXHIBIT P
                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

This MORTGAGE LOAN PURCHASE AGREEMENT (this "Agreement"), dated as of October 1,
2004 "(the Cut-off Date"), is made between Home Star Mortgage Services LLC (the
"Seller") and Homestar Mortgage Acceptance Corp. (the "Purchaser").

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

                  WHEREAS, the Seller owns the Mortgage Loans indicated on the
Mortgage Loan Schedule attached as Exhibit 1 hereto (the "Mortgage Loans"),
including rights to (a) any property acquired by foreclosure or deed in lieu of
foreclosure or otherwise, and (b) the proceeds of any insurance policies
covering the Mortgage Loans;

                  WHEREAS, the parties hereto desire that the Seller sell the
Mortgage Loans to the Purchaser (other than the servicing rights with respect
thereto), and that the Seller make certain representations and warranties and
undertake certain obligations with respect to the Mortgage Loans;

                  WHEREAS, pursuant to the terms of a Pooling and Servicing
Agreement, to be dated as of the Cut-off Date (the "Pooling and Servicing
Agreement"), among the Purchaser, as seller, HSBC Bank USA, National
Association, as trustee (the "Trustee") and Wells Fargo Bank, N.A., as master
servicer and securities administrator (the "Master Servicer"), the Purchaser
will issue Asset-Backed Pass-Through Certificates, Series 2004-5 (the
"Certificates");

                  NOW, THEREFORE, inconsideration of the mutual covenants herein
contained, the parties hereto agree as follows:

                              ARTICLE IDEFINITIONS

                  Section 1.1. DEFINITIONS. For all purposes of this Mortgage
Loan Purchase Agreement, except as otherwise expressly provided herein or unless
the context otherwise requires, capitalized terms not otherwise defined herein
shall have the meanings assigned to such terms in the Pooling and Servicing
Agreement. All other capitalized terms used herein shall have the meanings
specified herein.

                                   ARTICLE II

                 SALE OF MORTGAGE LOANS AND RELATED PROVISIONS

                   Section 2.1. SALE OF MORTGAGE LOANS.

         (a) The Seller, by the execution and delivery of this Agreement, does
         hereby sell, assign, set over, and otherwise convey to the Purchaser,
         without recourse but subject to the terms of this Agreement, (i) all of
         its right, title and interest in the Mortgage Loans identified on
         Exhibit 1 as of the Closing Date, including the related Cut-off Date
         Principal Balance, all interest accruing thereon on and after the
         Cut-off Date, and all collections of interest and principal due after
         the Cut-off Date, other than the servicing rights with respect thereto,
         (ii) the Seller's interest in any insurance policies and (iii) all
         proceeds of the foregoing.

         (b) In connection with any transfer pursuant to this Section 2.1, the
         Seller agrees (i) to cause the books and records of the Seller to
         indicate that the Mortgage Loans have been sold to the Purchaser
         pursuant to this Agreement and (ii) to deliver to the Purchaser the
         Mortgage Loan Schedule which is attached as Exhibit 1 to this
         Agreement, and to the Pooling and Servicing Agreement, as which is
         incorporated by reference herein.

                                       P-1
<PAGE>

         (c) In connection with such conveyances by the Seller, the Seller shall
         on behalf of the Purchaser deliver to, and deposit with the Trustee, on
         or before the Closing Date, the following documents or instruments with
         respect to each Mortgage Loan:

                  (i) the original Mortgage Note (including all riders thereto)
                  bearing all intervening endorsements necessary to show a
                  complete chain of endorsements from the original payee,
                  endorsed "Pay to the order of _____without recourse", via
                  original signature, and, if previously endorsed, signed in the
                  name of the last endorsee by a duly qualified officer of the
                  last endorsee or, with respect to any Mortgage Loan as to
                  which the original Mortgage Note has been permanently lost or
                  destroyed and has not been replaced, a Lost Note Affidavit
                  with indemnity. If the Mortgage Loan was acquired by the last
                  endorsee in a merger, the endorsement must be by "[name of
                  last endorsee], successor by merger to [name of the
                  predecessor]." If the Mortgage Loan was acquired or originated
                  by the last endorsee while doing business under another name,
                  the endorsement must be by "[name of last endorsee], formerly
                  known as [previous name]." Within 45 days after the Closing
                  Date, the Seller shall endorse or cause to be endorsed the
                  Mortgage Note in the name of "HSBC Bank USA, National
                  Association, as trustee under the Pooling and Servicing
                  Agreement relating to Homestar Mortgage Acceptance Corp.,
                  Asset-Backed Pass-Through Certificates, Series 2004-5" for
                  each Mortgage Note;

                  (ii) The original recorded 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 indicated thereon; provided
                  that if such document is not included because of a delay by
                  the public recording office where such document has been
                  delivered for recordation or such office as a matter of policy
                  does not return the original of such document or if such
                  original Mortgage has been lost, the Seller shall include or
                  cause to be included a copy thereof certified by the
                  appropriate recording office, if available;

                  (iii) unless the Mortgage Loan is registered on the MERS(R)
                  System, an original duly executed Assignment of the Mortgage
                  in recordable form from the Seller or the originator, as
                  applicable, to "HSBC Bank USA, National Association, as
                  trustee under the Pooling and Servicing Agreement relating to
                  Homestar Mortgage Acceptance Corp., Asset-Backed Pass-Through
                  Certificates, Series 2004-5" for each Mortgage Note;

                  (iv) The original intervening Assignments, if any and if
                  available, with evidence of recording thereon, showing an
                  unbroken chain of title to the Mortgage from the originator
                  thereof to 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); provided that if such document
                  is not included because of a delay by the public recording
                  office where such document has been delivered for recordation
                  or such office as a matter of policy does not return the
                  original of such document, the Seller shall include or cause
                  to be included a copy thereof certified by the appropriate
                  recording office, if available;

                  (v) The originals of each assumption, modification or
                  substitution agreement, if any and if available, relating to
                  the Mortgage Loan; and

                  (vi) the original title insurance policy, or, if such policy
                  has not been issued, any one of an original or a copy of the
                  preliminary title report, title binder or title commitment on
                  the Mortgaged Property with the original policy of the
                  insurance to be delivered promptly following the receipt
                  thereof;

         The Seller need not cause to be recorded any Assignment in any
jurisdiction under the laws of which, as evidenced by an Opinion of Counsel
delivered by the Seller to the Trustee, the NIMS Insurer, if any, and the Rating
Agencies, the recordation of such Assignment is not necessary to protect the
Trustee's interest in the related

                                       P-2
<PAGE>

Mortgage Loan; provided, however, notwithstanding the delivery of any Opinion of
Counsel, each Assignment shall be submitted for recording by the Seller, at no
expense to the Trust or the Trustee, upon the earliest to occur of: (i)
reasonable direction by the Holders of Certificates evidencing at least 25% of
the Voting Rights or the NIMS Insurer, if any, (ii) the occurrence of a Event of
Default under the Pooling and Servicing Agreement, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Seller, (iv) the
occurrence of a servicing transfer as described in Section 7.02 of the Pooling
and Servicing Agreement and (v) if the Seller is not the Master Servicer, the
occurrence of a bankruptcy, insolvency or foreclosure relating to the Mortgagor
under the related Mortgage. Upon receipt of written notice from the Trustee or
the NIMS Insurer that recording of the Assignments is required pursuant to one
or more of the conditions set forth in the preceding sentence, the Seller shall
be required to deliver such Assignments for recording as provided above,
promptly and in any event within 30 days following receipt of such notice. The
Seller shall furnish the Trustee, or its designated agent, with a copy of each
Assignment submitted for recording. In the event that any such Assignment is
lost or returned unrecorded because of a defect therein, the Seller shall
promptly have a substitute Assignment prepared or have such defect cured, as the
case may be, and thereafter cause each such Assignment to be duly recorded.

                  To the extent an Assignment referred to in clause (c)(iii)
above is required to be recorded (including, without limitation, Assignments for
states which are not covered by the Opinion of Counsel in the prior paragraph),
the Seller at its own expense shall complete and submit it for recording in the
appropriate public office for real property records, with such Assignment
completed in favor of the Trustee. While such Assignment to be recorded is being
recorded, the Trustee shall retain a photocopy of such Assignment. If any
Assignment is lost or returned unrecorded to the Trustee because of any defect
therein, the Seller is required to prepare a substitute Assignment or cure such
defect, as the case may be, and the Seller shall cause such substitute
Assignment to be recorded in accordance with this paragraph.

                  Notwithstanding anything to the contrary contained in this
Section 2.1, in those instances where the public recording office retains the
original Mortgage after it has been recorded, the Seller shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage certified by the public recording office to be a true and complete
copy of the recorded original thereof.

                  If any Assignment is lost or returned unrecorded to the
Trustee because of any defect therein, the Seller shall prepare a substitute
Assignment or cure such defect, as the case may be, and the Seller shall cause
such Assignment to be recorded in accordance with this Section 2.1.

                  If a defect in any Mortgage File is discovered which
materially and adversely affects the value of the related Mortgage Loan, or the
interests of the Certificateholders in such Mortgage Loan, including if any
document required to be delivered to the Trustee has not been delivered
(provided that a Mortgage File will not be deemed to contain a defect for an
unrecorded Assignment under clause (c) (iii) above if the Seller has submitted
such Assignment for recording pursuant to the terms of the following paragraph),
the Seller shall either (i) purchase such Mortgage Loan from the Trust Fund at
the Purchase Price within 90 days after the date on which the Seller was
notified of such defect; provided, that if such 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, or cure such defect, or (ii) substitute a Qualified
Substitute Mortgage Loan for the related Mortgage Loan upon the same terms and
conditions set forth in Section 3.1 hereof for substitutions.

                  The Seller shall exercise its best reasonable efforts to
deliver or cause to be delivered to the Custodian on behalf of the Trustee
within 120 days of the Closing Date, with respect to the Mortgage Loans, the
original or a photocopy of the title insurance policy with respect to each such
Mortgage Loan assigned to the Purchaser pursuant to this Section 2.1.

                  In connection with the assignment of any Mortgage Loan
registered on the MERS(R) System, the Seller further agrees that it will cause,
at the Seller's own expense, as of the Closing Date, the MERS(R) System to
indicate that such Mortgage Loans have been assigned by the Seller 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

                                       P-3
<PAGE>

repurchased in accordance with this Agreement) in such computer files (a) the
code in the field which identifies the specific Trustee and (b) the code in the
field "Pool Field" which identifies the series of the Certificates issued in
connection with such Mortgage Loans. The Seller and the Purchaser further agree
that they will not, and will not permit the Master Servicer to, alter the codes
referenced in this paragraph with respect to any Mortgage Loan during the term
of this Agreement unless and until such Mortgage Loan is repurchased in
accordance with the terms of this Agreement.

                  The Purchaser hereby acknowledges its acceptance of all right,
title and interest to the Mortgage Loans and other property, now existing and
hereafter created, conveyed to it pursuant to this Section 2.1, other than with
respect to servicing rights with respect to the Mortgage Loans. In addition to
the foregoing, on the Closing Date the Seller assigns to the Purchaser all of
its right, title and interest in the Servicing Agreements.

         (d) The parties hereto intend that the transaction set forth herein
         constitutes a sale by the Seller to the Purchaser of all the Seller's
         right, title and interest in and to the Mortgage Loans (other than with
         respect to the related servicing rights) and other property as and to
         the extent described above. In the event the transaction set forth
         herein is deemed not to be a sale, the Seller hereby grants to the
         Purchaser a security interest in (i) all of the Seller's right, title
         and interest in, to and under the Mortgage Loans (other than with
         respect to the related servicing rights), (ii) all of Seller's interest
         in any insurance policies and (iii) all proceeds of the foregoing and
         such other property, to secure all of the Seller's obligations
         hereunder, and this Agreement shall constitute a security agreement
         under applicable law. The Seller agrees to take or cause to be taken
         such actions and to execute such documents, including without
         limitation the filing of all necessary UCC-1 financing statements filed
         in the State of Delaware (which shall have been submitted for filing as
         of the Closing Date with respect to the aggregate Stated Principal
         Balance of the Mortgage Loans), any continuation statements with
         respect thereto and any amendments thereto required to reflect a change
         in the name or corporate structure of the Seller or the filing of any
         additional UCC-1 financing statements due to the change in the
         principal office of the Seller, as are necessary to perfect and protect
         the Purchaser's interests in each Mortgage Loan and the proceeds
         thereof.

                   Section 2.2. PAYMENT OF PURCHASE PRICE FOR THE MORTGAGE
LOANS.

         (a) The purchase price for the Mortgage Loans (other than with respect
         to the servicing rights thereto) shall be the sum of (1)
         $[____________] and (2) a 100% Percentage Interest in the Class P,
         Class C and Class R Certificates.

         (b) In consideration of the sale of the Mortgage Loans from the Seller
         to the Purchaser on the Closing Date, the Purchaser shall (1) pay to
         the Seller on the Closing Date by wire transfer of immediately
         available funds to a bank account designated by the Seller, the amount
         specified above in clause (a)(1) and (2) cause the transfer to the
         Seller of the Certificates in clause (a)(2).

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES;
                              REMEDIES FOR BREACH

                   Section 3.1. SELLER REPRESENTATIONS AND WARRANTIES. The
Seller hereby represents and warrants to the Purchaser as of the Closing Date
(or if otherwise specified below, as of the date so specified) that:

                  (a) with respect to the Seller:

                  (i) the Seller is a limited liability company duly organized,
                  validly existing and in good standing under the laws of the
                  State of Delaware;

                                       P-4
<PAGE>

                  (ii) the Seller has full corporate power to own its property,
                  to carry on its business as presently conducted and to enter
                  into and perform its obligations under this Agreement;

                  (iii) the execution and delivery by the Seller of this
                  Agreement have been duly authorized by all necessary corporate
                  action on the part of the Seller; and neither the execution
                  and delivery of this Agreement, nor the consummation of the
                  transactions herein contemplated hereby, nor compliance with
                  the provisions hereof, will conflict with or result in a
                  breach of, or constitute a default under, any of the
                  provisions of any law, governmental rule, regulation,
                  judgment, decree or order binding on the Seller or its
                  properties or the certificate of incorporation or by-laws of
                  the Seller, except those conflicts, breaches or defaults which
                  would not reasonably be expected to have a material adverse
                  effect on the Seller's ability to enter into this Agreement
                  and to consummate the transactions contemplated hereby;

                  (iv) the execution, delivery and performance by the Seller of
                  this Agreement and the consummation of the transactions
                  contemplated hereby do not require the consent or approval of,
                  the giving of notice to, the registration with, or the taking
                  of any other action in respect of, any state, federal or other
                  governmental authority or agency, except those consents,
                  approvals, notices, registrations or other actions as have
                  already been obtained, given or made and, in connection with
                  the recordation of the Mortgages, powers of attorney or
                  assignments of Mortgages not yet completed;

                  (v) this Agreement has been duly executed and delivered by the
                  Seller and, assuming due authorization, execution and delivery
                  by the Purchaser, constitutes a valid and binding obligation
                  of the Seller enforceable against it in accordance with its
                  terms (subject to applicable bankruptcy and insolvency laws
                  and other similar laws affecting the enforcement of the rights
                  of creditors generally);

                  (vi) to the best of the Seller's knowledge, there are no
                  actions, litigation, suits or proceedings pending or
                  threatened against the Seller before or by any court,
                  administrative agency, arbitrator or governmental body (i)
                  with respect to any of the transactions contemplated by this
                  Agreement or (ii) with respect to any other matter which in
                  the judgment of the Seller if determined adversely to the
                  Seller would reasonably be expected to materially and
                  adversely affect the Seller's ability to perform its
                  obligations under this Agreement; and the Seller is not in
                  default with respect to any order of any court, administrative
                  agency, arbitrator or governmental body so as to materially
                  and adversely affect the transactions contemplated by this
                  Agreement; and

                  (vii) the Seller's chief executive office and principal place
                  of business are located in the County of Bergen in the State
                  of New Jersey.

