Document:

EXECUTION COPY

              WACHOVIA ASSET SECURITIZATION, INC. 2003-HE2 TRUST,

                                    Issuer,

                                      and

                        U.S. BANK NATIONAL ASSOCIATION,

                               Indenture Trustee

                                      and

                      WACHOVIA BANK, NATIONAL ASSOCIATION

                                  Paying Agent

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

                                   INDENTURE

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

                            Dated as of July 2, 2003

                      WACHOVIA ASSET SECURITIZATION, INC.
                      ASSET-BACKED NOTES, SERIES 2003-HE2

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                               TABLE OF CONTENTS

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                                                                            ----

ARTICLE I     Definitions......................................................2

      Section 1.01    Definitions..............................................2

      Section 1.02    Incorporation by Reference of Trust Indenture Act........2

      Section 1.03    Rules of Construction....................................2

ARTICLE II    Original Issuance of Notes.......................................3

      Section 2.01    Form.....................................................3

      Section 2.02    Execution, Authentication and Delivery...................3

ARTICLE III   Covenants........................................................4

      Section 3.01    Collection of Payments with Respect to the
                      Mortgage Loans...........................................4

      Section 3.02    Maintenance of Office or Agency..........................4

      Section 3.03    Money for Payments to Be Held in Trust; Paying Agent.....4

      Section 3.04    Existence................................................6

      Section 3.05    Priority of Distributions; Defaulted Interest............6

      Section 3.06    Protection of Trust Estate..............................12

      Section 3.07    Opinions as to Trust Estate.............................12

      Section 3.08    Performance of Obligations; Servicing Agreement.........13

      Section 3.09    Negative Covenants......................................13

      Section 3.10    Annual Statement as to Compliance.......................14

      Section 3.11    Recordation of Assignments..............................14

      Section 3.12    Representations and Warranties Concerning the
                      Mortgage Loans..........................................14

      Section 3.13    Assignee of Record of the Mortgage Loans................14

      Section 3.14    Servicer as Agent and Bailee of the Indenture Trustee...14

      Section 3.15    Investment Company Act..................................15

      Section 3.16    Issuer May Consolidate, etc.............................15

      Section 3.17    Successor or Transferee.................................17

      Section 3.18    No Other Business.......................................17

      Section 3.19    No Borrowing............................................17

      Section 3.20    Guarantees, Loans, Advances and Other Liabilities.......17

      Section 3.21    Capital Expenditures....................................17

      Section 3.22    Owner Trustee Not Liable for Certificates or
                      Related Documents.......................................17

                                      -i-

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      Section 3.23    Restricted Payments.....................................18

      Section 3.24    Notice of Events of Default.............................18

      Section 3.25    Further Instruments and Acts............................18

      Section 3.26    Statements to Noteholders...............................18

      Section 3.27    Determination of Note Rate..............................18

      Section 3.28    Payments under the Policy...............................19

      Section 3.29    Replacement Enhancement.................................20

      Section 3.30    Additional Representations of Issuer....................21

      Section 3.31    Yield Maintenance Agreements............................21

      Section 3.32    Preference Claims under Policy..........................22

ARTICLE IV    The Notes; Satisfaction And Discharge Of Indenture..............23

      Section 4.01    The Notes...............................................23

      Section 4.02    Registration of and Limitations on Transfer and Exchange
                      of Notes; Appointment of Certificate Registrar..........24

      Section 4.03    Mutilated, Destroyed, Lost or Stolen Notes..............25

      Section 4.04    Persons Deemed Owners...................................26

      Section 4.05    Cancellation............................................26

      Section 4.06    Book-Entry Notes........................................26

      Section 4.07    Notices to Depository...................................27

      Section 4.08    Definitive Notes........................................27

      Section 4.09    Tax Treatment...........................................28

      Section 4.10    Satisfaction and Discharge of Indenture.................28

      Section 4.11    Application of Trust Money..............................29

      Section 4.12    Subrogation and Cooperation.............................29

      Section 4.13    Repayment of Monies Held by Paying Agent................30

      Section 4.14    Temporary Notes.........................................30

ARTICLE V     Default And Remedies............................................31

      Section 5.01    Events of Default.......................................31

      Section 5.02    Acceleration of Maturity; Rescission and Annulment......31

      Section 5.03    Collection of Indebtedness and Suits for Enforcement
                      by Indenture Trustee....................................32

      Section 5.04    Remedies; Priorities....................................34

                                      -ii-

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      Section 5.05    Optional Preservation of the Trust Estate...............35

      Section 5.06    Limitation of Suits.....................................36

      Section 5.07    Unconditional Rights of Noteholders to Receive
                      Principal and Interest..................................37

      Section 5.08    Restoration of Rights and Remedies......................37

      Section 5.09    Rights and Remedies Cumulative..........................37

      Section 5.10    Delay or Omission Not a Waiver..........................37

      Section 5.11    Control by Enhancer or Noteholders......................37

      Section 5.12    Waiver of Past Defaults.................................38

      Section 5.13    Undertaking for Costs...................................38

      Section 5.14    Waiver of Stay or Extension Laws........................38

      Section 5.15    Sale of Trust Estate....................................39

      Section 5.16    Action on Notes.........................................40

      Section 5.17    Performance and Enforcement of Certain Obligations......40

ARTICLE VI    The Indenture Trustee...........................................41

      Section 6.01    Duties of Indenture Trustee.............................41

      Section 6.02    Rights of Indenture Trustee and Paying Agent............43

      Section 6.03    Individual Rights of Indenture Trustee..................44

      Section 6.04    Disclaimer of the Indenture Trustee and Paying Agent....45

      Section 6.05    Notice of Event of Default..............................45

      Section 6.06    Reports by Paying Agent to Noteholders..................45

      Section 6.07    Compensation and Indemnity..............................45

      Section 6.08    Replacement of Indenture Trustee or Paying Agent........46

      Section 6.09    Successor Indenture Trustee or Paying Agent by Merger...48

      Section 6.10    Appointment of Co-Indenture Trustee or Separate
                      Indenture Trustee.......................................49

      Section 6.11    Eligibility; Disqualification...........................50

      Section 6.12    Preferential Collection of Claims Against Issuer........50

      Section 6.13    Representations and Warranties..........................50

      Section 6.14    Directions to Indenture Trustee.........................51

      Section 6.15    Indenture Trustee May Own Securities....................51

                                     -iii-

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      Section 6.16    Rights of Paying Agent, Certificate Paying Agent,
                      Note Registrar and Certificate Registrar................51

ARTICLE VII   Noteholders' Lists and Reports..................................52

      Section 7.01    Issuer to Furnish Paying Agent Names and Addresses
                      of Noteholders..........................................52

      Section 7.02    Preservation of Information; Communications to
                      Noteholders.............................................52