                  (b) with respect to the Mortgage Loans:

                  (i) as of the Cut-off Date, the information set forth in the
                  Mortgage Loan Schedule hereto is true and correct in all
                  material respects;

                  (ii) immediately prior to the transfer to the Purchaser, the
                  Seller was the sole owner of beneficial title and holder of,
                  and had good title to, each Mortgage and Mortgage Note
                  relating to the Mortgage Loans and is conveying the same free
                  and clear of any and all liens, claims, encumbrances,
                  participation interests, equities, pledges, charges or
                  security interests of any nature, the Mortgage Loans and
                  Mortgage Notes were not subject to any assignment or pledge,
                  and the Seller has full right and authority to sell or assign
                  the same pursuant to this Agreement;

                  (iii) no selection procedure reasonably believed by the Seller
                  to be adverse to the interests of the Certificateholders or
                  the Trust was utilized in selecting the Mortgage Loans;

                                       P-5
<PAGE>

                  (iv) each Mortgage Loan constitutes a "qualified mortgage"
                  under Section 860G(a)(3)(A) of the Code and Treasury
                  Regulation Section 1.860G-2(a)(1);

                  (v) the information set forth under the caption "The Mortgage
                  Pool--General" and "--Mortgage Loan Characteristics" in the
                  Prospectus Supplement is true and correct in all material
                  respects;

                  (vi) as of the Cut-off Date, no Mortgage Loan is 30 or more
                  days past due. The Seller has not advanced funds, or induced,
                  solicited or knowingly received any advance of funds from a
                  party other than the owner of the related Mortgaged Property,
                  directly or indirectly, for the payment of any amount required
                  by the Mortgage Note or Mortgage;

                  (vii) there are no delinquent taxes or assessment liens
                  against the related Mortgaged Property;

                  (viii) no default, breach, violation or waiver exists under
                  the mortgage documents, and no modifications to the mortgage
                  documents have been made that have not been reflected in the
                  Mortgage Loan Schedule;

                  (ix) all buildings upon, or comprising part of, the Mortgaged
                  Property are insured by an insurer acceptable to Fannie Mae
                  and Freddie Mac against loss by fire, hazards of extended
                  coverage and such other hazards as are customary in the area
                  where the Mortgaged Property is located, and such insurer is
                  licensed to do business in the state where the Mortgaged
                  Property is located. All such insurance policies contain a
                  standard mortgagee clause naming the originator, its
                  successors and assigns as mortgagee and Seller has received no
                  notice that all premiums thereon have not been paid. The
                  amount of the Mortgage Loan covered by these insurance
                  policies is in accordance with the standards of Fannie Mae or
                  Freddie Mac. If upon origination of the Mortgage Loan, the
                  Mortgaged Property was, or was subsequently deemed to be, in
                  an area identified in the Federal Register by the Federal
                  Emergency Management Agency as having special flood hazards
                  (and such flood insurance has been made available), which
                  require under applicable law that a flood insurance policy
                  meeting the requirements of the current guidelines of the
                  Federal Insurance Administration (or any successor thereto) be
                  obtained, such flood insurance policy is in effect which
                  policy is with a generally acceptable carrier in an amount
                  representing coverage not less than the least of (A) the
                  principal balance of the related Mortgage Loan, (B) the
                  minimum amount required to compensate for damage or loss on a
                  replacement cost basis, or (C) the maximum amount of insurance
                  that is available under the Flood Disaster Protection Act of
                  1973. The Mortgage obligates the Mortgagor thereunder to
                  maintain all such insurance at Mortgagor's cost and expense
                  and, on the Mortgagor's failure to do so, authorizes the
                  holder of the Mortgage to maintain such insurance at
                  Mortgagor's cost and expense and to obtain reimbursement
                  therefor from the Mortgagor;

                  (x) all parties which have had any interest in the Mortgage
                  Loan, whether as mortgagee, assignee, pledgee or otherwise,
                  are (or during the period in which they held and disposed of
                  such interest, were) in compliance with any and all applicable
                  "doing business" and licensing requirements of the state
                  wherein the Mortgaged Property is located;

                  (xi) as of the Closing Date, there is no mechanics' lien or
                  claim for work, labor or material affecting the Mortgaged
                  Property except those which are insured against by the title
                  insurance policy;

                  (xii) as of the Closing Date, there is no valid offset,
                  defense or counterclaim to any Mortgage Note or Mortgage, and,
                  to the best of the Seller's knowledge or the knowledge of the
                  related servicer, no such offset, defense or counterclaim has
                  been asserted with respect thereto;

                                       P-6
<PAGE>

                  (xiii) as of the Closing Date, the physical property subject
                  to any Mortgage is free of material damage and is in good
                  repair and, to the best of the Seller's knowledge or the
                  knowledge of the related servicer, there is no proceeding for
                  the total or partial condemnation thereof and no eminent
                  domain proceedings are pending;

                  (xiv) no foreclosure proceedings are pending against the
                  Mortgaged Property and the Mortgage Loan is not subject to any
                  pending bankruptcy or insolvency proceeding, and to the best
                  of the Seller's knowledge or the knowledge of the related
                  servicer, no material litigation or lawsuit relating to the
                  Mortgage Loan is pending;

                  (xv) all improvements which were considered in determining the
                  appraised value of the related Mortgaged Property lay wholly
                  within the boundaries and building restriction lines of the
                  Mortgaged Property, and no improvements on adjoining
                  properties encroach upon the Mortgaged Property, except as
                  allowed by Fannie Mae or Freddie Mac guidelines;

                  (xvi) at the time of origination, no improvement located on or
                  being part of the Mortgaged Property was in violation of any
                  applicable zoning and subdivision laws or ordinances;

                  (xvii) to the best of the Seller's knowledge, all inspections,
                  licenses and certificates required to be made or issued with
                  respect to all occupied portions of the Mortgaged Property
                  and, with respect to the use and occupancy of the same,
                  including but not limited to certificates of occupancy, have
                  been made or obtained from the appropriate authorities;

                  (xviii) as of the origination date of each Mortgage Loan, the
                  related Mortgaged Property is lawfully permitted to be
                  occupied under applicable law;

                  (xix) each Mortgage Loan is and will be a mortgage loan
                  arising out of the originator's practice in accordance with
                  the underwriting guidelines of the related originator. The
                  Seller has no knowledge of any fact that should have led it to
                  expect at the time of the initial creation of an interest in
                  the Mortgage Loan that such Mortgage Loan would not be paid in
                  full when due;

                  (xx) each original Mortgage has been recorded or is in the
                  process of being recorded in the appropriate jurisdictions
                  wherein such recordation is required to perfect the lien
                  thereof for the benefit of the Trust Fund;

                  (xxi) if an Assignment is included in the Mortgage File, such
                  Assignment is in recordable form and is acceptable for
                  recording under the laws of the jurisdiction in which the
                  Mortgaged Property is located;

                  (xxii) the related Mortgage File contains each of the
                  documents and instruments specified;

                  (xxiii) the Mortgage Loans are being serviced according to the
                  guidelines of the Seller, as servicer;

                  (xxiv) the Mortgage Note and the Mortgage have not been
                  altered or modified in any material respect, except by a
                  written instrument which has been recorded, and the substance
                  of any such alteration or modification has been approved by
                  the title insurer, to the extent required by the related
                  policy. No instrument of alteration or modification has been
                  executed by the Seller or any other person in the chain of
                  title from the Seller, and no Mortgagor has been released, in
                  whole or in part, except in connection with an assumption
                  agreement approved by the title insurer to the extent required
                  by the related policy;

                                       P-7
<PAGE>

                  (xxv) the Mortgage has not been satisfied, subordinated,
                  rescinded or canceled, in whole or in part, and the Mortgaged
                  Property has not been released from the lien of the Mortgage,
                  in whole or in part, nor has any instrument been executed that
                  would effect any such satisfaction, subordination, rescission,
                  cancellation or release;

                  (xxvi) a lender's title policy or binder, or other assurance
                  of title insurance customary in a form acceptable to Fannie
                  Mae or Freddie Mac was issued at origination and each policy
                  or binder is valid and remains in full force and effect;

                  (xxvii) the Mortgaged Property consists of a contiguous parcel
                  of real property with single-family residence erected thereon,
                  or a two- to four- family dwelling, or an individual
                  condominium unit, or an individual unit in a planned unit
                  development or a DE MINIMIS planned unit development. To the
                  best of the Seller's knowledge, the Mortgaged Property does
                  not consist of any of the following property types: (a)
                  co-operative units, (b) mobile homes and (c) manufactured
                  homes (as defined in the Fannie Mae Originator-Servicer's
                  Guide), except when the appraisal indicates that the home is
                  of comparable construction to a stick or beam construction
                  home, is readily marketable, has been permanently affixed to
                  the site and is not in a mobile home "park." The Mortgaged
                  Property is either a fee simple estate or a residential lease.
                  If any of the Mortgage Loans are secured by a leasehold
                  interest, with respect to each leasehold interest: the use of
                  leasehold estates for residential properties is an accepted
                  practice in the area where the related Mortgaged Property is
                  located; residential property in such area consisting of
                  leasehold estates is readily marketable; the lease is recorded
                  and no party is in any way in breach of any provision of such
                  lease; the leasehold is in full force and effect and is not
                  subject to any prior lien or encumbrance by which the
                  leasehold could be terminated or subject to any charge or
                  penalty; and the remaining term of the lease does not
                  terminate less than ten years after the maturity date of such
                  Mortgage Loan;

                  (xxviii) the Mortgage File contains an appraisal of the
                  related Mortgaged Property which satisfied the standards of
                  Fannie Mae and Freddie Mac and was made and signed, prior to
                  the approval of the Mortgage Loan application, by a qualified
                  appraiser, duly appointed by the Seller, who had no interest,
                  direct or indirect in the Mortgaged Property or in any loan
                  made on the security thereof, whose compensation is not
                  affected by the approval or disapproval of the Mortgage Loan
                  and who met the minimum qualifications of Fannie Mae and
                  Freddie Mac. Each appraisal of the Mortgage Loan was made in
                  accordance with the relevant provisions of the Financial
                  Institutions Reform, Recovery, and Enforcement Act of 1989;

                  (xxix) in the event the Mortgage constitutes a deed of trust,
                  a trustee, duly qualified under applicable law to serve as
                  such, has been properly designated and currently so serves and
                  is named in the Mortgage, and no fees or expenses are or will
                  become payable by the Purchaser to the trustee under the deed
                  of trust, except in connection with a trustee's sale after
                  default by the Mortgagor;

                  (xxx) none of the Mortgage Loans are "buydown" mortgage loans
                  or graduated payment mortgage loans;

                  (xxxi) the Mortgage is a legal, valid, existing and
                  enforceable first lien on the Mortgaged Property, including
                  all improvements on the Mortgaged Property, if any, subject
                  only to (1) the lien of current real property taxes and
                  assessments not yet due and payable, (2) covenants, conditions
                  and restrictions, rights of way, easements and other matters
                  of the public record as of the date of recording being
                  acceptable to mortgage lending institutions generally and
                  specifically referred to in the lender's title insurance
                  policy delivered to the originator of the Mortgage Loan and
                  which do not materially and adversely affect the Appraised
                  Value of the Mortgaged Property and (3) other matters to which
                  like properties are commonly subject which do not materially
                  and adversely affect the benefits of the security intended to
                  be provided by the Mortgage. The Seller has full right to sell
                  and assign the Mortgage to the Purchaser;

                                       P-8
<PAGE>

                  (xxxii) the related Mortgage Note and Mortgage are genuine and
                  each is the legal, valid and binding obligation of the maker
                  thereof, enforceable in accordance with its terms except as
                  such enforcement may be limited by bankruptcy, insolvency,
                  reorganization or other similar laws affecting the enforcement
                  of creditors' rights generally and by general equity
                  principles (regardless of whether such enforcement is
                  considered in a proceeding in equity or at law). All parties
                  to the Mortgage Note and Mortgage had legal capacity to
                  execute the Mortgage Note and Mortgage and each Mortgage Note
                  and Mortgage have been duly and properly executed by such
                  parties;

                  (xxxiii) each Mortgagor who is a party to the Mortgage Note is
                  a natural person;

                  (xxxiv) [reserved];

                  (xxxv) no proceeds from any Mortgage Loan were used to
                  purchase single premium credit life, disability, accident or
                  health insurance policies, as a condition to closing such
                  Mortgage Loan;
                           (xxxvi) each servicer of a Mortgage Loan has
                  accurately and fully reported its borrower credit files to at
                  least one credit repository in a timely manner;

                  (xxxvii) the proceeds of each Mortgage Loan have been fully
                  disbursed, and except with respect to any escrow holdbacks,
                  there is no requirement for future advances thereunder and any
                  and all requirements as to completion of any on-site or
                  off-site improvements and as to disbursement from any escrow
                  funds therefore have been complied with;

                  (xxxviii) the related Mortgage contains customary and
                  enforceable provisions which render the rights and remedies of
                  the holder thereof adequate for the realization against the
                  Mortgaged Property of the benefits of the security, including
                  (1) in the case of Mortgage designated as a deed of trust, by
                  trustee's sale, and (2) otherwise by judicial foreclosure;

                  (xxxix) there exist no deficiencies with respect to escrow
                  deposits and payment, if such are required, for which
                  customary arrangements for repayment thereof have not been
                  made, and no escrow deposits or payments of other charges or
                  payments due the Seller have been capitalized under the
                  Mortgage or the related Mortgage Note;

                  (xl) the Mortgage contains an enforceable provision for the
                  acceleration of the payment of the unpaid principal balance of
                  the Mortgage Loan in the event that the Mortgaged Property is
                  sold or transferred without the prior written consent of the
                  mortgagee thereunder, except as may be limited by applicable
                  law;

                  (xli) each Mortgage Note is comprised of one original
                  promissory note and each such promissory note constitutes an
                  "instrument" for purposes of section 9-102(a)(65) of the
                  Uniform Commercial Code;

                  (xlii) there was no fraud involved in the origination of the
                  Mortgage Loan by the mortgagee or by the Mortgagor, any
                  appraiser or any other party involved in the origination of
                  the Mortgage Loan;

                  (xliii) with respect to each adjustable-rate Mortgage Loan,
                  all adjustment to the Mortgage Rate and monthly payment have
                  been done in accordance with the terms of the related Mortgage
                  Note;

                  (xliv) all requirements of any federal, state or local law
                  (including usury, truth in lending, real estate settlement
                  procedures, consumer credit protection, equal credit
                  opportunity, disclosure or recording, predatory and abusive
                  lending laws) applicable to the acquisition, origination and
                  servicing of such Mortgage Loan have been complied with in all
                  material respects;

                                       P-9
<PAGE>

                  (xlv) none of the Mortgage Loans are (a) loans subject to 12
                  CFR Part 226.31, 12 CFR Part 226.32 or 12 CFR Part 226.34 of
                  Regulation Z, the regulation implementing TILA, which
                  implements the Home Ownership and Equity Protection Act of
                  1994, as amended ("HOEPA"), (b) loans subject to, or in
                  violation of, any applicable state or local law, ordinance or
                  regulation similar to HOEPA or (c) classified and/or defined
                  as a "high cost home loan" under any federal, state or local
                  law or ordinance or regulation;

                  (xlvi) no Mortgage Loan that is secured by a Mortgaged
                  Property located in the State of Georgia was originated on or
                  after October 1, 2002 and before March 7, 2003;

                  (xlvii) none of the Mortgage Loans secured by Mortgaged
                  Property in the States of Georgia, New York, Arkansas,
                  Kentucky and Florida is a "high cost home loan" as defined in
                  the Georgia Fair Lending Act, as amended (the "Georgia Act"),
                  the Arkansas Home Loan Protection Act, as amended (the
                  "Arkansas Act"), Kentucky Revised Statutes ss.360.100, as
                  amended (the "Kentucky Act"), the Florida Home Loan Protection
                  Act ss.494.007 (the "Florida Act"), and the New York Predatory
                  Lending Law, codified as N.Y. Banking Law ss.6-I, N.Y. Gen.
                  Bus. Law ss.771-a, and N.Y. Real Prop. Acts Law ss.1302
                  (together, the "New York Act"), respectively;

                  (xlviii) none of the Mortgage Loans are subject to the New
                  York Act; none of the Mortgage Loans secured by Mortgaged
                  Property in the District of Columbia is a "covered loan" as
                  defined in the District of Columbia Home Loan Protection Act
                  ss.26-1151.01 (the "D.C. Act"); none of the Mortgage Loans
                  secured by Mortgaged Property in Maine is a "high-rate,
                  high-fee mortgage" as defined in Maine Consumer Credit Code --
                  Truth In Lending ss.8-103 (the "Maine Act"); none of the
                  Mortgage Loans secured by Mortgaged Property in Nevada is a
                  "home loan" as defined in Nevada Revised Statutes title 52, as
                  amended by Assembly Bill No. 284, 72nd Session (Nevada 2003)
                  (the "Nevada Act"); and all the Mortgage Loans that are
                  subject to the Georgia Act, the New York Act, the Arkansas
                  Act, the Kentucky Act, the Florida Act, the D.C. Act, the
                  Maine Act and the Nevada Act comply with the requirements of
                  each such legislation;

                  (xlix) the information set forth in the Mortgage Loan Schedule
                  with respect to the Prepayment Charges is true and correct in
                  all material respects and each Prepayment Charge is
                  enforceable and was originated in compliance with all
                  applicable federal, state, and local laws; and

                  (l) no Mortgage Loan is a High Cost Loan or Covered Loan, as
                  applicable (as such terms are defined in Standard & Poor's
                  LEVELS(R) Glossary, Version 5.6 Revised, Appendix E, attached
                  hereto as Exhibit 2) and no Mortgage Loan originated on or
                  after October 1, 2002 through March 6, 2003 is governed by the
                  "Georgia Fair Lending Act".

                  It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive the sale of the Mortgage
Loans from the Seller to the Purchaser and shall inure to the benefit of the
Purchaser, its successors and assigns, notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or assignment of Mortgage or the
examination of any Mortgage File. It is understood by the parties hereto that a
breach of the representations and warranties made Section 3.1(b)(xliv), (xlv),
(xlvi), (xlvii), (xlviii), (xlix) or (l) will be deemed to materially and
adversely affect the value of the related Mortgage Loan or the interest of the
Purchaser.

                  Upon discovery or receipt of notice by the Seller, the
Purchaser or the Trustee of a breach of any representation or warranty of the
Seller set forth in clause (b) above which breach materially and adversely
affects the value of the Mortgage Loans or the interests of the Purchaser, the
Certificateholders or the Trustee in any of the Mortgage Loans delivered to the
Purchaser pursuant to this Agreement, the party discovering or receiving notice
of such breach shall give prompt written notice to the others. In the case of
any such breach of a representation or warranty set forth in clause (b) above,
the Seller shall, within 90 days from the date that the Seller was notified or

                                       P-10
<PAGE>

otherwise obtained knowledge of such breach, either (i) cure such breach in all
material respects or (ii) purchase such Mortgage Loan from the Trust Fund at the
Purchase Price; provided that if such 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 repurchase must occur within 90 days from the date such breach
was discovered; and provided, further, that (A) in the case of a breach of the
representation and warranty concerning the Mortgage Loan Schedule contained in
clause (b)(i), if such breach relates to any field on the Mortgage Loan Schedule
which identifies any Prepayment Charge or (B) in the case of a breach of
representation (xlix) or the unenforceability of any Prepayment Charge due to
subsequent changes in law, then, in each case, in lieu of purchasing such
Mortgage Loan from the Trust Fund at the Purchase Price, the Seller shall pay
the amount of the Prepayment Charge (net of any amount previously collected by
or paid to the Trust Fund in respect of such Prepayment Charge), and the Seller
shall have no right to repurchase (or, as detailed below, substitute for) such
Mortgage Loan. However, subject to the approval of the Purchaser and except as
specified above, the Seller 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, except 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 substitution must occur within 90
days from the date the breach was discovered if such 90 day period expires
before two years following the Closing Date. If the breach of representation and
warranty that gave rise to the obligation to repurchase or substitute a Mortgage
Loan pursuant to this Section 3.1 was the representation set forth in clause
(xliv), (xlv), (xlvi), (xlvii), (xlviii), or (l) of this Section 3.1(b), then
the Seller shall pay to the Trust Fund, concurrently with and in addition to the
remedies provided in the third preceding sentence, an amount equal to any
liability, penalty or the 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.
The obligations of the Seller to cure, purchase or substitute a Qualified
Substitute Mortgage Loan shall constitute the Purchaser's, the Trustee's and the
Certificateholders' sole and exclusive remedy under this Agreement or otherwise
respecting a breach of representations or warranties hereunder with respect to
the Mortgage Loans.

                  In the event that the Seller elects to substitute a Qualified
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 3.1(b), the Seller shall deliver to the Trustee and the Master Servicer,
as appropriate, 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 2.1, with the Mortgage Note endorsed as required by Section 2.1. 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, to the extent received by the Master
Servicer, will be retained by the Master Servicer and remitted by the Master
Servicer to the Seller on the next succeeding Distribution Date. After the month
of substitution, the Seller shall be entitled to retain all amounts received in
respect of such Deleted Mortgage Loan. Upon such substitution, the Mortgage Loan
Schedule shall be amended to reflect the addition of the Qualified Substituted
Mortgage Loan or Loans, the Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects, and the Seller shall be
deemed to have made the non-statistical representations and warranties with
respect to the Qualified Substitute Mortgage Loan contained in Section 3.1(b) as
of the date of substitution.

                  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 Certificateholders in the month of substitution). The Seller
shall provide the Master Servicer on the day of substitution for immediate
deposit into the Custodial Account the amount of such shortfall, without any
reimbursement therefor. The Seller shall give notice in writing to the Trustee
and the NIMS Insurer, if any, of such event, which notice shall be accompanied
by an Officer's 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 any REMIC created pursuant to the Pooling and
Servicing Agreement, 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 any REMIC created pursuant to the Pooling and Servicing
Agreement to fail to qualify as a

                                       P-11
<PAGE>

REMIC at any time that any Certificate is outstanding. The costs of any
substitution as described above, including any related assignments, opinions or
other documentation in connection therewith shall be borne by the Seller.

                  Any cause of action against the Seller or relating to or
arising out of a breach by the Seller of any representations and warranties made
in clause (b) above shall accrue as to any Mortgage Loan upon (i) discovery of
such breach by the Seller or notice thereof by the party discovering such breach
and (ii) failure by the Seller to cure such breach, purchase such Mortgage Loan
or substitute a Qualified Substitute Mortgage Loan pursuant to the terms hereof.

                  Section 3.2. THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
The Purchaser hereby represents and warrants to the Seller as of the Closing
Date (or if otherwise specified below, as of the date so specified) that:

         (a) the Purchaser is a corporation duly organized, validly existing and
         in good standing under the laws of the State of Delaware;

         (b) the Purchaser has full corporate power to own its property, to
         carry on its business as presently conducted and to enter into and
         perform its obligations under this Agreement;

         (c) the execution and delivery by the Purchaser of this Agreement have
         been duly authorized by all necessary corporate action on the part of
         the Purchaser; and neither the execution and delivery of this
         Agreement, nor the consummation of the transactions herein contemplated
         hereby, nor compliance with the provisions hereof, will conflict with
         or result in a breach of, or constitute a default under, any of the
         provisions of any law, governmental rule, regulation, judgment, decree
         or order binding on the Purchaser or its properties or the certificate
         of incorporation or by-laws of the Purchaser, except those conflicts,
         breaches or defaults which would not reasonably be expected to have a
         material adverse effect on the Purchaser's ability to enter into this
         Agreement and to consummate the transactions contemplated hereby;

         (d) the execution, delivery and performance by the Purchaser of this
         Agreement and the consummation of the transactions contemplated hereby
         do not require the consent or approval of, the giving of notice to, the
         registration with, or the taking of any other action in respect of, any
         state, federal or other governmental authority or agency, except those
         consents, approvals, notices, registrations or other actions as have
         already been obtained, given or made and, in connection with the
         recordation of the Mortgages, powers of attorney or assignments of
         Mortgages not yet completed;

         (e) this Agreement has been duly executed and delivered by the
         Purchaser and, assuming due authorization, execution and delivery by
         the Purchaser, constitutes a valid and binding obligation of the
         Purchaser enforceable against it in accordance with its terms (subject
         to applicable bankruptcy and insolvency laws and other similar laws
         affecting the enforcement of the rights of creditors generally); and

         (f) except as previously disclosed to the Purchaser in the Prospectus
         Supplement, there are no actions, suits or proceedings pending or, to
         the best of the Purchaser's knowledge, threatened against the
         Purchaser, before or by any court, administrative agency, arbitrator or
         governmental body (i) with respect to any of the transactions
         contemplated by this Agreement or (ii) with respect to any other matter
         which in the judgment of the Purchaser if determined adversely to the
         Purchaser or would reasonably be expected to materially and adversely
         affect the Purchaser's ability to perform its obligations under this
         Agreement; and the Purchaser is not in default with respect to any
         order of any court, administrative agency, arbitrator or governmental
         body so as to materially and adversely affect the transactions
         contemplated by this Agreement.

                                   ARTICLE IV

                               SELLER'S COVENANTS

                                       P-12
<PAGE>
                  Section 4.1. COVENANTS OF THE SELLER. The Seller hereby
covenants that, except for the transfer hereunder with respect to the Mortgage
Loans, the Seller will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur or assume any Lien on, any Mortgage Loan, whether now
existing or hereafter created, or any interest therein (other than the servicing
rights with respect thereto); the Seller will notify the Trustee, as assignee of
the Purchaser, of the existence of any Lien (other than as provided above) on
any Mortgage Loan immediately upon discovery thereof; and the Seller will defend
the right, title and interest of the Trustee, on behalf of the Trust Fund, in,
to and under the Mortgage Loans, whether now existing or hereafter created,
against all claims of third parties claiming through or under the Seller.

                                       P-13
<PAGE>

                                    ARTICLE V

                     LIMITATION ON LIABILITY OF THE SELLER

                  Section 5.1. LIMITATION ON LIABILITY OF THE SELLER. None of
the directors, officers, employees or agents of the Seller shall be under any
liability to the Purchaser hereunder, it being expressly understood that all
such liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement. Except as and to the extent
expressly provided in the Pooling and Servicing Agreement, the Custodial
Agreement and this Agreement, the Seller shall not be under any liability to the
Trust Fund, the Trustee or the Certificateholders thereunder. The Seller and any
director, officer, employee or agent of the Seller 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.

                                   ARTICLE VI

                                  TERMINATION

                  Section 6.1. TERMINATION. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate
upon the termination of the Trust Fund pursuant to the terms of the Pooling and
Servicing Agreement.

                                   ARTICLE VII

                            MISCELLANEOUS PROVISIONS

                   Section 7.1. AMENDMENT. This Agreement may be amended from
time to time by the Seller and the Purchaser, with the consent of the NIMS
Insurer, if any, by written agreement signed by the Seller and the Purchaser.

                  Section 7.2. GOVERNING LAW. This Agreement 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 7.3. NOTICES. All demands, notices and communications
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, addressed
as follows:

                           (i) if to the Seller:

                                    Home Star Mortgage Services LLC
                                    W. 115 Century Road
                                    Paramus, New Jersey 07652
                                    Attention: General Counsel

or, such other address as may hereafter be furnished to the Purchaser in writing
by the Seller.

                           (ii) if to the Purchaser:

                                    Homestar Mortgage Acceptance Corp.
                                    W. 115 Century Road
                                    Paramus, New Jersey 07652
                                    Attention: General Counsel

                                       P-14
<PAGE>

or such other address as may hereafter be furnished to the Seller in writing by
the Purchaser.

                  Section 7.4. SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever 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.

                  Section 7.5. RELATIONSHIP OF PARTIES. Nothing herein contained
shall be deemed or construed to create a partnership or joint venture between
the parties hereto, and the services of the Seller shall be rendered as an
independent contractor and not as agent for the Purchaser.

                  Section 7.6. COUNTERPARTS. This Agreement may be executed in
two or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an original
and such counterparts together shall constitute one and the same Agreement.

                  Section 7.7. SURVIVAL. The representations and warranties made
herein by the Seller and the provisions of Article V hereof shall survive the
purchase of the Mortgage Loans hereunder.

                  Section 7.8. FURTHER AGREEMENTS. The Purchaser and the Seller
each agree to execute and deliver to the other such additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement. Each of the Purchaser and the Seller agrees to use
its best reasonable efforts to take all actions necessary to be taken by it to
cause the Certificates to be issued and rated in the highest rating category by
each of the Rating Agencies, with the Certificates to be offered pursuant to the
Purchaser's shelf registration statement, and each party will cooperate with the
other in connection therewith.

                  Section 7.9. INTENTION OF THE PARTIES. It is the intention of
the parties that the Purchaser is purchasing, and the Seller is selling, the
Mortgage Loans (other than the servicing rights with respect thereto), rather
than a loan by the Purchaser to the Seller secured by the Mortgage Loans.
Accordingly, the parties hereto each intend to treat this transaction with
respect to the Mortgage Loans for federal income tax purposes as a sale by the
Seller, and a purchase by the Purchaser, of the Mortgage Loans (other than the
servicing rights with respect thereto). The Purchaser will have the right to
review the Mortgage Loans and the Related Documents to determine the
characteristics of the Mortgage Loans which will affect the federal income tax
consequences of owning the Mortgage Loans and the Seller will cooperate with all
reasonable requests made by the Purchaser in the course of such review.

                  Section 7.10. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE
AGREEMENT. This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Purchaser, the NIMS Insurer, if any, and their
respective successors and assigns. The NIMS Insurer, if any, shall be a
third-party beneficiary hereof and may enforce the terms hereof as if a party
hereto. The obligations of the Seller under this Agreement cannot be assigned or
delegated to a third party without the consent of the Purchaser, which consent
shall be at the Purchaser's sole discretion. The parties hereto acknowledge that
the Purchaser is acquiring the Mortgage Loans for the purpose of assigning the
Mortgage Loans to the Trustee, on behalf of the Trust Fund, for the benefit of
the Certificateholders. As an inducement to the Purchaser to purchase the
Mortgage Loans, the Seller acknowledges and consents to the assignment by the
Purchaser to the Trustee, on behalf of the Trust Fund of all of the Purchaser's
rights against the Seller pursuant to this Agreement and to the enforcement or
exercise of any right or remedy against the Seller pursuant to this Agreement by
the Purchaser. Such enforcement of a right or remedy by the Trustee, on behalf
of the Trust Fund, shall have the same force and effect as if the right or
remedy had been enforced or exercised by the Purchaser directly.

                                       P-15
<PAGE>

                  IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed to this Mortgage Loan Purchase Agreement by their
respective officers thereunto duly authorized as of the day and year first above
written.

                                            HOMESTAR MORTGAGE ACCEPTANCE CORP.
                                                     as Purchaser

                                            By: _______________________________
                                            Name:
                                            Title:

                                            HOME STAR MORTGAGE SERVICES LLC
                                                     as Seller

                                            By: _______________________________
                                            Name:
                                            Title:

                                       P-16
<PAGE>

                                    EXHIBIT 1

                             MORTGAGE LOAN SCHEDULE

                                       P-17
<PAGE>

                                    EXHIBIT 2

          Appendix E of the Standard & Poor's Glossary For File Format
                        For LEVELS(R) Version 5.6 Revised

Standard & Poor's has categorized loans governed by anti-predatory lending laws
in the Jurisdictions listed below into three categories based upon a combination
of factors that include (a) the risk exposure associated with the assignee
liability and (b) the tests and thresholds set forth in those laws. Note that
certain loans classified by the relevant statute as Covered are included in
Standard & Poor's High Cost Loan Category because they included thresholds and
tests that are typical of what is generally considered High Cost by the
industry.

                                       P-18
<PAGE>

STANDARD & POOR'S
HIGH COST LOAN CATEGORIZATION

<TABLE>
<CAPTION>

-------------------------------------------------- ------------------------------------- ----------------------------
State/Jurisdiction                                            Name of Anti-Predatory             Category under
                                                     Lending Law/Effective Date Applicable Anti-Predatory Lending Law
-------------------------------------------------- ------------------------------------- ----------------------------
<S>                                                <C>                                   <C>
Arkansas                                           Arkansas Home Loan  Protection  Act,  High Cost Home Loan
                                                   Ark. Code Ann. ss.ss.
                                                   23-53-101 et seq. Effective
                                                   July 16, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
Cleveland Heights, OH                              OH  Ordinance  No.   72-2003  (PSH),  Covered Loan
                                                   Mun. Code ss.ss. 757.01 et
                                                   seq. Effective June 2, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
Colorado                                           Consumer  Equity  Protection,  Colo.  Covered Loan
                                                   Stat. Ann. ss.ss. 5-3.5-101 et seq.
                                                   Effective  for covered loans offered
                                                   or entered into on or after  January
                                                   1,  2003.  Other  provisions  of the
                                                   Act took effect on June 7, 2002
-------------------------------------------------- ------------------------------------- ----------------------------
Connecticut                                        Connecticut    Abusive   Home   Loan  High Cost Home Loan
                                                   Lending  Practices Act,  Conn.  Gen.
                                                   Stat. ss.ss. 36a-746 et seq.
                                                   Effective October 1, 2001
-------------------------------------------------- ------------------------------------- ----------------------------
District of Columbia                               Home Loan  Protection Act, D.C. Code  Covered Loan
                                                   ss.ss. 26-1151.01 et seq.
                                                   Effective for loans closed on or
                                                   after January 28, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
Florida                                            Fair Lending Act,  Fla.  Stat.  Ann.  High Cost Home Loan
                                                   ss.ss. 494.0078 et seq.
                                                   Effective October 2, 2002
-------------------------------------------------- ------------------------------------- ----------------------------
Georgia (Oct 1, 2002 - Mar 6, 2003)                Georgia  Fair  Lending Act, Ga. Code  High Cost Home Loan
                                                   Ann. ss.ss. 7-6A-1 et seq.
                                                   Effective October 1, 2002 -
                                                   March
                                                   6, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
Georgia as amended (Mar 7, 2003 - current)         Georgia  Fair  Lending Act, Ga. Code  High Cost Home Loan
                                                   Ann. ss.ss. 7-6A-1 et seq.
                                                   Effective for loans closed on
                                                   or after March 7, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
HOEPA Section 32                                   Home     Ownership     and    Equity  High Cost Loan
                                                   Protection Act of 1994, 15 U.S.C. ss.
                                                   1639, 12 C.F.R. ss.ss. 226.32 and
                                                   226.34 Effective October 1, 1995,
                                                   amendments October 1, 2002
-------------------------------------------------- ------------------------------------- ----------------------------
</TABLE>

                                       P-19
<PAGE>

<TABLE>
<CAPTION>

<S>                                                <C>                                   <C>
Illinois                                           High Risk Home Loan Act, Ill.  Comp.  High Risk Home Loan
                                                   Stat.  tit.  815,  ss.ss.  137/5 et seq.
                                                   Effective  January 1, 2004 (prior to
                                                   this   date,    regulations    under
                                                   Residential   Mortgage  License  Act
                                                   effective from May 14, 2001)
-------------------------------------------------- ------------------------------------- ----------------------------
Kansas                                             Consumer  Credit  Code,  Kan.  Stat.  High    Loan    to    Value
                                                   Ann. ss.ss. 16a-1-101 et seq.
                                                   Consumer Loan and; Sections
                                                   16a-1-301 and 16a-3-207 High
                                                   APR Consumer Loan became
                                                   effective April 14, 1999;
                                                   Section 16a-3-308a became
                                                   effective
                                                   July 1, 1999
-------------------------------------------------- ------------------------------------- ----------------------------
Kentucky                                           2003 KY H.B.  287 - High  Cost  Home  High Cost Home Loan
                                                   Loan Act, Ky. Rev.  Stat. ss.ss. 360.100
                                                   et seq. Effective June 24, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
Maine                                              Truth in  Lending,  Me.  Rev.  Stat.  High Rate High Fee Mortgage
                                                   tit. 9-A, ss.ss. 8-101 et
                                                   seq. Effective September 29,
                                                   1995 and as amended from time
                                                   to time
-------------------------------------------------- ------------------------------------- ----------------------------
Massachusetts                                      Part 40 and Part 32, 209  C.M.R.  ss.ss.  High Cost Home Loan
                                                   32.00  et  seq.  and 209  C.M.R.  ss.ss.
                                                   40.01 et seq. Effective March 22,
                                                   2001 and amended from time to time
-------------------------------------------------- ------------------------------------- ----------------------------
Nevada                                             Assembly  Bill No.  284,  Nev.  Rev.  Home Loan
                                                   Stat. ss.ss. 598D.010 et seq.
                                                   Effective October 1, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
New Jersey                                         New Jersey Home  Ownership  Security  High Cost Home Loan
                                                   Act of  2002,  N.J.  Rev.  Stat.  ss.ss.
                                                   46:10B-22 et seq.
                                                   Effective for loans closed on or
                                                   after November 27, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
New York                                           N.Y. Banking Law Article 6-l          High Cost Home Loan
                                                   Effective for applications made on
                                                   or after April 1, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
New Mexico                                         Home Loan  Protection Act, N.M. Rev.  High Cost Home Loan
                                                   Stat. ss.ss. 58-21A-1 et seq.
                                                   Effective as of January 1,
                                                   2004; Revised as of February
                                                   26, 2004
-------------------------------------------------- ------------------------------------- ----------------------------
</TABLE>

                                       P-20
<PAGE>

<TABLE>
<CAPTION>

<S>                                                <C>                                   <C>
North Carolina                                     Restrictions   and   Limitations  on  High Cost Home Loan
                                                   High Cost Home Loans, N.C. Gen.
                                                   Stat. ss.ss. 24-1.1E et seq.
                                                   Effective July 1, 2000;
                                                   amended October 1, 2003
                                                   (adding open-end lines of
                                                   credit)
-------------------------------------------------- ------------------------------------- ----------------------------
Ohio                                               H.B.   386   (codified   in  various  Covered Loan
                                                   sections of the Ohio Code), Ohio
                                                   Rev. Code Ann. ss.ss. 1349.25
                                                   et seq. Effective May 24,
                                                   2002
-------------------------------------------------- ------------------------------------- ----------------------------
Oklahoma                                           Consumer  Credit Code  (codified  in  Subsection 10 Mortgage
                                                   various sections of Title 14A)
                                                   Effective  July  1,  2000;   amended
                                                   effective January 1, 2004
-------------------------------------------------- ------------------------------------- ----------------------------
South Carolina                                     South   Carolina   High   Cost   and  High Cost Home Loan
                                                   Consumer Home Loans Act, S.C. Code
                                                   Ann. ss.ss. 37-23-10 et seq.
                                                   Effective for loans taken on
                                                   or after January 1, 2004
-------------------------------------------------- ------------------------------------- ----------------------------
West Virginia                                      West Virginia  Residential  Mortgage  West   Virginia    Mortgage
                                                   Lender,  Broker and Servicer Act, W.  Loan Act Loan
                                                   Va. Code Ann. ss.ss. 31-17-1
                                                   et seq. Effective June 5,
                                                   2002
-------------------------------------------------- ------------------------------------- ----------------------------

<CAPTION>

STANDARD & POOR'S
COVERED LOAN CATEGORIZATION

State/Jurisdiction                                            Name of Anti-Predatory             Category under
                                                     Lending Law/Effective Date Applicable Anti-Predatory Lending Law
-------------------------------------------------- ------------------------------------- ----------------------------
<S>                                                <C>                                   <C>
Georgia (Oct 1, 2002 - Mar 6, 2003)                Georgia  Fair  Lending Act, Ga. Code  Covered Loan
                                                   Ann. ss.ss. 7-6A-1 et seq.
                                                   Effective October 1, 2002 -
                                                   March
                                                   6, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
New Jersey                                         New Jersey Home  Ownership  Security  Covered Home Loan
                                                   Act of  2002,  N.J.  Rev.  Stat.  ss.ss.
                                                   46:10B-22 et seq.
                                                   Effective November 27, 2003 - July
                                                   5, 2004
-------------------------------------------------- ------------------------------------- ----------------------------
</TABLE>

                                       P-21
<PAGE>

STANDARD & POOR'S
HOME LOAN CATEGORIZATION

<TABLE>
<CAPTION>

State/Jurisdiction                                            Name of Anti-Predatory             Category under
                                                     Lending Law/Effective Date Applicable Anti-Predatory Lending Law
-------------------------------------------------- ------------------------------------- ----------------------------
<S>                                                <C>                                   <C>
Georgia (Oct 1, 2002 - Mar 6, 2003)                Georgia  Fair  Lending Act, Ga. Code  Home Loan
                                                   Ann. ss.ss. 7-6A-1 et seq. Effective
                                                   October 1, 2002 - March 6, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
New Jersey                                         New Jersey Home  Ownership  Security  Home Loan
                                                   Act of  2002,  N.J.  Rev.  Stat.  ss.ss.
                                                   46:10B-22 et seq.
                                                   Effective for loans closed on or
                                                   after November 27, 2003
-------------------------------------------------- ------------------------------------- ----------------------------
New Mexico                                         Home Loan  Protection Act, N.M. Rev.  Home Loan
                                                   Stat. ss.ss. 58-21A-1 et seq.
                                                   Effective as of January 1,
                                                   2004; Revised as of February
                                                   26, 2004
-------------------------------------------------- ------------------------------------- ----------------------------
North Carolina                                     Restrictions   and   Limitations  on  Consumer Home Loan
                                                   High Cost Home Loans, N.C. Gen.
                                                   Stat. ss.ss. 24-1.1E et seq. Effective
                                                   July 1, 2000; amended October 1,
                                                   2003  (adding   open-end   lines  of
                                                   credit)
-------------------------------------------------- ------------------------------------- ----------------------------
South Carolina                                     South   Carolina   High   Cost   and  Consumer Home Loan
                                                   Consumer Home Loans Act, S.C. Code
                                                   Ann. ss.ss. 37-23-10 et seq. Effective
                                                   for loans taken on or after January
                                                   1, 2004
-------------------------------------------------- ------------------------------------- ----------------------------
</TABLE>

                                      P-22Put Option Agreement between OHI and American Health Care

 

 

Put Option Agreement

 

Between Omega Healthcare Investors, Inc.