      Section 7.03    Reports by Issuer.......................................52

      Section 7.04    Reports by Indenture Trustee............................53

ARTICLE VIII  Accounts, Disbursements and Releases............................53

      Section 8.01    Collection of Money.....................................53

      Section 8.02    Trust Accounts..........................................53

      Section 8.03    Officer's Certificate...................................54

      Section 8.04    Termination Upon Distribution to Noteholders............54

      Section 8.05    Release of Trust Estate.................................54

      Section 8.06    Surrender of Notes Upon Final Payment...................55

ARTICLE IX    Supplemental Indentures.........................................55

      Section 9.01    Supplemental Indentures Without Consent of Noteholders..55

      Section 9.02    Supplemental Indentures With Consent of Noteholders.....56

      Section 9.03    Execution of Supplemental Indentures....................58

      Section 9.04    Effect of Supplemental Indenture........................58

      Section 9.05    Conformity with Trust Indenture Act.....................58

      Section 9.06    Reference in Notes to Supplemental Indentures...........58

ARTICLE X     Miscellaneous...................................................59

      Section 10.01   Compliance Certificates and Opinions, etc...............59

      Section 10.02   Form of Documents Delivered to Indenture Trustee or
                      the Paying Agent........................................60

      Section 10.03   Acts of Noteholders.....................................61

      Section 10.04   Notices, etc., to Indenture Trustee, Paying Agent, Issuer,
                      Enhancer, Yield Maintenance Provider and
                      Rating Agencies.........................................62

      Section 10.05   Notices to Noteholders; Waiver..........................63

      Section 10.06   Alternate Payment and Notice Provisions.................63

      Section 10.07   Conflict with Trust Indenture Act.......................64

                                      -iv-

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      Section 10.08   Effect of Headings......................................64

      Section 10.09   Successors and Assigns..................................64

      Section 10.10   Severability............................................64

      Section 10.11   Benefits of Indenture...................................64

      Section 10.12   Legal Holidays..........................................64

      Section 10.13   GOVERNING LAW...........................................65

      Section 10.14   Counterparts............................................65

      Section 10.15   Recording of Indenture..................................65

      Section 10.16   Issuer Obligation.......................................65

      Section 10.17   No Petition.............................................65

      Section 10.18   Inspection..............................................66

EXHIBITS

      Exhibit A - Form of Notes
      Appendix A - Definitions

      SCHEDULE I
      ANNEX I

                                      -v-

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                 RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
                     ACT OF 1939 AND INDENTURE PROVISIONS*

          Trust Indenture
            Act Section                                  Indenture Section
            -----------                                  -----------------

             310(a)(1)...............................         6.11
                 (a)(2)..............................         6.11
                 (a)(3)..............................         6.10
                 (a)(4)..............................  Not Applicable
                 (a)(5)..............................         6.11
                 (b).................................         6.08, 6.11
                 (c).................................  Not Applicable
             311(a)..................................         6.12
                 (b).................................         6.12
                (c)..................................  Not Applicable
             312(a)..................................         7.01, 7.02(a)
                 (b).................................         7.02(b)
                 (c).................................         7.02(c)
             313(a)..................................         7.04
                 (b).................................         7.04
                 (c).................................         7.03(a)(iii), 7.04
                 (d).................................         7.04
             314(a)..................................         3.10, 7.03(a)
                  (b)................................         3.07
                 (c)(1)..............................         8.05(c), 10.01(a)
                 (c)(2)..............................         8.05(c), 10.01(a)
                (c)(3)...............................  Not Applicable
                 (d)(1)..............................         8.05(c), 10.01(b)
                 (d)(2)..............................         8.05(c), 10.01(b)
                 (d)(3)..............................         8.05(c), 10.01(b)
                 (e).................................        10.01(a)
             315(a)..................................         6.01(b)
                 (b).................................         6.05
                 (c).................................         6.01(a)
                 (d).................................         6.01(c)
                 (d)(1)..............................         6.01(c)
                 (d)(2)..............................         6.01(c)
                 (d)(3)..............................         6.01(c)
                 (e).................................         5.13
             316(a)(1)(A)............................         5.11
             316(a)(1)(B)............................         5.12
             316(a)(2)...............................    Not Applicable
             316(b)..................................         5.07
             317(a)(1)...............................         5.04
             317(a)(2)...............................         5.03(d)
             317(b)..................................         3.03(a)
             318(a)..................................        10.07

--------------
* This  reconciliation and tie shall not, for any purpose,  be deemed to be part
of the within indenture.

                                      -i-
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     This  Indenture,  dated  as of  July  2,  2003,  is  among  WACHOVIA  ASSET
SECURITIZATION,  INC. 2003-HE2 TRUST, a Delaware statutory trust, as issuer (the
"Issuer"), U.S. BANK NATIONAL ASSOCIATION,  as indenture trustee (the "Indenture
Trustee"),  and  WACHOVIA  BANK,  NATIONAL  ASSOCIATION,  the paying  agent (the
"Paying Agent").

                                  WITNESSETH:

     Each party hereto  agrees as follows for the benefit of the other party and
for the equal and ratable  benefit of the  Noteholders of the Issuer's  Wachovia
Asset  Securitization,  Inc.  Asset-Backed Notes, Series 2003-HE2,  Class A-I-1,
Class A-II-1 and Class A-II-2 (collectively, the "Notes") and the Enhancer.

                                GRANTING CLAUSE:

     The Issuer  hereby  Grants to the  Indenture  Trustee,  all of the Issuer's
right,  title  and  interest  in and to all of the  following:  (a) the  Initial
Mortgage Loans and any Subsequent Mortgage Loans (together with the Cut-Off Date
Principal  Balances  and  any  Additional  Balances  arising  thereafter  to and
including  the  date  immediately   preceding  the  commencement  of  the  Rapid
Amortization  Period),  and all monies due or to become due thereunder;  (b) the
Note Payment Account,  and all funds on deposit or credited thereto from time to
time and all  proceeds  thereof;  (c) the  Funding  Accounts,  and all  funds on
deposit  or  credited  thereto  from  time to time;  (d) the  Yield  Maintenance
Agreements;  (e) all hazard insurance policies; (f) all accounts, chattel paper,
deposit accounts, documents, general intangibles, goods, instruments, investment
property,  letter-of-credit  rights,  letters of credit, money, and oil, gas and
other  minerals,  consisting  of,  arising  from,  or  relating  to,  any of the
foregoing;  and (g) all present and future claims, demands, causes and choses in
action in respect of any or all of the  foregoing  and all payments on or under,
and all proceeds of every kind and nature  whatsoever  in respect of, any or all
of the  foregoing  and all payments on or under,  and all proceeds of every kind
and nature whatsoever in the conversion thereof, voluntary or involuntary,  into
cash or other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts,  acceptances,  checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables,  instruments and
other  property  which at any time  constitute all or part of or are included in
the proceeds of any of the foregoing  (collectively,  the "Trust  Estate" or the
"Collateral").

     The foregoing  Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts  owing in respect of, the Notes,  equally
and ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.

     The  foregoing  Grant shall inure to the benefit of the Enhancer in respect
of draws made on the Policy and amounts  owing from time to time pursuant to the
Insurance  Agreement  (regardless of whether such amounts relate to the Notes or
the  Certificates),  and such Grant shall  continue in full force and effect for
the benefit of the Enhancer  until all such amounts owing to it have been repaid
in full.

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     Each of the Mortgage Loan Schedules is hereby incorporated by reference and
made a part of this Indenture.

     The  Indenture   Trustee,   as  trustee  on  behalf  of  the   Noteholders,
acknowledges  such Grant,  accepts the trust under this  Indenture in accordance
with the provisions hereof and agrees to perform its duties as Indenture Trustee
as required herein.

                                   ARTICLE I

                                  Definitions

     Section 1.01  Definitions.  For all purposes of this  Indenture,  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  Definitions  attached  hereto  as  Appendix  A,  which is
incorporated by reference herein.  All other capitalized terms used herein shall
have the meanings specified herein.

     Section 1.02  Incorporation  by Reference of Trust Indenture Act.  Whenever
this  Indenture  refers to a provision of the Trust  Indenture  Act (the "TIA"),
such  provision  is  incorporated  by  reference  in and  made a  part  of  this
Indenture.  The  following TIA terms used in this  Indenture  have the following
meanings:

                    "Commission" means the Securities and Exchange Commission.

                    "indenture securities" means the Notes.

                    "indenture security holder" means a Noteholder.

                    "indenture to be qualified" means this Indenture.

                    "indenture  trustee" or  "institutional  trustee"  means the
          Indenture Trustee.

                    "obligor" on the indenture  securities  means the Issuer and
          any other obligor on the indenture securities.

          All other TIA terms used in this  Indenture  that are  defined by TIA,
defined by TIA reference to another  statute or defined by Commission  rule have
the meaning assigned to them by such definitions.

     Section 1.03 Rules of Construction. Unless the context otherwise requires:

          (a) a term has the meaning assigned to it;

          (b) an accounting term not otherwise  defined has the meaning assigned
to it in accordance with generally accepted  accounting  principles as in effect
from time to time;

          (c) "or" includes "and/or";

          (d) "including" means "including without limitation";

                                      2

<PAGE>

          (e) words in the  singular  include the plural and words in the plural
include the singular;

          (f) the term "proceeds" has the meaning  ascribed  thereto in the UCC;
and

          (g) any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate  delivered in connection herewith means such
agreement,  instrument  or statute  as from time to time  amended,  modified  or
supplemented and includes (in the case of agreements or instruments)  references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

                                   ARTICLE II

                           Original Issuance of Notes

     Section  2.01  Form.  The  Notes  together  with  the  Indenture  Trustee's
certificate of  authentication,  shall be in substantially the form set forth in
Exhibit A, with such appropriate insertions, omissions,  substitutions and other
variations  as are  required or permitted  by this  Indenture  and may have such
letters,   numbers  or  other  marks  of  identification  and  such  legends  or
endorsements placed thereon as may, consistently  herewith, be determined by the
officers  executing  the Notes,  as evidenced by their  execution  thereof.  Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of such Note.

     The Notes  shall be  typewritten,  printed,  lithographed  or  engraved  or
produced  by  any  combination  of  these  methods,  all  as  determined  by the
Authorized  Officers  executing such Notes,  as evidenced by their  execution of
such Notes.

     The terms of the Notes set forth in Exhibit A are part of the terms of this
Indenture.

     Section 2.02  Execution,  Authentication  and Delivery.  The Notes shall be
executed  on  behalf  of the  Issuer  by any of  its  Authorized  Officers.  The
signature  of any  such  Authorized  Officer  on the  Notes  may  be  manual  or
facsimile.

     Notes bearing the manual or facsimile  signature of individuals who were at
any  time   Authorized   Officers   of  the  Issuer   shall  bind  the   Issuer,
notwithstanding  that such  individuals  or any of them have ceased to hold such
offices prior to the  authentication  and delivery of such Notes or did not hold
such offices at the date of such Notes.

     The Indenture  Trustee shall upon Issuer Request  authenticate  and deliver
Notes  for  original  issue  in  an  aggregate   initial   principal  amount  of
$1,250,000,000.  The Class A-I-1 Notes shall have an initial principal amount of
$400,000,000,  the Class A-II-1 Notes shall have an initial  principal amount of
$750,000,000  and the Class A-II-2 Notes shall have an initial  principal amount
of $100,000,000, respectively.

     Each Note shall be dated the date of its authentication. The Notes shall be
issuable as registered  Notes.  The Class A-I-1 Notes and the Class A-II-1 Notes
shall be issuable in minimum  denominations of $25,000 and integral multiples of
$1,000 in excess thereof and the

                                       3

<PAGE>

Class  A-II-2  Notes shall be issuable in minimum  denominations  of $25,000 and
integral multiples of $25,000 in excess thereof.

     No Note shall be entitled to any benefit  under this  Indenture or be valid
or obligatory  for any purpose,  unless there appears on such Note a certificate
of authentication  substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized  signatories,
and such  certificate upon any Note shall be conclusive  evidence,  and the only
evidence, that such Note has been duly authenticated and delivered hereunder.

                                  ARTICLE III

                                   Covenants

     Section 3.01 Collection of Payments with Respect to the Mortgage Loans. The
Paying Agent shall  establish and maintain with itself the Note Payment  Account
in which  the  Paying  Agent  shall,  subject  to the  terms of this  paragraph,
deposit,  on the same day as it is received from the Servicer,  each  remittance
received by the Indenture Trustee with respect to the Mortgage Loans. The Paying
Agent shall  distribute  all payments of principal of and interest on the Notes,
subject to Section  3.03 as  provided  in Section  3.05  herein  from  monies on
deposit in the Note Payment Account.

     Section 3.02  Maintenance of Office or Agency.  The Issuer will maintain in
the City of  Minneapolis,  Minnesota,  an  office or agency  where,  subject  to
satisfaction  of  conditions  set forth  herein,  Notes may be  surrendered  for
registration  of transfer or exchange,  and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served.  The Issuer
hereby  initially  appoints  the  Paying  Agent to serve  as its  agent  for the
foregoing  purposes.  If at any time the Issuer  shall fail to maintain any such
office or agency or shall fail to  furnish  the  Paying  Agent with the  address
thereof,  such  surrenders,  notices  and  demands  may be made or served at its
Corporate  Trust Office,  and the Issuer hereby appoints the Paying Agent as its
agent to receive all such surrenders, notices and demands.