 

and American Health Care Centers, Inc.

 

and Related Parties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	 
	 	 	 
	

	 

                                              Table of Contents

	
Section 1. Put Option Consideration
	
1

	
Section 2. Put Option
	
2

	
(a) Grant of Option
	
2

	
(b) Option Period
	
2

	
(c) Purchase Price
	
2

	
(d) Payment of Purchase Price
	
2

	
(e) Exercise of Put
	
2

	
(f) Assumed and Retained Liabilities.
	
2

	
(g) Closing
	
2

	
Section 3. Covenants
	
2

	
(a) American Entity Debt
	
2

	
(b) Efforts to Consummate
	
2

	
(c) Access and Investigation
	
2

	
(d) Negative Covenants of the American Entities During the Put Period
	
2

	
(e) Affirmative Covenants of the American Entities During the Put Period
	
2

	
(f) Permitted Actions by AHCC and the American Entities During the Put Period
	
2

	
(g) Covenants of the Optionors During the Put Period
	
2

	
(h) Title Commitment
	
2

	
(i) Optionors’ Conditions
	
2

	
(j) Optionees’ Conditions
	
2

	
(k) Closing Certificates.
	
2

	
(l) Prorations and Recording Costs
	
2

	
(m) Post-Closing Covenants of Omega
	
2

	
(n) Cooperation on Tax Matters
	
2

	
(o) Post Closing Net Worth
	
2

	
(p) Preparation and Filing of Tax Returns
	
2

	
Section 4. Representations And Warranties Of Optionors
	
2

	
(a) Status of the Interests
	
2

	
(b) Validity and Conflicts
	
2

	
(c) Authority
	
2

	
(d) Financial Statements
	
2

	
(e) Books and Records
	
2

	
(f) Absence of Certain Changes
	
2

	
(g) Intellectual Property
	
2

	
(h) Title
	
2

	
(i) Claims and Proceedings.
	
2

	
(j) Taxes and Tax Returns
	
2

	
(k) Compliance with Laws
	
2

	
(m) Necessary Action
	
2

	
(n) Litigation
	
2

	
(o) Sensitive Payments
	
2

	
(p) The Properties
	
2

	
(q) Disclosure
	
2

	
(r) Employees
	
2

	
(s) Material Adverse Change
	
2

	
(t) Contracts
	
2

	
(u) Lease
	
2

	
Section 5. Omega Representations And Warranties
	
2

	
(a) Status of Omega
	
2

	
(b) Validity and Conflicts
	
2

	
(c) Authority
	
2

	
(d) Necessary Action
	
2

	
(e) Securities Representations
	
2

	
(f) HSR Act
	
2

	
(g) Environmental Assessments
	
2

	
Section 6. Optionors’ And American Entities’ Conditions
	
2

	
(a) Representations and Warranties
	
2

	
(b) Compliance with Obligations
	
2

	
Section 7. Optionees’ Conditions
	
2

	
(a) Representations and Warranties
	
2

	
(b) Compliance with Obligations
	
2

	
(c) Title Insurance Policies
	
2

	
(d) Closing Documents
	
2

	
(e) Essex Estoppel
	
2

	
Section 8. Termination
	
2

	
(a) Termination
	
2

	
(b) Opportunity to Cure
	
2

	
(c) Remedies Upon Termination
	
2

	
(d) Termination of 1997 Agreements
	
2

	
Section 9. Indemnification
	
2

	
(a) Survival
	
2

	
(b) Indemnification and Reimbursement by Optionors
	
2

	
(c) Indemnification and Reimbursement by Omega
	
2

	
(d) Limitations on Amount.
	
2

	
(e) Exclusive Remedy; Time Limitations.
	
2

	
(f) Third-party claims.
	
2

	
(g) Mitigation
	
2

	
(h) Insurance
	
2

	
(i) Other Claims
	
2

	
Section 10. Miscellaneous
	
2

	
(a) Notices
	
2

	
(b) Successors and Assigns
	
2

	
(c) Sole Agreement
	
2

	
(d) Captions
	
2

	
(e) Severability
	
2

	
(f) Counterparts
	
2

	
(g) Expenses
	
2

	
(h) Third Party Beneficiary
	
2

	
(i) Construction
	
2

	
(j) Governing Law
	
2

	
(k) Confidentiality
	
2

	
(l) Arbitration of Disputes Following Closing
	
2

	
(m) Invalidity
	
2

	
(n) Prevailing Party’s Fees
	
2

	 	 

	

 

 

			

	
 

 

	 	 	 
	

	 

Put Option Agreement

 

This Agreement, dated as of October 12, 2004, is entered into by and among Omega Healthcare Investors, Inc., a Maryland corporation ("Omega"), and American Health Care Centers, Inc., an Ohio corporation ("AHCC"), Robert L. and Phyllis Leatherman ("Leathermans"), Leatherman Family Co., Ltd., an Ohio limited liability company ("Leatherman LLC"), Evergreen Manor Nursing Home, Inc., an Ohio corporation ("Evergreen"), Twin-M Nursing Center, Inc., an Ohio corporation ("Twin-M") (AHCC, the Leathermans, Leatherman LLC, Evergreen, and Twin-M, are hereinafter sometimes collectively referred to as the "Optionors"), and certain entities owned by the Optionors which are set forth on Exhibit A-1 attached hereto or their successors (collectively, the "American Entities"). AHCC is entering into this Agreement on behalf of itself and as agent for the American Entities. All capitalized terms not otherwise defined have the meanings ascribed to them in the Appendix attached hereto.

 

W I T N E S S E T H:

 

WHEREAS, Omega wishes to grant to the Optionors the right to put upon the terms set forth in Section 2 below 100% of the ownership interests in, or the properties of, the American Entities; and

 

WHEREAS, the sole business (the "Business") of the American Entities is the ownership of the nursing home Properties described on Exhibit B and the leasing thereof to Essex Healthcare Corporation ("Essex"); and

 

WHEREAS, in consideration of the grant of the Put, the Optionors have agreed to pay Omega $1,000 as set forth below and further agreed that they will amend the mortgage loans owed to Omega by AHCC and certain of the American Entities to remove all rights of the debtors to prepay those loans prior to their maturity dates, except as otherwise provided herein.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

 

Section 1.   Put Option Consideration/Authority Opinions

 

In consideration of the grant of the Put by Omega to the Optionors as set forth in this Agreement, the Optionors have paid $1,000 to Omega and, as further consideration, AHCC and those American Entities who owe indebtedness to Omega (the "Omega Mortgage Loans") have entered into amendments to the Omega Mortgage Loans in the forms attached hereto as Exhibits C-1 through C-6, removing all rights of AHCC and the American Entities to prepay the Omega Mortgage Loans prior to their maturity dates (except as provided in Section 3(a) below).

 

In addition, to confirm the authority of Optionors and Omega to enter into this Agreement, counsel for Optionors has delivered an authority opinion based upon the form attached hereto as Exhibit J to Omega, and counsel for Omega has delivered an authority opinion based upon the form attached hereto as Exhibit K to Optionors, each confirming the authority of the respective parties to enter into this Agreement.

 

Section 2.   Put Option

 

(a)  Grant of Option. Omega hereby grants the Optionors an irrevocable option (the "Put"), exercisable at any time during the period specified in Section 2(b) below to sell to Omega, and Omega, either directly, or through one or more of its wholly owned subsidiaries (Omega and such subsidiaries being collectively herein sometimes referred to as "Optionees") hereby agrees to purchase upon exercise of the Put, with respect to each of the American Entities, at the sole election of the Optionors, either: (i) all of the Interests of the American Entity, or (ii) title to the Property listed on Exhibit A-1 which is owned by that American Entity. Notwithstanding the terms of the immediately preceding sentence, the Optionors only option with respect to the Camelot Arms Care Center Property owned by Wilcare Corporation and the Colonial Gardens Care Center Property owned by Colonial Gardens, Inc. shall be as follows: (i) the respective American entity shall transfer title to the Property owned by it to a newly-formed, single-asset, limited liability company (a "Transfer Entity"), of which the respective American Entity shall be the sole member, no more than three (3) days prior to the Closing Date; (ii) on the Closing Date, the American Entity will transfer one hundred percent (100%) of the membership interests in the Transfer Entity to the Optionee pursuant to the terms of the Interest Purchase Agreement for such Transfer Entity; and (iii) the formation documents (including articles of organization and operating agreement) for the Transfer Entity shall be upon terms pre-approved by, and reasonably acceptable to, the Optionees. If the Optionors elect to sell the Property of an American Entity to an Optionee, the Optionee must, except as provided in Section 3(a), assume all of the Omega Mortgage Loans owed by that American Entity. If the Optionors elect to sell the Interests of an American Entity to an Optionee and Optionee elects to acquire the Interests through a merger transaction, the Optionee may acquire the Interests by merger of the Optionee into the American Entity whose Interests are being acquired, but not by the merger of the American Entity into the Optionee. The Put may only be exercised, if at all, if it is exercised with respect to all of the Interests or Properties, as the case may be, of all of the American Entities that own the Properties.

 

(b)  Option Period. The Put will have a term of 90 days beginning on the date of this Agreement and ending at 11:59 p.m., Akron time, on January 10, 2005 (the "Option Period"). If the Put is not exercised within such 90-day period, the Put will expire, and neither party shall have any further rights or obligations hereunder.

 

(c)  Purchase Price. If the Put is exercised, Omega, either directly or through one or more of the Optionees, will pay the Interest Purchase Price for the Interests or the Property Purchase Price for the Properties, as applicable, of each American Entity as determined below, subject to adjustment as provided for below.

 

	(1)  	The purchase price (the "Property Purchase Price") for each Property of the American Entities is the amount set forth opposite the description of each Property on Exhibit A-1.

 

	(2)  	The purchase price (the "Interest Purchase Price") for all of the Interests of each American Entity is the amount set forth opposite that Entity’s name on Exhibit A-1, adjusted by the Adjustment Amount. The "Adjustment Amount" (which may be a positive or negative number) will be equal to the Adjusted Owners’ Equity (as defined below) minus the Target Owners’ Equity (as defined below). The "Target Owners’ Equity" is the amount set forth opposite that American Entity’s name on Exhibit A-1 calculated as set forth on Exhibit A-2 (which calculation excludes Optionors’ Assumed Liabilities and Essex Liabilities). The Interest Purchase Price for each American Entity set forth on Exhibit A-1 takes into account the fact that Omega will not be assuming Excess Omega Mortgage Loan Indebtedness as provided in Section 3(a).

 

	(3)  	On the Closing Date, after review and discussion with Omega, AHCC will deliver to Omega a balance sheet for each of the American Entities, the Interests in which are being acquired hereunder, prepared as of the close of business ("Effective Time") on the immediately preceding day ("Effective Date") reflecting the Adjusted Owners’ Equity thereof ("Effective Date Balance Sheet"). "Adjusted Owners’ Equity" means the Owners’ equity of an American Entity, calculated in accordance with GAAP consistent with the calculation of Target Owner’s Equity for each American Entity on Exhibit A-2, except that (i) no depreciation or amortization deductions will be taken into account after June 30, 2004 and (ii) any Optionors’ Assumed Liabilities and Essex Liabilities will not be treated as Liabilities of an American Entity. Debt amortization by the Company will increase Adjusted Owner’s Equity and is not to be treated under the preceding sentence as an amortization deduction to be disregarded for purposes of determining Adjusted Owners’ Equity.

 

	(4)  	On or before May 1, 2005, AHCC and Omega will meet to determine whether any adjustments should be made to the Effective Date Balance Sheets and the Adjusted Owners’ Equity of the various American Entities to correct any errors and to reflect changes in circumstances or facts unknown at the time of Closing to determine the "Final Adjusted Owners’ Equity" as of the Effective Date. If Omega and AHCC are not able to agree on whether any adjustments should be made, or the nature or the amount of such adjustments, within 10 business days of such date, then the issues in dispute will be submitted for resolution to a certified public accounting firm mutually agreeable to AHCC and Omega, which firm does not have, and has not had, any relationship with AHCC or Omega or any company directly or indirectly controlled by them (the "Accountants"). If AHCC and Omega cannot agree upon the identity of the Accountants they will each choose a certified public accounting firm and the firms chosen by them will mutually agree upon the selection of the Accountants. If issues in dispute are submitted to the Accountants for resolution, (i) each party will furnish to the Accountants such workpapers and other documents and information relating to the disputed issues as the Accountants may request and are available to that party (or its independent public accountants), and will be afforded the opportunity to present to the Accountants any material relating to the determination and to discuss the determination with the Accountants; (ii) the determination by the Accountants, as set forth in a notice delivered to both parties by the Accountants, will be binding and conclusive on the parties; and (iii) Omega and Optionors will each bear 50% of the fees of the Accountants for such determination.

 

	(5)  	If the Final Adjusted Owners’ Equity is less than the Adjusted Owners’ Equity, then the Optionors shall pay Omega the amount of such shortfall. If the Final Adjusted Owners’ Equity is greater than the Adjusted Owners’ Equity, then Omega shall pay the appropriate Optionor the amount of such difference. All payments will be made together with interest at six percent (6%) compounded annually beginning on the Closing Date and ending on the date of payment. Payments must be made by wire transfer of immediately available funds within five business days following the final determination of the Final Adjusted Owners’ Equity.

 

(d)  Payment of Purchase Price. On the Closing Date, the Optionees will pay in full the Interest Purchase Price for any Interests being acquired by wire transfer of immediately available funds and Omega will, except to the extent provided in Section 3(a), release AHCC from liability on any Omega Mortgage Loan owed by, or encumbering the Property of, an American Entity whose Interests are being acquired hereunder. Also on the Closing Date, the Optionees will pay the Property Purchase Price for any Properties Put to them by assuming, except to the extent provided in Section 3(a), any Omega Mortgage Loan encumbering the Properties Put to them, and by paying the balance of the Property Purchase Price by wire transfer of immediately available funds. The aggregate amount of the Interest Purchase Price and the Property Purchase Price to be paid by Optionees is referred to as the "Aggregate Purchase Price." Omega will release AHCC and any American Entity from liability for any Omega Mortgage Loan assumed by an Optionee.

 

(e)  Exercise of Put. In order to exercise the Put, the Optionors must deliver to Omega a written notice ("Put Notice") of their exercise of the Put on or before the expiration of the Option Period. Simultaneously with the delivery of the Put Notice, the Optionors will notify Omega of their election to put either the Interests or the Properties of each American Entity in the Put Notice. The Optionors will complete, execute and deliver to Omega, as to each of the American Entities, (i) two counterparts of an Agreement for Purchase of Shares substantially in the form attached as Exhibit D ("Share Purchase Agreement") executed in each case by AHCC and by any other Optionor transferring Shares, or (ii) two counterparts of an Interest Purchase Agreement substantially in the form attached as Exhibit E ("Interest Purchase Agreement") executed in each case by AHCC, Omega and the Optionors that own the Interests being acquired, or (iii) two counterparts of an Agreement to Purchase Property acceptable to the parties executed by an Optionee and by the relevant American Entity owning the Property being transferred ("Property Purchase Agreement"). The Interest Purchase Agreements, Property Purchase Agreements and the Share Purchase Agreements are sometimes hereinafter collectively referred to as the "Purchase Agreements." Omega and, if applicable, the other Optionees must execute and deliver to AHCC one counterpart of each of the Purchase Agreements within five days after the receipt of the Put Notice by Omega. Omega may designate another Optionee to consummate an acquisition hereunder but Omega will in all instances be jointly and severally liable with any such other Optionee under the applicable Purchase Agreement. Simultaneously with the delivery of the applicable Purchase Agreements to AHCC, Omega shall deliver (i) the Escrow Agreement substantially in the form of Exhibit U to AHCC and (ii) to the Certified Title Agency, Inc. ("Escrow Agent") a performance deposit in the amount of One Million and 00/100 Dollars ($1,000,000.00) (the "Performance Deposit") via the wire instructions set forth in the Escrow Agreement to secure the performance of Omega under the terms of this Agreement. If this Agreement is terminated for any reason other than a termination by the Optionors under Section 8(a)(4) due to a material Breach by Omega not cured following written notice within the applicable cure period, then the Performance Deposit shall be returned to Omega on the termination date. If this Agreement is terminated because of a material Breach by Omega not cured following written notice within the applicable cure period, then the Performance Deposit shall be paid to the Optionors as liquidated damages in accordance with Section 8(c). If the transaction contemplated by this Agreement closes, the Performance Deposit shall be delivered to AHCC on the Closing Date, and the amount of the Performance Deposit shall be credited against the amount of the Interest Purchase Price or Property Purchase Price. The Escrow Agent shall hold the Performance Deposit pursuant to the terms of an Escrow Agreement substantially in the form of Exhibit U attached.