     Section  3.03 Money for  Payments  to Be Held in Trust;  Paying  Agent.  As
provided in Section  3.01,  all payments of amounts due and payable with respect
to any Notes that are to be made from  amounts  withdrawn  from the Note Payment
Account  pursuant  to Section  3.01 shall be made on behalf of the Issuer by the
Paying Agent or by the Indenture  Trustee or another  paying agent  appointed by
the Indenture  Trustee pursuant to Section 6.08 to act as Paying Agent hereunder
and under the  Servicing  Agreement,  and no amounts so withdrawn  from the Note
Payment Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.03.  The Issuer  hereby  appoints the Paying Agent to
act as initial  Paying Agent  hereunder and under the Servicing  Agreement.  The
Issuer will cause each Paying  Agent other than the initial  Paying Agent or the
Indenture  Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying  Agent shall agree with the  Indenture  Trustee (and if the
Indenture Trustee or the initial Paying Agent acts as Paying Agent, it hereby so
agrees),  subject to the provisions of this Section 3.03, that such Paying Agent
will:

          (a) hold all  sums  held by it for the  payment  of  amounts  due with
respect to the Notes in trust for the  benefit of the Persons  entitled  thereto
until such sums shall be paid to such

                                       4
<PAGE>

Persons or  otherwise  disposed of as herein  provided and pay such sums to such
Persons as herein provided;

          (b) give the Indenture  Trustee and the Enhancer written notice of any
default  by the  Issuer of which it has  actual  knowledge  in the making of any
payment required to be made with respect to the Notes;

          (c) at any time during the  continuance of any such default,  upon the
written  request  of the  Indenture  Trustee,  except in the case where the same
party is both the Indenture  Trustee and the Paying Agent, in which case no such
written request will be needed,  forthwith pay to the Indenture Trustee all sums
so held in trust by such Paying Agent;

          (d)  immediately  resign as  Paying  Agent  and  forthwith  pay to the
Indenture  Trustee all sums held by it in trust for the payment of Notes,  if at
any time it ceases to be the  Certificate  Paying Agent or to meet the standards
required to be met by a paying agent at the time of its appointment;

          (e)  comply  with all  requirements  of the Code with  respect  to the
withholding  from  any  payments  made  by it on any  Notes  of  any  applicable
withholding  taxes imposed thereon and with respect to any applicable  reporting
requirements in connection therewith; and

          (f) deliver to the Indenture  Trustee and the Paying Agent,  except in
the case where such party is both the Indenture Trustee and the Paying Agent, in
which case no such delivery is required,  a copy of the statement to Noteholders
prepared  with respect to each Payment Date by the Servicer  pursuant to Section
4.01 of the Servicing Agreement.

     The Issuer may at any time,  for the purpose of obtaining the  satisfaction
and  discharge of this  Indenture or for any other  purpose,  by Issuer  Request
direct any Paying Agent to pay to the  Indenture  Trustee all sums held in trust
by such Paying  Agent,  such sums to be held by the  Indenture  Trustee upon the
same  trusts as those upon which the sums were held by such  Paying  Agent;  and
upon such  payment by any Paying  Agent to the  Indenture  Trustee,  such Paying
Agent shall be released from all further liability with respect to such money.

     Subject to applicable laws with respect to escheat of funds, any money held
by the  Indenture  Trustee or the Paying  Agent in trust for the  payment of any
amount due with respect to any Note and  remaining  unclaimed for one year after
such amount has become due and payable shall be  discharged  from such trust and
be paid to the Issuer on Issuer  Request;  and the Noteholder of such Note shall
thereafter,  as an  unsecured  general  creditor,  look only to the  Issuer  for
payment  thereof  (but only to the extent of the amounts so paid to the Issuer),
and all liability of the  Indenture  Trustee or the Paying Agent with respect to
such trust money shall thereupon cease;  provided,  however,  that the Indenture
Trustee or the Paying Agent before  being  required to make any such  repayment,
shall at the expense and written  direction  of the Issuer cause to be published
once, in an Authorized  Newspaper,  notice that such money remains unclaimed and
that, after a date specified therein,  which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee or the Paying Agent may also
adopt and employ, at the expense and written direction of the Issuer,  any other
reasonable means of notification of such repayment

                                       5

<PAGE>

(including,  but not limited to, mailing notice of such repayment to Noteholders
the Notes which have been called but have not been surrendered for redemption or
whose  right to or  interest  in  monies  due and  payable  but not  claimed  is
determinable  from the records of the Indenture  Trustee or the Paying Agent, at
the last address of record for each such Noteholder).

     Section 3.04 Existence.  The Issuer will keep in full effect its existence,
rights  and  franchises  as a  statutory  trust  under  the laws of the State of
Delaware  (unless it becomes,  or any successor  Issuer hereunder is or becomes,
organized  under the laws of any other state or of the United States of America,
in which case the Issuer  will keep in full  effect  its  existence,  rights and
franchises  under  the laws of such  other  jurisdiction)  and will  obtain  and
preserve its  qualification  to do business in each  jurisdiction  in which such
qualification   is  or  shall  be   necessary   to  protect  the   validity  and
enforceability  of this Indenture,  the Notes, the Mortgage Loans and each other
instrument or agreement included in the Trust Estate.

     Section 3.05 Priority of Distributions; Defaulted Interest.

          (a) In accordance with Section 3.04(b) of the Servicing Agreement, the
priority of  distributions  on each Payment Date from Principal  Collections and
Interest Collections with respect to the Mortgage Loans, any optional advance of
delinquent  principal and/or interest on the Mortgage Loans made by the Servicer
in respect of the related  Collection Period, any amounts received by the Paying
Agent under the Yield Maintenance  Agreements with respect to such Payment Date,
any Deficiency Amount with respect to Mortgage Loans or the Notes deposited into
the Note  Payment  Account,  and any  amounts  transferred  to the Note  Payment
Account  from any  Funding  Account  pursuant to Section  3.19 of the  Servicing
Agreement, is as follows:

                    (i)  During   each  of  the   Revolving   Periods,   Managed
          Amortization Periods and the Rapid Amortization Period:

                              (1) from available  Interest  Collections from the
                    related  Loan Group  (exclusive  of the pro rata  portion of
                    interest  attributable to Additional Balances represented by
                    the Additional  Balance Increase Amount for the related Loan
                    Group,  to the Enhancer,  the amount of the pro rata portion
                    of the  premium for the Policy  attributable  to the related
                    Notes and any unpaid  premium for the Policy,  with interest
                    thereon as provided in the Insurance Agreement;

                              (2) from any remaining  Interest  Collections from
                    the related Loan Group (exclusive of the pro rata portion of
                    interest  attributable to Additional Balances represented by
                    the Additional  Balance Increase Amount for the related Loan
                    Group) and any Deficiency  Amount described in clause (a) of
                    the definition of Deficiency Amount paid with respect to the
                    related  Notes and deposited  into the Note Payment  Account
                    pursuant  to  Section  3.28(a)(ii),   to  the  Note  Payment
                    Account, for payment by the Paying Agent to the Noteholders,
                    interest for the related  Interest  Period at the applicable
                    Note  Rate on the  Note  Balance  immediately  prior to that
                    Payment  Date,  other  than  any  Interest   Shortfalls  and
                    excluding  any  Relief  Act  Shortfalls   allocated  thereto
                    pursuant to Section  3.05(e)  during the related  Collection
                    Period;

                                       6
<PAGE>

                              (3) from any remaining  Interest  Collections from
                    the related Loan Group,  to the  Distribution  Account,  for
                    payment  by the  Paying  Agent  to pay  the  holders  of the
                    Certificates,  the pro rata portion of interest attributable
                    to Additional Balances represented by the Additional Balance
                    Increase  Amount for the related Loan Group,  as interest on
                    such Additional Balance Increase Amount;

                              (4) in the case of the Class  A-I-1  Notes and the
                    Class A-II-1  Notes,  from any payments  received  under the
                    related  Yield  Maintenance  Agreement,  to the Note Payment
                    Account, for payment by the Paying Agent to the Noteholders,
                    Interest  Shortfalls,  if any, on the related Class of Notes
                    for such  Payment  Date and any  prior  Payment  Date to the
                    extent not previously  paid,  together with interest thereon
                    at the related  Note Rate on the Note  Balance of such Class
                    of Notes immediately prior to such Payment Date;

                              (5) in the case of the Class  A-I-1  Notes and the
                    Class A-II-1  Notes,  from any remaining  payments  received
                    under a Yield  Maintenance  Agreement,  (to the  extent  not
                    previously  paid pursuant to clause (4) above),  to the Note
                    Payment  Account,  for  payment by the  Paying  Agent to the
                    holders  of the  Notes  relating  to the other  Loan  Group,
                    Interest  Shortfalls,  if any, on the related Class of Notes
                    for such Payment Date, together with interest thereon at the
                    related Note Rate on the Note Balance of such Class of Notes
                    immediately prior to such Payment Date; and

                              (6) from any  remaining  amounts  from the related
                    Loan Group,  to reimburse  the Enhancer for prior draws made
                    on the  Policy  in order to make  interest  payments  on the
                    related Class of Notes, with interest  thereon,  as provided
                    in the Insurance Agreement.

                    (ii) During each  Revolving  Period,  and after the payments
          described in clause (i) above:

                              (1) from remaining Net Principal  Collections from
                    the related Loan Group,  to the  Distribution  Account,  for
                    distribution to the holders of the  Certificates,  an amount
                    equal to the related Additional Balance Increase Amount;

                              (2) any remaining Net Principal Collections from a
                    Loan Group to the  related  Funding  Account as set forth in
                    the Servicing Agreement or, if such Payment Date is the last
                    Payment Date in the applicable Revolving Period, the related
                    Principal  Distribution  Amount for that Payment Date to the
                    Note Payment Account, for payment by the Paying Agent to the
                    holders of the related Notes, until the Note Balance of such
                    Notes have been reduced to zero;

                              (3) from Group Excess Spread from the related Loan
                    Group and any Deficiency  Amount  described in clause (b) of
                    the definition of Deficiency Amount paid with respect to the
                    Notes and  allocable  to the Class  A-I-1 Notes or the Class
                    A-II  Notes,  as  the  case  may  be,  pursuant  to  Section
                    3.28(a)(iii)  hereof,  to the related Funding  Account,  the
                    aggregate amount of Liquidation Loss

                                       7

<PAGE>

                    Amounts incurred on the Mortgage Loans in that Loan Group in
                    the     related     Collection     Period,     until     the
                    Overcollateralization Amount for such Loan Group is equal to
                    the related  Overcollateralization  Target Amount,  but only
                    until  the Total  Overcollateralization  Amount  equals  the
                    Total Overcollateralization Target Amount;

                              (4) from the  Group  Excess  Spread  from one Loan
                    Group to the Funding  Account for the other Loan Group,  the
                    aggregate amount of Liquidation Loss Amounts incurred on the
                    Mortgage  Loans  in the  other  Loan  Group  in the  related
                    Collection Period, to the extent not paid pursuant to clause
                    (ii)(3) above,  until the  Overcollateralization  Amount for
                    that   other   Loan   Group   is   equal   to  the   related
                    Overcollateralization  Target  Amount,  but only  until  the
                    Total   Overcollateralization   Amount   equals   the  Total
                    Overcollateralization Target Amount;

                              (5) from any  remaining  amounts  from the related
                    Loan Group, to the Enhancer, to reimburse it for prior draws
                    made on the Policy with respect to a Loan Group,  other than
                    with respect to payments of interest on the related Class of
                    Notes, with interest  thereon,  as provided in the Insurance
                    Agreement;

                              (6) on and after the Payment Date in January 2004,
                    from remaining  Group Excess Spread for each Loan Group,  to
                    the related Funding Account, until the Overcollateralization
                    Amount  for  such  Loan  Group  is  equal  to  the   related
                    Overcollateralization  Target  Amount,  but only  until  the
                    Total   Overcollateralization   Amount   equals   the  Total
                    Overcollateralization Target Amount;

                              (7) on and after the payment date in January 2004,
                    if the Total  Overcollateralization  Amount is less than the
                    Total  Overcollateralization  Target Amount,  from the Group
                    Excess Spread from each Loan Group,  to the related  Funding
                    Account,  until  the Total  Overcollateralization  Amount is
                    equal to the Total Overcollateralization Target Amount;

                              (8) from any  remaining  Group Excess  Spread from
                    the related Loan Group,  to the  Distribution  Account,  for
                    distribution to the holders of the  Certificates,  an amount
                    equal to the related Additional Balance Increase Amount;

                              (9) from any  remaining  amounts  from the related
                    Loan Group,  to the Enhancer,  any other amounts owed to the
                    Enhancer pursuant to the Insurance Agreement;

                              (10) from any remaining  Group Excess  Spread,  to
                    the Note Payment Account, for payment by the Paying Agent to
                    the   Noteholders  of  the  related   Notes,   any  Interest
                    Shortfalls,  together with  interest  thereon at the related
                    Note Rate (as adjusted from time to time);

                              (11) from any  remaining  Group Excess Spread from
                    either  Loan  Group,  to  the  Distribution   Account,   for
                    distribution to the holders of the

                                       8

<PAGE>

                    Certificates,  an  amount  equal to the  Additional  Balance
                    Increase Amount for either Loan Group;

                              (12)  from  any  remaining  amounts,  (i)  to  the
                    Indenture  Trustee,  any  amounts  owing  to  the  Indenture
                    Trustee or (ii) to the Paying  Agent,  any amounts  owing to
                    the Paying  Agent,  pursuant  to Section  6.07 to the extent
                    remaining unpaid; and

                              (13) any remaining  amounts,  to the  Distribution
                    Account, for distribution to the holders of the Certificates
                    by the Certificate Paying Agent in accordance with the Trust
                    Agreement.