 

(f)  Assumed and Retained Liabilities.

 

	(1)  	Assumed Liabilities. On the Closing Date AHCC will assign to Omega and the Optionees, and Omega and the Optionees will assume, the Essex Lease by executing and delivering an Assignment and Assumption substantially in the form of Exhibit V-1. If any American Entity transfers its assets to a successor that becomes an American Entity, the Interest in which is acquired by an Optionee, the predecessor will assign the Essex Lease to the successor, and the successor will assume the Essex Lease by executing and delivering an Assignment and Assumption substantially in the form of Exhibit V-2. If on the Closing Date, any Properties are purchased by any of the Optionees, the Optionees shall not assume and shall not agree to discharge any Liabilities with respect to the American Entities, the Optionors, or the Property, other than the Omega Mortgage Loan (as reduced by the Excess Omega Mortgage Loan Indebtedness that will be assumed by AHCC and the Leathermans pursuant to Section 3(a) of this Agreement) for that particular Property and any Essex Liabilities. If on the Closing Date any Interests are purchased by any of the Optionees, the applicable American Entity shall assign to, and the Optionors shall assume, all of the Liabilities with respect to that American Entity, other than the Omega Mortgage Loan, the Permitted Encumbrances (including the Essex Lease) and accrued income taxes (to the extent set forth on the Effective Date Balance Sheets) (the "Optionors’ Assumed Liabilities").

 

	(2)  	Retained Liabilities. If on the Closing Date, any Properties are purchased by any of the Optionees, the American Entity selling the Property shall retain all of its Liabilities, other than the Omega Mortgage Loan (as reduced by the Excess Omega Mortgage Loan Indebtedness that will be assumed by AHCC and the Leathermans pursuant to Section 3(a) of this Agreement) for that particular Property and the Permitted Encumbrances, including the Essex Lease (collectively, the "Optionor Retained Liabilities"). The Optionor Retained Liabilities shall remain the sole responsibility of and shall be retained, paid, performed and discharged solely by the American Entity selling the Property. If on the Closing Date any Interests are purchased by any of the Optionees, the only Liability that will be retained by the applicable American Entity shall be the Omega Mortgage Loan for the Property held by such entity and accrued income taxes.

 

	(3)  	Tax Liens and Encumbrances. The foregoing does not mean that the American Entities must assign, or that the Optionors must assume, liability for real estate taxes and assessments that are not yet due and payable, as well as the restrictions and encumbrances reflected on Exhibit F; the Optionees will acquire the Properties subject to all liens for real estate taxes and assessments that are not yet due and payable, as well as the restrictions and encumbrances reflected on Exhibit F.

 

(g)  Closing. If the Put is exercised, the sales thereunder will close (the "Closing") on the date that is 10 days after the date of delivery of the Put Notice (or if such 10th day is a Saturday, Sunday or a holiday, the next day that is not a Saturday, Sunday, or a holiday) or on such other date as the parties mutually agree (the "Closing Date"). At the Closing, the parties will proceed to close the transactions in accordance with their terms. Time is of the essence in the consummation of the Closing. For each day that the Closing is delayed because of a failure by the Optionees to consummate the transactions contemplated hereby (other than a failure attributable to actions or omissions of the Optionors or the American Entities or a cause that is beyond the reasonable control of the Optionees) the Purchase Price provided for in Section 2(c) must be increased by the sum of $10,000 per day. For each day that the Closing is delayed because of a failure by the Optionors or the American Entities to consummate the transactions contemplated hereby (other than a failure attributable to actions or omissions of the Optionees or a cause that is beyond the reasonable control of the Optionors or the American Entities) the Optionors must pay Omega as liquidated damages the sum of $10,000 per day.

 

Section 3.   Covenants

 

(a)  American Entity Debt. To the extent AHCC requests, AHCC, the Leathermans, the American Entities with Omega Mortgage Loan indebtedness and Omega will within five days after delivery of AHCC’s request enter into an agreement or agreements in the form attached hereto as Exhibits G-1 - G-6, amending the Omega Mortgage Loan indebtedness, of each American Entity designated by AHCC in its notice, to provide that AHCC and the Leathermans will pay and discharge those portions of the Omega Mortgage Loan indebtedness attributable to each such American Entity as set forth on Exhibit H (the "Excess Omega Mortgage Loan Indebtedness"), and further providing that Omega will release each such American Entity from its share of the Excess Omega Mortgage Loan Indebtedness and will agree to first make a demand on AHCC and the Leathermans for payment of the Excess Omega Mortgage Loan Indebtedness before proceeding against the Properties securing the Excess Omega Mortgage Loan Indebtedness. At Closing, to the extent AHCC and the Leathermans assume the Excess Omega Mortgage Loan Indebtedness, they will pay the Excess Omega Mortgage Loan Indebtedness and Omega will release AHCC, the Leathermans and any American Entity the Interests in which are not acquired by an Optionee from the balance of the Omega Mortgage Loan owed by such American Entity. If the Optionors exercise the Put to sell the Interests of an American Entity hereunder, the Optionors will either (i) cause to be paid in full on or before Closing any Debt of the American Entity whose Interests are being sold, other than the Omega Mortgage Loans, or (ii) assume such Debt other than the Omega Mortgage Loans pursuant to Section 2(f)(1).

 

(b)  Efforts to Consummate. If the Optionors exercise the Put, each party hereto, without payment or further consideration, but subject to the terms and conditions herein, shall use its good faith efforts to take or cause to be taken all action and to do or cause to be done all things necessary, proper or advisable to consummate and make effective, as soon as reasonably practicable, the transactions contemplated hereby, including, but not limited to, the obtaining of all consents of any third party, whether private or governmental, required in connection with such party's performance of such transactions and each party hereto shall cooperate with the other in all of the foregoing. If any event should occur which would prevent fulfillment of the conditions to the obligations of any party hereto to consummate the transactions contemplated by this Agreement, that party must use its reasonable efforts to cure the same as expeditiously as possible.

 

(c)  Access and Investigation. Between the date of this Agreement and the Closing Date, Optionors will, and will cause each American Entity and its representatives to:

 

	(1)  	afford Omega and its representatives (collectively, "Omega Representatives") full and free access to each American Entity’s Properties (so long as such access does not violate the Essex Lease), contracts, books and records and other documents and data, and

 

	(2)  	furnish Omega and Omega’s Representatives with such additional financial, operating and other data and information relating to the American Entities or the Properties as Omega may reasonably request.

 

(d)  Negative Covenants of the American Entities During the Put Period. During the Put Period, each American Entity will conduct its business and operations solely in the ordinary course of business, except as contemplated hereby, consistent with past practice. Without limiting the generality of the foregoing, except with the written consent of Omega, the American Entities will not, during the Put Period:

 

	(1)  	sell, assign, transfer, pledge or otherwise in any manner dispose of, mortgage or encumber any of the Properties other than as contemplated by this Agreement;

 

	(2)  	engage in any transactions or activities or incur any liability other than in the ordinary course of the conduct of the Business or fail to preserve intact the present business organization of the American Entities (the payment of a management fee by the American Entities to AHCC of not more than 5% of gross revenues will not be deemed to be outside the ordinary course of Business, but such management fee will be terminated at the Closing);

 

	(3)  	create or incur any indebtedness for borrowed money (including, without limitation, obligations in respect of capital leases) to any Person other than Omega or assume, guarantee or otherwise become responsible for the obligations of any other Person;

 

	(4)  	modify, terminate or breach the lease between Essex, AHCC and the American Entities dated October 30, 1997, as amended (the "Essex Lease") or any other material contract;

 

	(5)  	grant or extend any power of attorney or appoint any agent;

 

	(6)  	loan money or assets to any Person;

 

	(7)  	adopt any new method of accounting or change any existing method of accounting;

 

	(8)  	make any change to the Articles of Incorporation or Code of Regulations of any of the American Entities that are corporations, or the partnership agreements or certificates of partnership of any American Entities that are partnerships;

 

	(9)  	fail to maintain their books, accounts and records relating to the business of the American Entities in the usual, regular and ordinary manner consistent with past practice;

 

	(10)  	issue, sell or deliver, redeem or purchase, any of their Interests, or grant or enter into any options, warrants, rights, agreements or commitments to purchase or to subscribe to any Interest in an American Entity or any securities or obligations convertible into an American Entity Interest or make any other changes in the capital structure of an American Entity or amend any terms of any such equity securities or agreements; 

 

	(11)  	enter into any lease, tenancy, contract or other commitment affecting any of the Properties;

 

	(12)  	sell, lease, transfer or otherwise dispose of capital assets, real, personal or mixed (except that an American Entity may transfer its assets to another entity that is wholly owned, directly or indirectly, by AHCC and the Leathermans so long as (i) the corporate formation documents (including articles of incorporation, codes of regulations and bylaws) for such other entities are pre-approved and reasonably acceptable to the Optionees and (ii) the successor entity becomes a party hereto as an additional American Entity the Property or Interests of which must be sold to Omega as provided herein if the Put is exercised);

 

	(13)  	acquire or agree to acquire by merging or consolidating with, or by purchasing the stock or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to any of the American Entities (except that an American Entity may transfer its assets to another entity that is wholly owned, directly or indirectly, by AHCC and the Leathermans so long as (i) the corporate formation documents (including articles of incorporation, codes of regulations and bylaws) for such other entities are pre-approved and reasonably acceptable to the Optionees and (ii) the successor entity becomes a party hereto as an additional American Entity the Property or Interests of which must be sold to Omega as provided herein if the Put is exercised);

 

	(14)  	waive or release any rights of material value, or cancel, compromise, release or assign any material indebtedness owed to it or any material claims held by it;

 

	(15)  	cancel, terminate or permit to lapse any material insurance policy or coverage naming it as a beneficiary or a loss payable payee without obtaining comparable substitute insurance coverage; or

 

	(16)  	fail to comply in all material respects with applicable Laws and contractual obligations.

 

(e)  Affirmative Covenants of the American Entities During the Put Period. Except with the written consent of Omega, each American Entity will, during the Put Period:

 

	(1)  	conduct its operations consistently with the business practices that would be followed by a reasonably prudent business Person and in accordance in all material respects with all applicable Laws;

 

	(2)  	confer with the Optionees concerning operational matters of a material nature; and

 

	(3)  	maintain in all material respects consistent accounting methods and reporting.

 

(f)  Permitted Actions by the Optionors and the American Entities During the Put Period. Notwithstanding Section 3(d) and (e), an American Entity may, during the Put Period, engage in any transaction contemplated by this Agreement and transfer:

 

	(1)  	its Property and Liabilities to a successor entity (including a deemed transfer for income tax purposes as a result of a termination or revocation by an American Entity of its qualified Subchapter S election under IRC §1361(b)(3)(B) and a transfer to an Optionor who transfers the Property to a successor entity), so long as the successor entity becomes a party hereto as an additional American Entity the Property or Interests of which must be sold to Omega as provided herein if the Put is exercised;

 

	(2)  	any of its assets other than the Properties to one or more of the Optionors; and

 

	(3)  	to one or more of the Optionors, and one or more of the Optionors may assume and agree to pay and discharge, any of the Liabilities of the American Entities, subject to Section 3(a).

 

Notwithstanding Section 4(a) and Section 3(d), (e) and (g), any Optionor may transfer its Interest to another Optionor, and the transferee will be an Optionor bound as to the Interests transferred the same as the transferor.

 

(g)  Covenants of the Optionors During the Put Period. Except as provided in Section 3(f), during the Put Period, no Optionor may sell, assign, transfer, pledge or otherwise in any manner dispose of or encumber any of the Interests nor may any Optionor take any action or fail to take any action, as a result of which any of the events listed in Section 3(d) would be likely to occur.

 

(h)  Title Commitment. AHCC has delivered to Omega commitments for title insurance policies insuring title to the Properties through Commonwealth Title Insurance Company (the "Title Company"), reflecting the state of title as of the dates set forth on Exhibit I with values equal to the amounts specified on Exhibit I for each Property (the "Title Commitments"). The Title Commitments run in favor of Omega or another Optionee designated by Omega. At the Closing, AHCC will deliver to Omega (or its designated Optionee) the Title Insurance Policies or a marked-up version of the Title Commitments as set forth in Section 7(c). If any subsequent update to the Title Commitments indicates there are any defects in title not reflected on the Title Commitments (excluding liens for the additional accrual of taxes and assessments during the update period that are not yet due and payable) that were (i) created by an act of an American Entity after the date of the Title Commitments or that (ii) would materially and adversely affect an Optionee’s use of a Property, AHCC will have 10 days to remove any such title defects. If AHCC does not remove any title defects within such 10 day period, Omega will have five days thereafter to notify AHCC that it elects to terminate this Agreement.

 

(i)  Optionors’ Conditions. Unless specifically prohibited by law, if the Optionors exercise their Put, Optionors will use their best efforts to cause all of the conditions to Closing set forth in Sections 6 and 7 which are within the Optionors’ or the American Entities’ control to be satisfied prior to the Closing Date and Optionors will not take any action inconsistent with their obligations under this Agreement or which could hinder or delay the consummation of the transactions contemplated by this Agreement or which would cause any representation, warranty or covenant made by the Optionors or the American Entities in this Agreement or in any certificate, list, Exhibit, or other instrument furnished or to be furnished pursuant hereto, or in connection with the transaction contemplated hereby, to be untrue in any material respect as of the Closing Date.

 

(j)  Optionees’ Conditions. Unless specifically prohibited by law, if the Optionors exercise their Put, Omega will use its best efforts to cause all of the conditions to Closing set forth in Sections 6 and 7 which are within Omega’s control to be satisfied prior to the Closing Date and Omega will not take any action inconsistent with its obligations under this Agreement or which could hinder or delay the consummation of the transactions contemplated by this Agreement or which would cause any representation, warranty or covenant made by Omega in this Agreement or in any certificate, list, Exhibit, or other instrument furnished or to be furnished pursuant hereto, or in connection with the transaction contemplated hereby, to be untrue in any material respect as of the Closing Date.

 

(k)  Closing Certificates.

 

	(1)  	If the Optionors exercise their Put, the Optionors shall cause the documents and instruments required by the Purchase Agreements and the following documents to be delivered (or tendered subject only to Closing) to Omega:

 

	(i)  	an authority opinion of Optionors’ counsel, dated the Closing Date, substantially in the form of Exhibit J attached;

 

	(ii)  	the articles of incorporation (or other applicable organizational documents) and all amendments thereto of each of the American Entities, duly certified as of a recent date by the Secretary of State of the jurisdiction of their incorporation; 

 

	(iii)  	releases of all encumbrances on the Properties, other than the Omega Mortgage Loans and those encumbrances listed on Exhibit F;

 

	(iv)  	certificates dated as of a date not earlier than the fifth business day prior to the Closing as to the good standing of each of the American Entities, executed by the appropriate officials of the State of Ohio and each jurisdiction in which each of the American Entities is licensed or qualified to do business as a foreign corporation; and

 

	(v)  	a certificate (1) of the accuracy and truthfulness of Optionors’ representations and warranties in this Agreement as of the Closing Date and identifying any inaccurate or false representations or warranties (2) of the performance by Optionors of, or the compliance by Optionors with, any covenant or obligation required to be performed or complied with by Optionors pursuant to this Agreement.

 

	(2)  	If the Optionors exercise their Put, Omega shall cause the documents and instruments required by the Purchase Agreements and the following documents to be delivered (or tendered subject only to Closing) to the Optionors: (i) an authority opinion of Omega’s counsel, dated the Closing Date, substantially in the form of Exhibit K attached, and (ii) a certificate (a) of the accuracy and truthfulness of Omega’s representations and warranties in this Agreement as of the Closing Date and identifying any inaccurate or false representations or warranties and (b) of the performance by Omega of, or the compliance by Omega with, any covenant or obligation required to be performed or complied with by Omega pursuant to this Agreement.

 

(l)  Prorations and Costs. All recording fees (excluding transfer tax type fees), if any, relating to the recording of the instruments by which the Interests or Properties are transferred to Optionees shall be paid by Omega. The Optionors shall pay all other recording fees. The parties shall prorate as between themselves any taxes or other charges paid or prepaid by one party of which the other shall receive the benefit with respect to any Property sold hereunder. The Optionors shall pay (i) any transfer taxes or fees due in connection with the transfer of the American Entities or the Properties and (ii) the cost of either new Title Insurance Policies or updates to existing title insurance policies or commitments for the Properties (whichever are applicable to the specific Properties) but Omega shall pay the cost of any endorsements thereto. Omega shall pay for the costs of the surveys, environmental assessments, and other costs of its due diligence.

 

(m)  Post-Closing Covenants of Omega. If the Optionors exercise the Put, Omega covenants that it will, and it will cause the Optionees to, treat the purchase of the American Entities whose Shares are acquired as an acquisition of shares of stock for federal income tax purposes in a manner consistent with the tax treatment of the Optionors and the American Entities, and will not make an IRC §338(g) or 338(h)(10) election to treat the acquisition of the Interests as a purchase of assets. For a period of at least eight (8) months after the Closing, Omega will treat any American Entities the Shares of which are acquired by Omega or an Optionee as taxable REIT subsidiaries of Omega and, further, will not, for a period of at least eight (8) months after the Closing, make any election to treat an American Entity, the Shares of which were acquired hereunder, as a disregarded entity for federal income tax purposes, which election is effective at any time before eight (8) months after the Closing Date.

 

(n)  Cooperation on Tax Matters. After the Closing, AHCC and Omega must furnish or cause to be furnished to each other, upon request, in a timely manner, such information (including access to books and records) and assistance relating to the transactions contemplated hereby and for an American Entity whose Interests are acquired hereunder as is reasonably necessary for the filing of any tax return, for the preparation for any audit, and for the prosecution or defense of any proceeding relating to any proposed tax adjustment. AHCC and Omega will cooperate with each other in the conduct of any tax audit or other proceeding involving any of the foregoing and will adopt consistent positions for tax purposes.