                    (iii) During each Managed Amortization Period, and after the
          payments described in clause (i) above:

                              (1)  from  Net  Principal   Collections  from  the
                    related  Loan  Group,  to  the  Distribution   Account,  for
                    distribution to the holders of the  Certificates,  an amount
                    equal to the related Additional Balance Increase Amount;

                              (2) from any  remaining  amounts  from the related
                    Loan  Group,  to the Note  Payment  Account,  the  Principal
                    Distribution Amount, including any Liquidation Loss Amounts,
                    and from any  Deficiency  Amount  described in clause (b) of
                    the definition of Deficiency Amount paid with respect to the
                    Notes and  allocable  to the Class  A-I-1 Notes or the Class
                    A-II  Notes,  as  the  case  may  be,  pursuant  to  Section
                    3.28(a)(iii)  hereof,  and on  deposit  in the Note  Payment
                    Account  on such  Payment  Date,  for  payment by the Paying
                    Agent to the  holders of the related  Notes,  until the Note
                    Balance of such Notes have been reduced to zero;

                              (3) from any remaining  Group Excess Spread from a
                    Loan Group,  to the Note Payment  Account for payment to the
                    holders of the Notes  related to the other Loan  Group,  the
                    aggregate amount of Liquidation Loss Amounts included in the
                    Principal  Distribution Amount of that other Loan Group that
                    were not paid pursuant to clause (iii)(2)  above,  until the
                    Note Balance of such Notes has been reduced to zero;

                              (4) if the Note  Balance of all of the  Classes of
                    Notes  related to a Loan  Group  have been  reduced to zero,
                    from any remaining  amounts related to the Mortgage Loans in
                    that Loan Group, to the Note Payment Account,  any remaining
                    Principal  Distribution  Amount  for  that  Loan  Group  for
                    payment to the  holders  of the Notes  related to such other
                    Loan  Group,  until the Note  Balance of such Notes has been
                    reduced to zero;

                              (5) from any  remaining  amounts  from the related
                    Loan Group,  to the  Enhancer,  to  reimburse it for related
                    prior draws made on the Policy,  other than with  respect to
                    interest  of the  related  Class  of  Notes,  with  interest
                    thereon, as provided in the Insurance Agreement;

                                       9

<PAGE>

                              (6) on and after the payment date in January 2004,
                    from the Group  Excess  Spread from each Loan Group,  to the
                    Note  Payment  Account,  for  payment to the  holders of the
                    related Notes,  until the  Overcollateralization  Amount for
                    that    Loan    Group    is    equal    to    the    related
                    Overcollateralization Target Amount but only until the Total
                    Overcollateralization     Amount     equals     the    Total
                    Overcollateralization Target Amount;

                              (7) on and after the payment date in January 2004,
                    if the Total  Overcollateralization  Amount is less than the
                    Total  Overcollateralization  Target Amount,  from the Group
                    Excess  Spread  from each Loan  Group,  to the Note  Payment
                    Account,  for payment to the  holders of the related  Notes,
                    until the Total Overcollateralization Amount is equal to the
                    Total Overcollateralization Target Amount;

                              (8) from  remaining  Group Excess  Spread from the
                    related  Loan  Group,  to  the  Distribution   Account,  for
                    distribution to the holders of the  Certificates,  an amount
                    equal to the related Additional Balance Increase Amount;

                              (9) from any  remaining  amounts  from the related
                    Loan Group,  to the Enhancer,  any other amounts owed to the
                    Enhancer pursuant to the Insurance Agreement;

                              (10) from any  remaining  Group Excess Spread from
                    each Loan Group, to the Note Payment Account, for payment by
                    the Paying  Agent to the  holders of the  related  Notes any
                    Interest  Shortfalls  on the related  Notes,  together  with
                    interest  thereon at the  applicable  Note Rate (as adjusted
                    from time to time);

                              (11) from any  remaining  Group Excess Spread from
                    either  Loan  Group,  to  the  Distribution   Account,   for
                    distribution to the holders of the  Certificates,  an amount
                    equal to the Additional  Balance  Increase Amount for either
                    Loan Group;

                              (12)  from  any  remaining  amounts,  (i)  to  the
                    Indenture  Trustee,  any  amounts  owing  to  the  Indenture
                    Trustee or (ii) to the Paying  Agent,  any amounts  owing to
                    the Paying  Agent,  pursuant  to Section  6.07 to the extent
                    remaining unpaid; and

                              (13) any remaining  amounts,  to the  Distribution
                    Account, for distribution to the holders of the Certificates
                    by the Certificate Paying Agent in accordance with the Trust
                    Agreement.

                    (iv)  During the Rapid  Amortization  Period,  and after the
          payments described in clause (i) above:

                              (1) from any  remaining  amounts  from the related
                    Loan  Group,  to the Note  Payment  Account,  the  Principal
                    Distribution   Amount,   which  includes   Liquidation  Loss
                    Amounts,  from any Deficiency Amount described in clause (b)
                    of the definition of Deficiency  Amount paid with respect to
                    the Notes and

                                       10

<PAGE>

                              allocable  to the Class  A-I-1  Notes or the Class
                    A-II  Notes,  as  the  case  may  be,  pursuant  to  Section
                    3.28(a)(iii)  hereof,  and on  deposit  in the Note  Payment
                    Account  on such  Payment  Date,  for  payment by the Paying
                    Agent to the  holders of the related  Notes,  until the Note
                    Balance of such Notes has been reduced to zero;

                              (2) from any remaining  Group Excess Spread from a
                    Loan Group,  to the Note Payment  Account for payment to the
                    holders of the Notes  related to the other Loan  Group,  the
                    aggregate amount of Liquidation Loss Amounts included in the
                    Principal  Distribution Amount of such other Loan Group that
                    were not paid pursuant to clause  (iv)(1)  above,  until the
                    Note Balance of such Notes has been reduced to zero;

                              (3) if the  Note  Balance  of all the  Classes  of
                    Notes  related to a Loan  Group  have been  reduced to zero,
                    from any remaining  amounts related to the Mortgage Loans in
                    such Loan Group, to the Note Payment Account,  any remaining
                    Principal  Distribution  Amount  for  such  Loan  Group  for
                    payment to the holders of the Notes in the other Loan Group,
                    until the Note  Balance  of such  Notes has been  reduced to
                    zero;

                              (4)   from   Principal    Collections,    to   the
                    Distribution Account, for distribution to the holders of the
                    Certificates,  an  amount  equal to the  related  Additional
                    Balance Increase Amount;

                              (5) from any  remaining  amounts  from the related
                    Loan Group,  to the  Enhancer,  to  reimburse it for related
                    prior draws made on the Policy,  other than with  respect to
                    interest  of the  related  Class  of  Notes,  with  interest
                    thereon, as provided in the Insurance Agreement;

                              (6) on and after the Payment Date in January 2004,
                    from the Group  Excess  Spread from each Loan Group,  to the
                    Note  Payment  Account,  for  payment to the  holders of the
                    related Notes,  until the  Overcollateralization  Amount for
                    that    Loan    Group    is    equal    to    the    related
                    Overcollateralization Target Amount but only until the Total
                    Overcollateralization     Amount     equals     the    Total
                    Overcollateralization Target Amount;