 

(o)  Post Closing Net Worth. If the Put is exercised and the Closing occurs, AHCC must maintain a Net Worth of at least $5 million for a period of five years after the Closing Date. For purposes of the foregoing, Net Worth means the excess of the fair market value of AHCC’s assets as determined by appraisal less the face amount of all of its liabilities.

 

(p)  Preparation and Filing of Tax Returns. Omega is responsible for the preparation and filing of all tax returns required to be filed after the Closing Date for an American Entity the Shares in which are acquired by an Optionee (an "Acquired Entity"). Any such tax returns for an Acquired Entity that include, or end on, the Closing Date ("Straddle Tax Period") must be prepared by Omega and submitted to AHCC (together with schedules, statements and, to the extent required by AHCC, supporting documentation) at least 40 days prior to the due date (including extensions) of such tax return. If AHCC objects to any item on such a tax return, AHCC must, within 10 days after delivery of such tax return, notify Omega in writing that it so objects, specifying with particularity any such item and stating the specific factual or legal basis for such objection. If a notice of objection is delivered and Omega and AHCC are unable to resolve such objection within 10 days after receipt by Omega of such notice, the disputed items must be submitted to the Accountants. The Accountants will resolve any disputed item within 20 days of having the item referred to them pursuant to such procedures as they may establish. The parties will act timely and promptly to implement the decision of the Accountants. The costs, fees and expenses of the Accountants will be borne 50% by Omega and 50% by AHCC. Without the prior written consent of AHCC, Omega will not permit an Acquired Entity to file any amended tax return for a Straddle Tax Period or for a period that ended on or before the Closing Date. In the case of any taxes that are payable for a Straddle Tax Period, for purposes of preparing the tax accrual on the Effective Date Balance Sheets, the taxable year of the Company which includes the Effective Date will be treated as closing on (and including) the Effective Date.

 

Section 4.   Representations And Warranties Of Optionors

 

Optionors jointly and severally represent and warrant to Omega as follows:

 

(a)  Status of the Interests. The American Entities are duly organized as the type of entity set forth on Exhibit A-1 attached hereto and are validly existing and in good standing under the laws of the State of Ohio. The authorized equity securities of each of the American Entities is as set forth on Exhibit A-1. All of the Interests and other securities issued and outstanding of each of the American Entities are owned of record and beneficially as set forth on Exhibit A-1. Each Optionor owns and holds good and marketable title to such Interests as set forth on Exhibit A-1 free and clear of any encumbrance of any kind. The Interests are not subject to any restrictions on transferability other than restrictions imposed by(i) the applicable articles of incorporation, (ii) the applicable partnership or operating agreements, (iii) the applicable codes of regulations, (iv) the 1933 Act and (v) the applicable state and federal securities Laws. The American Entities do not have outstanding any rights, warrants or options to acquire securities of the American Entities or any convertible or exchangeable securities and no Person has any right to acquire any securities of the American Entities. All of the Interests have been duly authorized and duly and validly issued and, to the extent applicable, are fully paid and non-assessable, and none were issued in violation of the 1933 Act, any other Legal Requirement, any preemptive rights, rights of first refusal or other restrictions of any kind.

 

(b)  Validity and Conflicts. This Agreement is, and each document to be executed by the Optionors pursuant hereto will be, the legal, valid and binding obligations of the Optionors and the American Entities, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to the enforcement of creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The execution of this Agreement and the consummation of the transactions contemplated hereby in accordance with the terms hereof (1) have been approved by all necessary action of AHCC, the American Entities and Leatherman LLC as may be required under AHCC’s, the American Entities’ or Leatherman LLC’s articles of incorporation, code of regulations, operating agreement or other applicable organizational documents ("Charter Documents"), and (2) do not and will not directly or indirectly (with or without notice or lapse of time) (i) result in a breach of the terms and conditions of, nor constitute a default under, or violation of, such Charter Documents or any law, regulation or court order or contravene, conflict with or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any mortgage, note, bond, indenture, agreement, license or other instrument or obligation to which AHCC, the American Entities or Leatherman LLC is now a party or by which any of the Properties may be bound or affected (excluding the agreements relating to the Omega Mortgage Loans and agreements and other instruments relating to Debt that will be paid off, and for which there will be no remaining obligations of any kind, on or before the Closing Date), (ii) cause Omega or any American Entities to become subject to or become liable for the payment of any tax other than the conveyance fee to be paid by the Optionors under Section 3(1) of this Agreement, or (iii) result in the imposition or creation of any encumbrance upon or with respect to the Properties or any of the assets owned or used by any of the American Entities. Any provision of this Agreement to the contrary notwithstanding, the Optionors make no representation or warranty regarding, in general, whether the transactions contemplated by this Agreement comply with the antitrust laws and they specifically do not represent or warrant whether they comply with the HSR Act.

 

(c)  Authority. AHCC, Leatherman LLC and the American Entities have full corporate, limited liability company or partnership (as applicable) right, power, authority and capacity to execute and to deliver this Agreement and all related documents, and (subject to the last sentence of Section 4(b)) to carry out the transactions contemplated hereby and thereby. The American Entities have full corporate, limited liability company or partnership (as applicable) right, power, authority and capacity to own the Property and to conduct their Business as the same is now being conducted.

 

(d)  Financial Statements. True and correct copies of (1) the combined balance sheets and the related combined statements of operations, changes in deficits and cash flows for AHCC and its subsidiaries for the calendar year ended December 31, 2003 (the "Audited AHCC Statements"), (2) and the combined balance sheets and the related combined statements of operations for AHCC and its subsidiaries for the six months ended June 30, 2004, (the "Unaudited AHCC Statements," and, together with the Audited AHCC Statements, the "AHCC Financial Statements"), and (3) the unaudited combined balance sheet and the related combined statements of operations for the American Entities for the six months ended June 30, 2004 (the "American Financial Statements," and collectively with the AHCC Financial Statements, the "Financial Statements"), are attached as Exhibit L. The Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied ("GAAP"), fairly present the financial position, results of operations, changes in stockholders’ equity and cash flows, and accurately set forth in all material respects as and to the extent required by GAAP the results of the operations of the American Entities for the periods covered thereby except that the unaudited Financial Statements do not include footnotes, changes in stockholder equity or cash flows, or any provision for accrued municipal income tax, and the interim Financial Statements may not reflect normal recurring year-end adjustments. Except as and to the extent reflected in the Financial Statement of each American Entity, the American Entity did not have, as of the applicable Financial Statement date, any material liabilities, and the American Entities have not incurred any liabilities since the applicable Financial Statement date except (A) current liabilities incurred in the ordinary course of the Business and consistent with past practice, and (B) any accrued income tax and property tax liabilities.

 

(e)  Books and Records. The books of account, minute books, stock record books and other records of the American Entities, all of which have been made available to Omega, do not contain any material errors or omissions that could cause any material damage to Omega. At the Closing, all of those books and records will be in the possession of the American Entities.

 

(f)  Absence of Certain Changes. Since the December 31, 2003, except as set forth in this Agreement, each American Entity has conducted its Business in the ordinary course consistent with past practices and: 

 

	(1)  	to the Knowledge of the Sellers, there has not been any damage, destruction or other casualty loss (whether or not covered by insurance), condemnation or other taking affecting the Property of an American Entity;

 

	(2)  	there has not been any change in any method of accounting or accounting practice by an American Entity; or

 

	(3)  	except as set forth on Exhibit M, no American Entity has engaged in any of the activities prohibited by Section 3(d), provided that for purposes of this Section 4(g), any references to timing in Section 3(d) should be interpreted to mean the period from December 31, 2003 to the date of this Agreement.

 

(g)  Intellectual Property. The American Entities have no registered trademarks, service marks, patents, patent applications, inventions or discoveries that may be patentable, registered copyrights (in both published works and unpublished works), rights in mask works, owned, used, or licensed as licensee or licensor (collectively, the "Intellectual Property") nor do they use any such Intellectual Property in connection with the Business.

 

(h)  Title. The Optionors have good title to the Interests free and clear of all encumbrances and restrictions other than those created by the Charter Documents. The American Entities have good and marketable fee simple title to the Property free and clear of all liens, charges and encumbrances other than liens for taxes that are not yet due and payable, restrictions imposed by zoning ordinances, and the encumbrances and other items reflected in the Title Commitment. Optionors are leasing all of the Properties to Essex.

 

(i)  Claims and Proceedings.

 

	(1)  	There are no outstanding Orders of any Governmental Body against or involving the American Entities or the Properties.

 

	(2)  	There are no actions, suits, claims or counterclaims or legal, administrative or arbitral proceedings or investigations (collectively, "Claims") (whether or not the defense thereof or liabilities in respect thereof are covered by insurance), pending or threatened against or involving the American Entities or any of the Properties.

 

(j)  Taxes and Tax Returns. All tax returns, reports and filings of any kind or nature required to be filed by the American Entities have been properly completed and timely filed, or extensions for the filing thereof have been timely secured, with all such filings being in compliance with all applicable requirements and all taxes due with respect to the American Entities have been timely paid. There are no tax liens for past due taxes on or pending against any of the American Entities or any of their Properties, and there are no pending or threatened tax audits of AHCC or any American Entity. There are no presently outstanding waivers or extensions or requests of an American Entity for waiver or extension of the time within which a tax deficiency may be asserted or assessed. The charges, accruals and reserves with respect to taxes (other than municipal income taxes) on the respective books of each American Entity are adequate (determined in accordance with GAAP) and are at least equal to that American Entity’s liability for taxes (other than municipal income taxes). There exists no proposed tax assessment against any American Entity, except for property taxes that are not yet due and payable. All taxes that any American Entity is or was required by any Legal Requirement to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Body. All tax returns filed by (or that include on a consolidated basis) any American Entity are true, correct and complete. There is no tax sharing agreement that will require any payment by any American Entity after the date of this Agreement.

 

(k)  Compliance with Laws. Neither the Optionors nor the American Entities have received written or, to the Optionors’ Knowledge, verbal notice from any licensing or certifying agency supervising or having authority over the Properties, requiring them to be reworked or redesigned so as to conform to or comply with any existing Law except where the requirement either (i) has been fully satisfied prior to the Effective Date, or (ii) has been the subject of a valid written waiver issued by the applicable licensing or certifying agency. To the Optionors’ Knowledge, no American Entity is or has been in the last twelve months in violation in any material respect of any Orders or Laws of any Governmental Bodies affecting the American Entity or its Property. No event has occurred or circumstance exists that (with or without notice or lapse of time) may constitute or result in a violation by an American Entity of, or a failure on the part any American Entity to comply with, any Legal Requirement (subject to the last sentence of Section 4(b)) or may give rise to any obligation on the part of any American Entity to undertake, or to bear all or any portion of the cost of, any remedial action of any nature.

 

(1)  Environmental Issues. Except in accordance, and in compliance, with any and all applicable local, state and federal governmental Laws relating to environmental matters, and hazardous materials, substances or wastes ("Environmental Laws"), the Optionors and the American Entities have not Released into the environment any such hazardous materials, substances or wastes or caused the same to be so Released into the environment or discharged, placed or disposed of at, on or under any of the Properties other than to the extent the same will not have a Material Adverse Effect on the condition, financial or otherwise, of the affected Property. To the Optionors’ Knowledge and except as otherwise disclosed in the environmental assessments listed on Exhibits N and S (collectively, the "Environmental Reports"), or as otherwise disclosed on Exhibit S, with respect to the Properties, (i) except to the extent permitted by applicable Environmental Laws, no hazardous materials, substances or wastes are located on or at the Properties or have been Released into the environment or discharged, placed or disposed of in, on or under the Properties, (ii) except to the extent permitted by applicable Environmental Laws, no underground storage tanks are or have been located at the Properties, (iii) none of the Properties were used as a dump for waste material, and (iv) each of the Properties complies with, and has complied with, all Environmental Laws in all material respects. Optionors and the American Entities have not received any written notice from any Governmental Body or any written complaint from any third party with respect to an American Entity’s alleged noncompliance with, or potential liability under, any Environmental Laws at any of the Properties which remains unresolved as of the Effective Date. All written assessments prepared by or on behalf of the Optionors or the American Entities of the hazardous waste or environmental conditions at the Properties which are in the possession of the Optionors or the American Entities have been made available to Omega. Notwithstanding any other provision of this Agreement to the contrary, the representations and warranties contained in this Section 4 will not be Breached as a result of any environmental condition existing at any of the Properties of which Omega receives notice pursuant to the information provided to it in any environmental assessment delivered to Omega as mortgagee of any Property or prepared in connection with the 1997 Agreements, or this Agreement and the sale of the Interests or Properties hereunder including, without limitation, the Environmental Reports. Optionors will have no liability to the Optionees for any violation of any Environmental Law, or the Release onto the Properties or any property contiguous thereto, of any hazardous materials, wastes, or substances, occurring after the commencement of the Essex Lease, unless such violation or Release was attributable to actions of the Optionors or the American Entities, or the Optionors have Knowledge thereof and do not disclose the same to Omega by delivery of an environmental assessment or otherwise.

 

(m)  Necessary Action. Subject to the last sentence of Section 4(b), AHCC, the American Entities and Leatherman LLC have duly and properly taken or obtained or caused to be taken or obtained, or prior to Closing will have duly and properly taken or obtained or caused to be taken or obtained, all action necessary for AHCC and Leatherman LLC to enter into and to deliver this Agreement and any and all documents and agreements executed by AHCC and Leatherman LLC in connection herewith or in furtherance hereof and to carry out the terms hereof and thereof and the transactions contemplated herein and therein. No consent of any third party is or will be necessary to authorize the execution, delivery and performance of this Agreement and any documents and agreements executed by the Optionors in connection herewith or with the consummation of the transactions contemplated herein.

 

(n)  Litigation. There is no, nor have the Optionors nor the American Entities received written notice of, any litigation, suit, claim, action, administrative investigation or other proceeding pending or, to the Knowledge of the Optionors, threatened by or against the American Entities, at law or in equity, by or before any Governmental Body, or by or on behalf of any third party where the claim is unresolved. To the Knowledge of the Optionors, no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such proceeding. Except as set forth on Exhibit O, the American Entities are not a party to, nor are the Optionors and the American Entities nor any of the Properties bound by, any orders, judgments, injunctions, decrees or settlement agreements under which it or they may have continuing obligations which are likely to materially restrict or affect the present business operations of any or all of the Properties. The rights or abilities of the Optionors and the American Entities to consummate the transactions contemplated herein have not been challenged by any Governmental Body or any other person. 

 

(o)  Sensitive Payments. The American Entities have not (i) made any contributions, gifts, bribes, rebates, payoffs, influence payments, kickbacks or other payments to any Person, public or private, regardless of form, whether in money, property or services where either the payment or the purpose of such contribution, payment or gift is illegal under the laws of the United States or the jurisdiction in which made, (ii) established or maintained any unrecorded fund or asset for any purpose or made any false or artificial entries on its books, (iii) given or received any payments or other forms of remuneration in connection with the referral of patients which would violate the Medicare/Medicaid Anti-kickback Law, Section 1128(b) of the Social Security Act, 42 USC Section 1320a-7b(b) or any analogous state statute, (iv) made any payments to any person with the intention or understanding that any part of such payment was to be used for any purpose other than that described in the documents supporting the payment, or (v) established or maintained any fund or asset that has not been recorded in the books and records of the American Entities.

 

(p)  The Properties. The Optionors have no Knowledge of the failure of the buildings and other improvements on any of the Properties to comply with the requirements of any laws at the time of construction and any ordinances, rules, regulations and restrictions of record applicable thereto. Except as disclosed in Exhibit P, Optionors have no Knowledge of any latent material defect or deficiency with regard to the structures, roofs, soil, fixtures, plumbing, mechanical, electrical or other systems on any Property which would substantially impair the use or value of such Property. Except for the representations made in this Section 4(p), the Optionors are selling the Properties hereunder AS IS and disclaim any implied warranties with respect thereto.

 

(q)  Disclosure. No representation or warranty by or on behalf of the Optionors contained in this Agreement and no statement contained in any certificate, list, Exhibit, or other instrument furnished or to be furnished to Omega pursuant hereto contains or will contain any untrue statement of a material fact, or omits or will omit to state any material facts which are necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. 

 

(r)  Employees. The American Entities currently have no employees and have not at any time within the last five (5) years prior to the Closing Date had any employees or utilized the services of any individuals who would be considered "leased employees" as defined in Section 414(n) of the Internal Revenue Code ("Code"). Further, the American Entities have not at any time within the last five (5) years prior to the Closing Date sponsored or had any obligation with respect to any "employee benefit plan" as defined in Section 3(3) of ERISA. In addition, with respect to any "employee benefit plan" sponsored by or under which any affiliate of the American Entities (within the meaning of Section 4001 of ERISA or Section 414 of the Code) has or had an obligation to contribute: (i) within the last five (5) years prior to the Closing Date no "employee pension benefit plan" as defined in Section 3(2) of ERISA that was subject to Title IV of ERISA has been terminated, so that any liability or insufficiency will remain outstanding or unpaid as of the Closing Date; (ii) within the last five (5) years prior to the Closing Date no such affiliate has withdrawn from any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA, so that any liability or insufficiency will remain outstanding or unpaid as of the Closing Date; and (iii) no proceedings to terminate or withdraw from any such plan have been initiated, and no event described in ERISA Sections 4043, 4062(e), 4063 or 4069, and applicable regulations thereunder, has occurred or will occur with respect to any such plan prior to or as a result of the Closing.

 

(s)  Material Adverse Change. Since December 31, 2003, there has not been any material adverse change in the Properties or condition of any American Entity.

 

(t)  Contracts. The American Entities are not parties to any contracts other than the Essex Lease, those contracts listed on Exhibit Q, and the instruments relating to (i) the Omega Mortgage Loans and (ii) the other Debt of the American Entities to be paid off on or before the Closing.

 

(u)  Lease. Except as disclosed on Exhibit R, the Essex Lease is the only lease or other agreement by which a party has been granted a right to occupy the Properties.

 

Section 5.   Omega Representations And Warranties

 

Omega hereby warrants and represents to AHCC that:

 

(a)  Status of Omega. Omega is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland.

 

(b)  Validity and Conflicts. This Agreement is, and all documents to be executed by Omega pursuant hereto will be, the legal, valid and binding obligations of Omega, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to the enforcement of creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The execution of this Agreement and the consummation of the transactions contemplated herein have been approved by the Board of Directors of Omega and do not and will not result in a breach of the terms and conditions of nor constitute a default under or violation of, the articles of incorporation or bylaws of Omega or any law, regulation, court order, mortgage, note, bond, indenture, agreement, license or other instrument or obligation to which Omega is now a party or by which any of its assets may be bound or affected.

 

(c)  Authority. Omega has full corporate right, power, capacity and authority to execute and to deliver this Agreement and all related documents, and to carry out the transactions contemplated herein and therein.

 

(d)  Necessary Action. Omega has duly and properly taken or obtained or caused to be taken or obtained, or prior to Closing will have duly and properly taken or obtained or caused to be taken or obtained, all action necessary for Omega (i) to enter into and to deliver this Agreement and any and all documents and agreements executed by Omega in connection herewith or in furtherance hereof and (ii) to carry out the terms hereof and thereof and the transactions contemplated herein and therein, which action shall include, but not be limited to, obtaining the consent of the Board of Directors of Omega. No consent of any third party is or will be necessary nor any other action by or on behalf of Omega is or will be necessary, to authorize the execution, delivery and performance of this Agreement and any documents and agreements executed by Omega in connection herewith or consummation of the transactions contemplated herein.

 

(e)  Securities Representations. Any Optionee acquiring Interests hereunder is (i) making its decision to acquire such Interests based upon independent investigation of the American Entity the Interests of which are being acquired and Omega and such Optionee have been given an opportunity to examine all documents and to ask questions of, and receive answers from, the management of AHCC and the American Entity and (ii) making the acquisition for its own account and not with a view to distribution within the meaning of Section 2(11) of the 1933 Act.

 

(f)  HSR Act. Neither the Optionors nor Omega is required to notify the Department of Justice of the proposed transactions contemplated by this Agreement pursuant to the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. Section 18a ("HSR Act").

 

(g)  Environmental Assessments. Set forth on Exhibit S attached is a complete list of all the updated environmental assessments received by Omega with respect to the Properties in anticipation of executing this Agreement. 

 

Section 6.   Optionors’ And American Entities’ Conditions

 

All obligations of the Optionors and the American Entities under this Agreement are subject to the fulfillment, prior to or as of the Closing Date, of each of the following conditions any one or more of which may be waived by AHCC in writing:

 

(a)  Representations and Warranties. All of the representations and warranties of Omega contained in this Agreement or in any certificate or document delivered in connection with this Agreement or the transaction contemplated herein (considered collectively) and each of these representations and warranties (considered individually) shall have been true and correct in all material respects at and as of the date of this Agreement and shall be true in all material respects as of the Closing Date as though such representations and warranties were then again made, other than any representations or warranties which specifically relate to an earlier period, which shall have been true as of the date thereof. Each such representation and warranty that contains an express materiality qualification shall have been true and accurate in all respects as of the date of this Agreement and shall be true and accurate in all respects as of the Closing Date as if then made.

 

(b)  Compliance with Obligations. Omega shall have performed all of its obligations under this Agreement that are to be performed by it prior to or as of the Closing Date.

 

Section 7.   Optionees’ Conditions

 

All obligations of the Optionees under this Agreement are subject to the fulfillment of each of the following conditions, any one or more of which may be waived in writing by Omega:

 

(a)  Representations and Warranties. All of the representations and warranties of Optionors contained in this Agreement or in any certificate or document delivered in connection with this Agreement or the transaction contemplated herein (considered collectively), and each of these representations and warranties (considered individually) shall have been true and correct in all material respects at and as of the date of this Agreement, and (except as contemplated hereby) shall be true and correct in all material respects as of the Closing Date as though such representations and warranties were then again made, other than any representations or warranties which specifically relate to an earlier period, which shall have been true as of the date thereof. Each such representation and warranty that contains an express materiality qualification shall have been true and accurate in all respects as of the date of this Agreement and shall be true and accurate in all respects as of the Closing Date as if then made. The taking by the Optionors or the American Entities of any of the actions permitted by Section 3(f) are actions contemplated by this Agreement so that they will not cause any of the conditions to the Optionees’ obligations not to be satisfied even though the representation and warranty as to Interest and Property ownership in Section 4(a) and (h) may not be true as of the Closing Date.

 

(b)  Compliance with Obligations. Optionors and American Entities shall have executed and delivered the Purchase Agreements to Omega and performed all of their obligations under this Agreement that are to be performed by them prior to or as of the Closing Date. The American Entities shall not be in default under the Essex Lease which default is not cured by the Closing Date.

 

(c)  Title Insurance Policies. Owner’s title insurance policies (the "Title Insurance Policies") or updated title commitment for each Property shall have been issued to Omega or its designated Optionee with respect to each of the Properties with values equal to the fair market values of each parcel of Property as provided herein and subject only to:

 

(i)    those exceptions reflected on the Title Commitments;

	 	(ii)	those exceptions that do not materially and adversely effect Omega’s use of the Properties;

	 	(iii)	the Essex Lease, and all real estate taxes, assessments, water charges, requirements of municipal or other governmental authorities, or other covenants, agreements, matters or things which are the obligation of Essex to pay, comply with, conform to or discharge under the provisions of the Essex Lease, it being understood that no lien, encumbrance, violation, charge or condition shall be deemed to be a failure of this condition if the same is due to any act or omission of Essex, or if Essex is obligated to assume, discharge, dispose of, or rectify the same under any of the provisions of the Lease ("Essex Liabilities");

	 	(iv)	standard exceptions to title set forth in the standard policy of title insurance in use in Ohio at the time of Closing, but only to the extent such exceptions relate to the acts or omissions of Essex; and

	 	(ix)	any liens or other matters created by or arising out of the wrongful acts or negligence of Omega or Essex under the Essex lease.

(d)  Closing Documents. Optionors shall have caused the documents and instruments required by Section 3(l) to be delivered to Omega.

 

(e)  Essex Estoppel. Optionors shall have obtained from Essex an executed Estoppel Certificate in the form attached hereto as Exhibit T.

 

Section 8.   Termination

 

(a)  Termination. This Agreement may be terminated by Omega or AHCC upon the following conditions:

 

	(1)  	By mutual consent of the parties;

 

	(2)  	By Omega if the conditions to Closing set forth in Section 7 have not been satisfied or waived by the Closing Date;

 

	(3)  	By AHCC if the conditions to Closing set forth in Section 6 have not been satisfied or waived by the Closing Date; and

 

	(4)  	By a non-defaulting party, in the event of a material Breach by the other party. 

 

(b)  Opportunity to Cure. Neither party to this Agreement may claim termination or pursue any other remedy referred to in this Section 8 on account of a Breach without first giving such other party written notice of such Breach and not less than ten days within which to cure such Breach. Neither party to this Agreement may claim termination on account of a failure to satisfy a condition under Sections 6 or 7 unless the party asserting such failure provides the other party written notice thereof and the other party has 10 days in which to satisfy such condition. The Closing Date shall be postponed if necessary to afford such opportunity to cure or satisfy a condition.

 

(c)  Remedies Upon Termination. Each party’s right of termination under Section 8(a) is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of such right of termination shall not be an election of remedies. Notwithstanding the foregoing sentence, in the event of a termination under Section 8(a)(4) due to a material Breach by Omega not cured following written notice within the applicable cure period, then (i) the Option Agreement dated October 30, 1997 between AHCC, the American Entities and Omega will be terminated, (ii) the Omega Mortgage Loans shall be amended so that they may be prepaid without penalty, and (iii) the Performance Deposit shall be immediately delivered to Optionors as their sole and exclusive right to damages resulting from such material Breach. OPTIONORS AND OMEGA ACKNOWLEDGE AND AGREE THAT (i) THE AMOUNT OF THE PERFORMANCE DEPOSIT IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE SUFFERED AND COSTS INCURRED BY OPTIONORS AS A RESULT THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO A DEFAULT OF OMEGA UNDER THIS AGREEMENT; (ii) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY OPTIONORS AS A RESULT OF SUCH WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF OMEGA UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE; (iii) OMEGA SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE PERFORMANCE DEPOSIT IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF OMEGA UNDER THIS AGREEMENT; AND (iv) THE AMOUNT OF THE PERFORMANCE DEPOSIT SHALL BE AND CONSTITUTE VALID LIQUIDATED DAMAGES.

 

(d)  Termination of 1997 Agreements. If the Closing of the sale of the Interests and/or the Properties is consummated after an exercise of the Put by the Optionors, the Agreement dated October 10, 1997 and the Option Agreement dated October 30, 1997 between AHCC, the American Entities and Omega (the "1997 Agreements") will be terminated and the parties will be relieved of all obligations thereunder. In such event, the parties will for tax purposes treat the $6.9 million payment made by Omega to AHCC under the Option Agreement as part of the cost of the Property and Interests acquired hereunder, provided, however, that the $6.9 million shall have no effect on the calculation of the Adjusted Owners’ Equity.

 

Section 9.   Indemnification

 

(a)  Survival. All representations, warranties, covenants and obligations in this Agreement and any certificate or document delivered pursuant to this Agreement shall survive the Closing and the consummation of the transactions contemplated by this Agreement, subject to Section 9(e). The right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants and obligations shall not be affected by any investigation (including any environmental investigation or assessment) conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or obligation. The waiver of any condition based upon the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants and obligations.

 

(b)  Indemnification and Reimbursement by Optionors. Optionors, jointly and severally, will indemnify and hold harmless Omega and the other Optionees, and their respective directors, officers, managers, employees, agents, consultants, advisors, accountants, financial advisors, legal counsel or other representatives, shareholders, subsidiaries and affiliates (collectively, the "Omega Indemnified Persons"), and will reimburse the Omega Indemnified Persons for any loss or damage (subject to the limitations set forth in Section 9(d), (e), (f), (g), and (h)) suffered by them (collectively, "Damages"), arising from or in connection with:

 

	(1)  	any Breach of any representation or warranty made by the Optionors or the American Entities;

 

	(2)  	any Breach of any covenant of the Optionors;

 

	(3)  	any Liability arising out of the ownership or operation of the American Entities, the Transfer Entities and the Properties prior to the Closing Date other than any Omega Mortgage Loans, liens for taxes and assessments not yet due and payable, and, in the case of a sale of an Interest, any Liability reflected on the Effective Date Balance Sheet for the American Entity the Interest in which was sold;

 

	(4)  	any brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding made, or alleged to have been made, by any Person with the Optionors or the American Entities (or any Person acting on their behalf) in connection with any of the transactions contemplated by this Agreement;

 

	(5)  	any services provided by the American Entities, in whole or in part, prior to the Closing Date;

 

	(6)  	any noncompliance with any bulk sales or similar laws or fraudulent transfer law in respect of the transactions contemplated by this Agreement or any transfer tax due as a result of the transactions contemplated by this Agreement; or

 

	(7)  	any Optionor Assumed Liabilities and any Optionor Retained Liabilities.

 

(c)  Indemnification and Reimbursement by Omega. Omega will indemnify and hold harmless the Optionors, and will reimburse the Optionors, for any Damages arising from or in connection with:

 

	(1)  	any Breach of any representation or warranty made by Omega;

 

	(2)  	any Breach of any covenant of Omega;

 

	(3)  	any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Omega (or any Person acting on Omega’s behalf) in connection with any of the transactions contemplated by this Agreement; 

 

	(4)  	any Liabilities arising out of the ownership and operation of the Properties from and after the Closing Date, including a breach of the Essex Lease, other than any Retained Liabilities or Liabilities for which the Omega Indemnified Persons may be indemnified pursuant to Section 9(b); or

 

	(5)  	any Omega Mortgage Loan or other liability assumed by an Optionee and reflected on the Effective Date Balance Sheet.

 

(d)  Limitations on Amount.

 

	(1)  	The Optionors shall have no liability (for indemnification or otherwise) with respect to claims under Section 9(b) until the total of all Damages with respect to such matters exceeds $250,000 and then only for the amount by which such Damages exceed $250,000. However, this Section 9(d)(1) will not apply to a claim for Breach of the representations and warranties made in Section 4(a) as to the authorization, issuance and ownership of the Interests, claims under Section 9(b)(2), (3), (4), (6) and (7), or to any Breach of any Optionor representation and warranty of which the Optionors had Knowledge at any time prior to the date on which such representation and warranty is made and the Optionors will be jointly and severally liable for all Damages with respect to such Breaches. 

 

	(2)  	Omega will have no liability (for indemnification or otherwise) with respect to claims under Section 9(c) until the total of all Damages with respect to such matters exceeds $250,000 and then only for the amount by which such Damages exceed $250,000. However, this Section 9(d)(2) will not apply to claims under Section 9(c)(2), (3), (4) and (5) or to any Breach of any Omega representation and warranty of which Omega had Knowledge at any time prior to the date on which such representation and warranty is made, and Omega will be liable for all Damages with respect to such Breaches.

 

	(3)  	After the Closing, the Optionors’ on the one hand, and the Optionees’ on the other hand, maximum liability for indemnification hereunder is limited to Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00), except that there will be no limit upon the Optionor’s liability for a Breach of the representations and warranties made in Section 4(a) as to the authorization, issuance and ownership of the Interests.

 

(e)  Exclusive Remedy; Time Limitations.

 

	(1)  	After the Closing, a party’s sole monetary remedy for a Breach, including a breach of the Purchase Agreements or any other instrument delivered hereunder, will be the indemnification provisions of this Section 9, except in the event of a fraudulent act or omission.

 

	(2)  	If the Closing occurs, Optionors will have liability (for indemnification) with respect to any Breach of (i) such matters specifically outlined in Section 9(b)(3) through (7) only if on or before the fifth anniversary of the Closing Date, Omega notifies Optionors of a claim for Breach thereof specifying the factual basis of the claim in reasonable detail to the extent then known by Omega or (ii) a covenant to be performed or complied with prior to the Closing Date or a representation or warranty, only if on or before the first anniversary of the Closing Date, Omega notifies Optionors of a claim for Breach thereof specifying the factual basis of the claim in reasonable detail to the extent then known by Omega, except that if the claim relates to a Breach of the representations and warranties made in Section 4(a) as to the authorization, issuance and ownership of the Interests, the claim may be made at any time.

 

	(3)  	If the Closing occurs, Omega will have liability for indemnification with respect to any Breach of (i) a covenant to be performed or complied with prior to the Closing Date or such other matters specifically outlined in Section 9(c)(2) through (5), only if on or before the fifth anniversary of the Closing Date, Optionors notify Omega of a claim for Breach thereof specifying the factual basis of the claim in reasonable detail to the extent then known by Optionors or (ii) a representation or warranty, only if on or before the first anniversary of the Closing Date, Optionors notify Omega of a claim for Breach thereof specifying the factual basis of the claim in reasonable detail to the extent then known by Optionors.

 

(f)  Third-party claims.

 

	(1)  	Promptly after receipt by a Person entitled to indemnity under Section 9(b) or 9(c) (an "Indemnified Person") of notice of the assertion of a third-party claim against it, such Indemnified Person shall give notice to the Persons obligated to indemnify under such Section (an "Indemnifying Person") of the assertion of such third-party claim, provided that the failure to notify an Indemnifying Person will not relieve the Indemnifying Person of any liability that it may have to any Indemnified Person, except to the extent that the Indemnifying Person demonstrates that the defense of such third-party claim is prejudiced by the Indemnified Person’s failure to give such notice.

 

	(2)  	If an Indemnified Person gives notice to the Indemnifying Person pursuant to Section 9(f)(1) of the assertion of a third-party claim, the Indemnifying Person shall be entitled to participate in the defense of such third-party claim and, to the extent that it wishes (unless (A) the Indemnifying Person is also a Person against whom the third-party claim is made and the Indemnified Person’s counsel opines in writing to the Indemnifying Person that joint representation would be inappropriate because of a conflict of interest or (B) the Indemnifying Person fails to provide reasonable assurance to the Indemnified Person of its financial capacity to defend such third-party claim (the Optionors will be deemed to provide reasonable assurance as to their financial capacity if they provide Omega with a financial statement prepared by AHCC’s regular independent pubic accounting firm demonstrating compliance with the $5 million Net Worth covenant contained in Section 3(a)), to assume the defense of such third-party claim with counsel reasonably satisfactory to the Indemnified Person. (Omega and the Optionees acknowledge that Buckingham, Doolittle & Burroughs, LLP is satisfactory to it as counsel for the defense of a claim hereunder and AHCC and the Optionors acknowledge that Dykema Gossett PLLC is acceptable to them as counsel to defend a third-party claim described herein.) After notice from the Indemnifying Person to the Indemnified Person of its election to assume the defense of such third-party claim, the Indemnifying Person shall not, so long as it diligently conducts such defense, be liable to the Indemnified Person under this Section 9 for any fees of other counsel or any other expenses with respect to the defense of such third-party claim, in each case subsequently incurred by the Indemnified Person in connection with the defense of such third-party claim. If the Indemnifying Person assumes the defense of a third-party claim, (A) such assumption will conclusively establish for purposes of this Agreement that the claims made in that third-party claim are within the scope of and subject to indemnification, and (B) if the settlement involves more than the payment of money by the Indemnifying Person or Persons and would adversely effect the Indemnified Person, no compromise or settlement of such a third-party claim may be effected by the Indemnifying Person without the Indemnified Person’s written consent, which will not be unreasonably withheld. 

 

	(3)  	Notwithstanding the foregoing, if an Indemnified Person determines in good faith that there is a reasonable probability that a third-party claim may materially adversely affect it or its affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnified Person may, by notice to the Indemnifying Person, assume the exclusive right to defend, compromise or settle such third-party claim, but the Indemnifying Person will not be bound by any determination of any third-party claim so defended for the purposes of this Agreement or any compromise or settlement effected without its consent (which may not be unreasonably withheld).

 

	(4)  	Notwithstanding any other provision of this Agreement (including Section 10(l)), Optionors hereby consent to the nonexclusive jurisdiction of any court in which any action, arbitration, audit, hearing, investigation, litigation or suit (a "Proceeding") in respect of a third-party claim is brought against any Omega Indemnified Person for purposes of any claim that an Omega Indemnified Person may have under this Agreement with respect to such Proceeding or the matters alleged therein and agree that process may be served on Optionors with respect to such a claim anywhere.

 

	(5)  	With respect to any third-party claim subject to indemnification under this Section 9:

 

	(i)  	both the Indemnified Person and the Indemnifying Person, as the case may be, shall keep the other Person fully informed of the status of such third-party claim and any related Proceedings at all stages thereof where such Person is not represented by its own counsel, and 

 

	(ii)  	the parties agree (each at its own expense) to render to each other such assistance as they may reasonably require of each other and to cooperate in good faith with each other in order to ensure the proper and adequate defense of any third-party claim.

 

(g)  Mitigation. Each Indemnified Person acknowledges that the fact that it is indemnified for a Breach under this Section 9 does not obviate its obligation under Ohio common law to mitigate any Damages suffered by it as a result of such a Breach.