                              (7) on and after the Payment Date in January 2004,
                    if the Total  Overcollateralization  Amount is less than the
                    Total  Overcollateralization  Target Amount,  from the Group
                    Excess  Spread  from each Loan  Group,  to the Note  Payment
                    Account,  for payment to the  holders of the related  Notes,
                    until the Total Overcollateralization Amount is equal to the
                    Total Overcollateralization Target Amount;

                              (8) from  remaining  Group Excess  Spread from the
                    related  Loan  Group,  to  the  Distribution   Account,  for
                    distribution to the holders of the  Certificates,  an amount
                    equal to the related Additional Balance Increase Amount;

                                       11

<PAGE>

                              (9) from any  remaining  amounts  from the related
                    Loan Group,  to the Enhancer,  any other amounts owed to the
                    Enhancer pursuant to the Insurance Agreement;

                              (10) from any  remaining  Group Excess Spread from
                    each Loan Group, to the Note Payment Account, for payment by
                    the Paying  Agent to the  holders of the  related  Notes any
                    Interest  Shortfalls,  together with interest thereon at the
                    applicable Note Rate (as adjusted from time to time);

                              (11) from any  remaining  Group Excess Spread from
                    either  Loan  Group,  to  the  Distribution   Account,   for
                    distribution to the holders of the  Certificates,  an amount
                    equal to the Additional  Balance  Increase Amount for either
                    Loan Group;

                              (12)  from  any  remaining  amounts,  (i)  to  the
                    Indenture  Trustee,  any  amounts  owing  to  the  Indenture
                    Trustee or (ii) to the Paying  Agent,  any amounts  owing to
                    the Paying  Agent,  pursuant  to Section  6.07 to the extent
                    remaining unpaid; and

                              (13) any remaining  amounts,  to the  Distribution
                    Account, for distribution to the holders of the Certificates
                    by the Certificate Paying Agent in accordance with the Trust
                    Agreement.

     For purposes of the foregoing, the Note Balance on each Payment Date during
the  Amortization  Periods  will be  reduced  (any such  reduction,  an  "Unpaid
Principal Amount") by the Liquidation Loss Amounts (other than amounts allocated
in respect of the Excluded Amount) for such Payment Date, but only to the extent
that such  Liquidation  Loss Amounts are not otherwise  covered by payments made
pursuant to clauses (iii)(2), (iii)(3), (iii)(6) or (iii)(7) during each Managed
Amortization Period, and (iv)(1),  (iv)(2),  (iv)(6) or (iv)(7) during the Rapid
Amortization   Period,   or  by  a  draw   on  the   Policy,   and   the   Total
Overcollateralization  Amount for that Payment Date is zero.  All  reductions on
the Class  A-II-1  Notes and the Class  A-II-2  Notes will be made on a pro rata
basis.

          (b) On each Payment Date,  the Paying Agent shall apply,  from amounts
on deposit in the Note Payment  Account,  and in  accordance  with the Servicing
Certificate,  the amounts set forth above in the order of priority  set forth in
Section 3.05(a). The Indenture Trustee and the Paying Agent shall be entitled to
rely conclusively on the accuracy and completeness of each Servicing Certificate
delivered to it by the Servicer and neither the Indenture Trustee nor the Paying
Agent  shall be  obligated,  absent  manifest  error,  to  verify,  recalculate,
reconcile or recomputed any amount contained in such Servicing Certificate.

          (c) Amounts paid to Noteholders  shall be paid in respect of the Notes
in  accordance  with the  applicable  percentage  as set forth in paragraph  (d)
below.  Interest on the Notes will be computed on the basis of the actual number
of days in each Interest Period and a 360-day year. Interest will be paid to the
Class A-II-1 Notes and Class A-II-2 Notes on a pari passu basis.  Interest  will
accrue on the related  Additional  Balance Increase Amount at the Net Loan Rate.
Any installment of interest or principal  payable on any Note that is punctually
paid

                                       12

<PAGE>

or duly provided for by the Issuer on the applicable  Payment Date shall be paid
to the Noteholder of record thereof on the immediately  preceding Record Date by
wire transfer to an account  specified in writing by such Noteholder  reasonably
satisfactory  to the Paying  Agent,  or by check or money  order  mailed to such
Noteholder at such Noteholder's  address appearing in the Note Register,  in the
amount  required to be  distributed  to such  Noteholder  on such  Payment  Date
pursuant to such Noteholder's Notes;  provided,  however,  that the Paying Agent
shall not pay to any such Noteholder any amounts  required to be withheld from a
payment to such Noteholder by the Code.

          (d)  Principal  of each Note  shall be due and  payable in full on the
Final  Payment  Date as  provided  in the  applicable  form of Note set forth in
Exhibit  A. All  payments  on the  Notes  shall be made in  accordance  with the
priorities set forth in paragraphs (a) and (b) above to the Noteholders entitled
thereto. All principal payments on the Class A-II Notes will be allocated to the
Class A-II-1 Notes and the Class A-II-2 Notes on a pro rata basis.  Principal on
the Notes of any Class will be paid in  accordance  with the related  Percentage
Interests  represented  thereby.  Upon written notice to the Paying Agent by the
Issuer,  the Paying Agent shall notify the Person in the name of which a Note is
registered  at the close of  business  on the Record  Date  preceding  the Final
Payment Date or other final Payment Date,  as  applicable.  Such notice shall be
mailed no later than five  Business Days prior to the Final Payment Date or such
other final Payment Date and, unless such Note is then a Book-Entry  Note, shall
specify that payment of the  principal  amount and any interest due with respect
to such Note at the Final  Payment Date or such other final Payment Date will be
payable only upon presentation and surrender of such Note, and shall specify the
place where such Note may be presented and surrendered for such final payment.

     On each Payment Date, the  Overcollateralization  Amount available to cover
any  Liquidation  Loss Amounts  (other than amounts  allocated in respect of the
Excluded Amount) on such Payment Date shall be deemed to be reduced by an amount
equal  to  such  Liquidation  Loss  Amounts  (except  to the  extent  that  such
Liquidation  Loss  Amounts  were  covered on such  Payment  Date by a payment in
respect of Liquidation Loss Amounts).

          (e) With respect to any Payment Date,  interest  payments on the Notes
will be reduced by any Relief Act Shortfalls for the related  Collection  Period
on a pro rata basis in  accordance  with the amount of  interest  payable on the
Notes on such Payment Date, absent such reduction.

     Section 3.06 Protection of Trust Estate.

          (a) The Issuer  shall from time to time  execute  and deliver all such
supplements   and  amendments   hereto  and  all  such   financing   statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:

                    (i) maintain or preserve the lien and security interest (and
          the priority  thereof) of this Indenture or carry out more effectively
          the purposes hereof;

                                       13

<PAGE>

                    (ii) perfect,  publish  notice of or protect the validity of
          any Grant made or to be made by this Indenture;

                    (iii) cause the Trust to enforce any of the Mortgage  Loans;
          or

                    (iv)  preserve  and defend title to the Trust Estate and the
          rights of the  Indenture  Trustee  and the  Noteholders  in such Trust
          Estate against the claims of all persons and parties.