 

(h)  Insurance. An Indemnifying Person hereunder will have no liability for indemnification with respect to the matters described in Section 9(a) or (b) to the extent that the Indemnified Person or Indemnifying Person may seek indemnification therefor pursuant to the terms of the Essex Lease from Essex or Essex’s applicable insurance company.

 

(i)  Other Claims. A claim for indemnification for any matter not involving a third-party claim may be asserted by notice to the party from whom indemnification is sought and shall be paid promptly after such claim is either accepted by all of the Indemnifying Persons or resolved by arbitration conducted in accordance with Section 10(1).

 

Section 10.   Miscellaneous

 

(a)  Notices. Any notice, request or other communication to be given by any party hereunder shall be in writing and shall be sent by registered or certified mail, postage prepaid, by overnight delivery, hand delivery or facsimile transmission to the following addresses:

 

To Optionors:            American Health Care Centers, Inc.

200 Smokerise Drive

Wadsworth, Ohio 44281

Attn: Mr. Neil R. Wenger

Telephone No.: 330/336-6684

Facsimile No.: 330/334-6711

 

With copy to:

(which shall not

constitute notice)        Buckingham, Doolittle & Burroughs, LLP

P.O. Box 1500

50 S. Main St.

Akron, Ohio 44308

Attn: Robert W. Malone

Telephone No.: 330/376-5300

Facsimile No.: 330/258-6559

 

To Optionees:            Omega Healthcare Investors, Inc.

9690 Deereco Road, Ste. 100

Timonium, MD 21093

Attn: C. Taylor Pickett

Telephone No.: 410/427-1720

Facsimile No.: 410/427-8820

 

With copy to:

(which shall not

constitute notice)        Dykema Gossett PLLC

39577 Woodward, Suite 300

Bloomfield Hills, MI 48304

Attn: Kyle R. Hauberg

Telephone No.: 248/203-0871

Facsimile No.: 248/203-0763

 

Notice to an American Entity must be provided to AHCC as its agent and AHCC’s counsel, except that after the Closing Notice to an Acquired Entity must be provided to Omega as agent and to Omega’s counsel. All Notices under this Agreement will be considered to be received by a party:

 

	(1)  	on the date delivered to that party, at the address for that party set forth above, regardless of the means of delivery; or

 

	(2)  	on the date sent by facsimile transmission (with electronic confirmation) to that party at the facsimile number for that party set forth above.

 

A copy of the notice or other communication to a party under this Agreement must be sent to the party’s counsel at the address set forth above. A Notice under this Agreement will be considered to be received if a party refuses to accept a Notice delivered to it. A party may change its address of facsimile number under this Agreement by giving the other parties and counsel notice of the change in the manner specified above. If a party changes the party’s address or facsimile number and does not notify the other parties in the manner specified above, a Notice will be deemed received three days after it is sent by U.S. regular mail, postage prepaid, to the party’s address set forth above, or such other address as to which the other parties have been notified in the manner specified above, except that if a party has actual knowledge of a different address it must also send the notice to such other address.

 

(b)  Successors and Assigns. No party may assign, directly or indirectly, its rights or obligations hereunder without the prior written consent of the other parties. Notwithstanding the foregoing, each American Entity shall have the right to transfer its Property and Liabilities to a Transfer Entity or other entity directly or indirectly owned and controlled by AHCC and the Leathermans so long as the entity formation documents (including articles of incorporation, codes of regulations and bylaws for corporations and articles of organization and operating agreements for limited liability companies are pre-approved and reasonably acceptable to the Optionees; such a transferee entity will be deemed to be a successor and a party to this Agreement as an American Entity. Notwithstanding the foregoing, Omega shall have the right to cause one of its wholly owned subsidiaries to purchase Interests or Properties hereunder provided that the subsidiary agrees in a writing acceptable to AHCC’s counsel to become a party to this Agreement, bound by all of its provisions including Sections 3(m) and 9(e). Omega’s designation of a subsidiary to make an acquisition hereunder does not relieve Omega of any of its obligations under this Agreement to the extent they are not performed by the subsidiary; Omega will continue to be jointly and severally liable therefor. This Agreement shall be binding upon and inure to the benefit of the successors, heirs, administrators, executors, and permitted assigns of the parties hereto.

 

(c)  Sole Agreement. This Agreement may not be amended or modified in any respect whatsoever except by an instrument in writing signed by the parties hereto. This Agreement, the Exhibits hereto and the documents executed and delivered pursuant hereto constitute the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior negotiations, discussions, writings and agreements between them.

 

(d)  Captions. The captions of this Agreement are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

 

(e)  Severability. Should any one or more of the provisions of this Agreement be determined to be invalid, unlawful or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

 

(f)  Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

 

(g)  Expenses. Except as otherwise specifically provided for in this Agreement, each party shall bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and other transactions contemplated hereby.

 

(h)  Third Party Beneficiary. Subject to Section 10(b), nothing in this Agreement express or implied is intended to and shall not be construed to confer upon or create in any person (other than the parties hereto) any rights or remedies under or by reason of this Agreement, including without limitation, any right to enforce this Agreement.

 

(i)  Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state or local statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" means "including without limitation."

 

(j)  Governing Law. THIS AGREEMENT AND ANY DOCUMENTS DELIVERED HEREUNDER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO. OMEGA AND AHCC CONSENT TO IN PERSONAM JURISDICTION BEFORE THE STATE AND FEDERAL COURTS OF OHIO AND AGREE THAT ALL DISPUTES CONCERNING THIS AGREEMENT BE HEARD IN THE STATE AND FEDERAL COURTS LOCATED IN OHIO. OMEGA AND AHCC AGREE THAT SERVICE OF PROCESS MAY BE EFFECTED UPON IT UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF OHIO AND IRREVOCABLY WAIVE ANY OBJECTION TO VENUE IN OHIO.

 

(k)  Confidentiality. Both parties recognize and agree that this Agreement, its terms and conditions, and materials delivered in connection with this Agreement are confidential. Neither party shall disclose any of the above described confidential information, or the existence of this Agreement, to any third party (except their lawyers and accountants who have agreed to maintain such confidentiality) without the prior written consent of the other party, except as required by law or judicial process. After the Closing, each party may issue such press releases or public statements relating to the transactions contemplated hereby as it determines appropriate or required by law, but each party shall consult with the other, and shall use best efforts to agree upon, the form and content, prior to issuing any press release, public announcement or statement with respect to this Agreement or the transactions contemplated hereby.

 

(l)  Arbitration of Disputes Following Closing. If a controversy shall arise between the parties hereto following Closing relating to this Agreement, any other agreement between the parties, any instrument or document delivered pursuant to or in connection with the Agreement, or the transactions contemplated by this Agreement (hereinafter, a "Controversy") which the parties are unable to settle between themselves, the Controversy shall be determined by arbitration, except as set forth under Section 9(f)(4). Such arbitration shall be conducted by three arbitrators selected in accordance with the procedures of the American Arbitration Association and in accordance with its rules and procedures. The decision of the arbitrators shall be final and binding, and enforceable in any court of competent jurisdiction. Such decision shall set forth in writing the basis for the decision, and in rendering such decision, the arbitrators shall not add to, subtract from or otherwise modify the provisions of this Agreement and any other agreements, documents and instruments executed pursuant to or in connection with this Agreement. The expense of the arbitration shall be divided equally between AHCC and Omega unless otherwise specified in the award. The prevailing party, as determined by the arbitrators, shall be entitled to recover its costs and expenses including attorney fees. Such arbitration shall be conducted in Toledo, Ohio. In any such arbitration, the parties shall be entitled to conduct discovery in the same manner as permitted under Federal Rules of Civil Procedure 27 through 37. No provision in this Section 10(l) shall limit the right of any party to this Agreement to obtain provisional or ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of any arbitration. The exercise of such a remedy does not waive the right of any party to arbitration. The Section shall not apply to any Controversy which may arise between the parties prior to the Closing.

 

(m)  Invalidity. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

 

(n)  Prevailing Party’s Fees. Notwithstanding anything elsewhere herein to the contrary, in the event of a dispute between Optionors and Omega arising out of or in connection with this transaction, neither Optionors nor Omega shall be required to indemnify or hold the other harmless against costs and expenses, including attorneys’ fees, incurred with respect to such dispute, but in any litigation, arbitration or other dispute resolution process entered into by the parties with respect to such dispute the parties shall jointly request that the prevailing party be awarded its costs, expenses and reasonable attorneys’ fees.

 

(o)  Conflicts. In the event of a conflict or inconsistency between the terms of this Agreement and the terms of any of the Purchase Agreements, the terms of this Agreement shall control.

 

 

SIGNATURE PAGE FOLLOWS

 

	 
 

 

 

 

	 	 	 
	

	 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

Omega Healthcare Investors, Inc.            American Health Care Centers, Inc.

on behalf of itself and the American Entities

 

By:/S/DANIEL. J. BOOTH        By:/S/NEIL R. WENGER

Its:Chief Operating Officer          Its: Executive Vice President

 

/S/ROBERT LEATHERMAN

Robert Leatherman

 

/S/PHYLLIS LEATHERMAN

Phyllis Leatherman

 

Leatherman Family Co., Ltd.

 

By:/S/ROBERT LEATHERMAN

Its: Member

 

Evergreen Manor Nursing Home, Inc.

By:/S/NEIL R. WENGER

Its: Vice President

Twin-M Nursing Center, Inc.

By:/S/NEIL R. WENGER

Its: Vice President

	
 

 

 

 

	 	 	 
	

	 

Appendix

 

The following capitalized words used in this Agreement and the singular, plural, and other derivatives thereof have the meanings set forth below:

 

"Agreement" or "this Agreement" shall mean, and the words "herein", "hereof" and "hereunder" and words of similar import shall refer to, this agreement as it from time to time may be amended.

 

"Breach" means (i) any inaccuracy in a representation or warranty when made or (ii) any failure to perform or comply with a covenant or other provision, in the case of either (i) or (ii) above, contained in this Agreement or any instrument, certificate or document delivered pursuant to this Agreement.

 

"Debt" means any bank financing or other interests-bearing indebtedness to which the American Entity whose Interest or Property is being sold is subject.

 

"ERISA" means the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

 

"Governmental Body" means a governmental entity or political subdivision thereof, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision, or any court or arbitrator.

 

"Interests" means the partnership interests of any American Entity that is a partnership, the shares of stock of any American Entity that is a corporation, or the membership interests of any American Entity that is a limited liability company.

 

"IRC" means the Internal Revenue Code of 1986, as amended.

 

"IRS" means the Internal Revenue Service.

 

"Knowledge" means, with respect to an Optionor, the actual knowledge of such Optionor, without independent investigation. With respect to a corporate entity, Knowledge means the actual knowledge of the corporation’s officers and, with respect to a partnership entity, the actual knowledge of the general partner or partners thereof.

 

"Law" means any material law, statute, code, ordinance, rule, regulation or other requirement.

 

"Legal Requirement" means any applicable federal, state, local, municipal, foreign, international, multinational or other constitution, law, ordinance, principle of common law, code, regulation, statute or treaty.

 

"Liability" means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.    

 

"Material Adverse Effect" means a material adverse effect on the business, financial condition, operations, or results of operations of an American Entity.

 

"1933 Act" means the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder.

 

"Order" means any order, judgment, injunction, award, citation, decree, consent decree or writ.

 

"Person" means an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity, including a government or political subdivision or an agency or instrumentality thereof.

 

"Property(ies)" means the real property interests owned by the American Entities as listed on Exhibit B, together with any assets owned by the American Entities which are directly related to the ownership (but not the operation of) the Properties.

 

"Put Period" means the 90-day period specified in Section 2(b) or, if the Put is exercised, the period beginning on the date of delivery of the Put Notice by the Optionors to Omega and ending on the Closing Date.

 

"Release" means the intentional or unintentional, spilling, leaking, disposing, discharging or disturbance of, or emitting, depositing, injecting, leaching, escaping, or any other release or threatened release of any hazardous substance in violation of any Environmental Law.

 

"Shares" means the shares of stock of any American Entity that is a corporation.

 

 

	
 

 

 

 

	 	 	 
	

	 

 

LIST OF EXHIBITS

 

Exhibit A-1    American Entities, Type of Entity, Authorized and Issued Equity Securities, Ownership, Description of Properties, Property Purchase Price, Interest Purchase Price and Target Owner’s Equity

 

Exhibit A-2    Calculation of Target Owner’s Equity

 

Exhibit B    Properties

 

Exhibits C-1     Form of Omega Mortgage Loan Amendments (Prepayment)

- C-6

 

Exhibit D    Form of Share Purchase Agreement

 

Exhibit E    Interest Purchase Agreement

 

Exhibit F    Permitted Encumbrances

 

Exhibits G-1    Form of Excess Omega Mortgage Loan Amendments

- G-6

 

Exhibit H    Excess Omega Mortgage Loan Indebtedness

 

Exhibit I    Title Commitment Information

 

Exhibit J    Form Authority Opinion - Optionors

 

Exhibit K    Form Authority Opinion - Omega

 

Exhibit L    Financial Statements

 

Exhibit M    Prohibited Activities

 

Exhibit N    American Entities’ Environmental Reports

 

Exhibit O    Litigation

 

Exhibit P    Property Defects or Deficiencies

 

Exhibit Q    Contracts

 

Exhibit R    Other Occupancy Agreements

 

Exhibit S    Omega’s Environmental Reports

 

Exhibit T    Form of Essex Estoppel

 

Exhibit U    Form of Performance Deposit Escrow Agreement

 

Exhibit V-1    AHCC Lease Assignment and Assumption

 

Exhibit V-2    American Entity Lease Assignment and Assumption

 

 

 

	

 

 

 

	 	 	 
	

	 

EXHIBIT A-1

 

AMERICAN ENTITIES, TYPE OF ENTITY AUTHORIZED AND ISSUED EQUITY SECURITIES, OWNERSHIP, DESCRIPTION OF PROPERTIES,

PROPERTY PURCHASE PRICE, INTEREST PURCHASE PRICE

AND TARGET OWNER’S EQUITY

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT A-2

 

CALCULATION OF TARGET OWNER’S EQUITY

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT B

 

PROPERTIES

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBITS C-1 THROUGH C-6

 

FORM OF

OMEGA MORTGAGE LOAN AMENDMENTS (PREPAYMENT)

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT D

 

FORM OF

SHARE PURCHASE AGREEMENT

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT E

 

FORM OF

INTEREST PURCHASE AGREEMENT

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT F

 

PERMITTED ENCUMBRANCES

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBITS G-1 - G-6

 

FORM OF

EXCESS OMEGA MORTGAGE LOAN AMENDMENTS

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT H

EXCESS OMEGA MORTGAGE LOAN INDEBTEDNESS

	

American Entities
	 	 	
Canton Health Care Land Partnership dba

Canton Health Care Center
	 	 	

Hutton I Land Partnership dba Hutton Nursing Center I
	 	 	
Hutton II Land Partnership dba Hutton Nursing Center II
	 	 	
Hutton III Land Partnership dba Hutton Nursing Center III
	 	 	
Meridian Arms Land Partnership dba Meridian Arms Living Center
	 	 	

St. Mary’s Land Partnership dba St. Mary’s Living Center
	 	 	

Total
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Excess Omega Mortgage Loan Indebtedness
	 	

$
	

1,000,000.00
	 	

$
	

800,000.00
	 	

$
	

1,200,000.00
	 	

$
	

300,000.00
	 	

$
	

600,000.00
	 	

$
	

1,100,000.00
	 	

$
	

5,000,000.00
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	
 

 

	 	 	 
	

	 

EXHIBIT I

 

TITLE COMMITMENT INFORMATION

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT J

 

FORM AUTHORITY OPINION - OPTIONORS

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT K

 

FORM AUTHORITY OPINION - OMEGA

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT L

 

FINANCIAL STATEMENTS

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT M

 

PROHIBITED ACTIVITIES

 

NONE

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT N

 

AMERICAN ENTITIES’ ENVIRONMENTAL REPORTS

 

 

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT O

 

LITIGATION

 

NONE

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT P

 

PROPERTY DEFECTS OR DEFICIENCIES

 

NONE

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT Q

 

CONTRACTS

 

NONE

 

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT R

 

OTHER OCCUPANCY AGREEMENTS

 

NONE

 

 

	
 

 

 

	 	 	 
	

	 

EXHIBIT S

OMEGA’S ENVIRONMENTAL REPORTS

 

In relation to the information contained in the Environmental Reports listed in this Exhibit, please note the following:

1.    Section 4.1 of Certified Environments Inc.’s Phase I Environmental Site Assessment for Essex of Salem II, 250 Continental Drive, Salem, Ohio 44460, dated July 22, 2002, states in part: "[b]ased on the above information, CEI concludes that these is a risk of contamination to the subject property from this LUST site." (referring to the Loudon Ford and Mercury facility located at 100 Continental Drive, Salem, Ohio).

2.    The "Conclusion" section of National Assessment Corporation’s Phase I Environmental Site Assessment for Essex Health Care Dixon Health Care Center, 135 Reichert Avenue, Wintersville, Ohio 43952, dated June 29, 2004, states in part:

According to Mr. Fred Terpenning, Property maintenance supervisor, prior to the installation of the emergency generator aboveground storage tank, approximately 10 years ago, the Property had an underground storage tank (UST) that was removed from the Property. Contaminated soil was reportedly removed during the UST closure. Additional information regarding the UST removal or post closure sample was not available for NAC’s review.

Additionally, the "Recommendations" section of the report states in part:

NAC recommends that all documentation relating to the closure and removal of the former UST be made available for review. If sufficient documentation regarding the UST removal is not available and soil quality cannot be provided, NAC recommends a subsurface investigation to determine if soil at the Property has been impacted from the former UST.

Note that the Optionors and American Entities believe that a UST was removed from the Property, and caused a Freedom of Information Act request (a "FOIA Request") to be submitted to Ms. Nancy Caldwell of the State Fire Marshal - Bureau of Underground Storage Tank Regulations ("BUSTR"). Ms. Caldwell responded to the FOIA Request by stating that she was unable to find any BUSTR records with respect to the Property, which indicates that the UST was likely removed without BUSTR’s knowledge. A copy of BUSTR’s response to the FOIA Request is attached hereto, and incorporated herein by reference.

	
 

 

 

	 	 	 
	

	 

EXHIBIT T

 

FORM OF

ESSEX ESTOPPEL

	
 

 

 

	 	 	 
	

	 

EXHIBIT U

 

FORM OF

PERFORMANCE DEPOSIT ESCROW AGREEMENT

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