          (b) Except as  otherwise  provided in this  Indenture,  the  Indenture
Trustee  shall not remove any portion of the Trust Estate that consists of money
or is  evidenced  by an  instrument,  certificate  or  other  writing  from  the
jurisdiction  in which it was held at the  date of the most  recent  Opinion  of
Counsel delivered pursuant to Section 3.07 (or from the jurisdiction in which it
was held as  described  in the Opinion of Counsel  delivered at the Closing Date
pursuant  to Section  3.07,  if no Opinion  of  Counsel  has yet been  delivered
pursuant to Section  3.07) unless the Indenture  Trustee and the Enhancer  shall
have first  received  an  Opinion  of  Counsel  to the effect  that the lien and
security  interest  created by this Indenture with respect to such property will
continue to be maintained after giving effect to such action or actions.

     Section 3.07 Opinions as to Trust Estate.

     On the Closing Date, the Issuer shall furnish to the Indenture Trustee, the
Paying  Agent,  the Enhancer and the Owner  Trustee an Opinion of Counsel at the
expense  of the  Issuer  stating  that,  upon  delivery  of the Loan  Agreements
relating to the Initial Mortgage Loans to the Indenture Trustee or the Servicer,
in the State of North  Carolina,  the  Indenture  Trustee will have a perfected,
first priority security interest in such Mortgage Loans.

     On or before  December 31st in each calendar  year,  beginning in 2004, the
Issuer shall furnish to the Indenture Trustee, the Paying Agent and the Enhancer
an Opinion of Counsel at the expense of the Issuer  either  stating that, in the
opinion of such counsel, no further action is necessary to maintain a perfected,
first priority  security interest in the Mortgage Loans until December 31 in the
following  calendar  year or, if any such action is  required  to maintain  such
security  interest in the Mortgage  Loans,  such  Opinion of Counsel  shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures  supplemental  hereto  and  any  other  requisite  documents  and the
execution and filing of any financing  statements  and  continuation  statements
that will, in the opinion of such counsel,  be required to maintain the security
interest in the Mortgage Loans until December 31 in the following calendar year.

     Section 3.08 Performance of Obligations; Servicing Agreement.

          (a)  The  Issuer  shall  punctually  perform  and  observe  all of its
obligations and agreements contained in this Indenture,  the Basic Documents and
in the instruments and agreements included in the Trust Estate.

          (b) The  Issuer  may  contract  with  other  Persons  to  assist it in
performing its duties under this  Indenture,  and any performance of such duties
by a Person identified to the Indenture  Trustee in an Officer's  Certificate of
the Issuer shall be deemed to be action taken by the Issuer.

                                       14

<PAGE>

          (c) The  Issuer  shall not take any  action or permit any action to be
taken by  others  that  would  release  any  Person  from  any of such  Person's
covenants or  obligations  under any of the  documents  relating to the Mortgage
Loans or under any instrument included in the Trust Estate, or that would result
in the amendment, hypothecation,  subordination, termination or discharge of, or
impair the validity or  effectiveness  of, any of the documents  relating to the
Mortgage  Loans or any such  instrument,  except such actions as the Servicer is
expressly permitted to take in the Servicing Agreement.

          (d)  The  Issuer  may  retain  an  administrator  and may  enter  into
contracts  with other Persons for the  performance  of the Issuer's  obligations
hereunder,  and performance of such  obligations by such Persons shall be deemed
to be performance of such obligations by the Issuer.

     Section 3.09 Negative Covenants. So long as any Notes are Outstanding,  the
Issuer shall not:

          (a) except as expressly permitted by this Indenture,  sell,  transfer,
exchange or otherwise  dispose of the Trust Estate,  unless directed to do so by
the Indenture Trustee pursuant to Section 5.04 hereof;

          (b) claim any credit on, or make any  deduction  from the principal or
interest payable in respect of, the Notes (other than amounts properly  withheld
from such  payments  under the Code) or assert any claim  against any present or
former  Noteholder by reason of the payment of the taxes levied or assessed upon
any part of the Trust Estate;

          (c) (i) permit the validity or  effectiveness  of this Indenture to be
impaired,  or permit the lien of this  Indenture  to be  amended,  hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any  covenants or  obligations  with  respect to the Notes under this  Indenture
except as may be  expressly  permitted  hereby,  (ii)  permit any lien,  charge,
excise, claim, security interest,  mortgage or other encumbrance (other than the
lien of this Indenture) to be created on or extend to or otherwise arise upon or
burden  the Trust  Estate or any part  thereof  or any  interest  therein or the
proceeds  thereof or (iii) permit the lien of this Indenture not to constitute a
valid first priority security interest in the Trust Estate; or

          (d)  impair  or cause to be  impaired  the  Issuer's  interest  in the
Mortgage Loans,  the Purchase  Agreement or in any other Basic Document,  if any
such  action  would  materially  and  adversely  affect  the  interests  of  the
Noteholders and the Enhancer.

     Section 3.10 Annual Statement as to Compliance. The Issuer shall deliver to
the Indenture Trustee, the Paying Agent and the Enhancer,  within 120 days after
the end of each  fiscal  year of the Issuer  (commencing  with the  fiscal  year
ending on December  31,  2003),  an  Officer's  Certificate  stating,  as to the
Authorized Officer signing such Officer's Certificate, that:

          (a) a review of the  activities  of the Issuer during such year and of
its performance under this Indenture and the Trust Agreement has been made under
such Authorized Officer's supervision; and

          (b) to the best of such Authorized Officer's knowledge,  based on such
review,  the Issuer has complied with all  conditions  and covenants  under this
Indenture and the provisions

                                       15

<PAGE>

of the Trust Agreement  throughout such year, or, if there has been a default in
its compliance with any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.

     Section 3.11  Recordation  of  Assignments.  The Issuer  shall  enforce the
obligation,  if any, of the Seller under the  Purchase  Agreement to execute any
Assignments  of Mortgage  and of the Servicer to submit or cause to be submitted
for  recordation all Assignments of Mortgages in accordance with Section 3.17 of
the Servicing Agreement.

     Section 3.12 Representations and Warranties  Concerning the Mortgage Loans.
The Indenture Trustee,  as pledgee of the Mortgage Loans, shall have the benefit
of the  representations and warranties made by the Seller in Sections 3.1 of the
Purchase  Agreement,  concerning the Mortgage Loans and the right to enforce the
remedies against the Seller provided in such Section 3.1, as applicable,  to the
same extent as though such  representations and warranties were made directly to
the Indenture Trustee.

     Section 3.13  Assignee of Record of the Mortgage  Loans.  As pledgee of the
Mortgage Loans, the Indenture  Trustee shall hold title to the Mortgage Loans by
being named as payee in the  endorsements  or assignments of the Loan Agreements
and assignee in the Assignments of Mortgage to be delivered under Section 2.1 of
the Purchase  Agreement.  Except as expressly provided in the Purchase Agreement
or in the Servicing  Agreement  with respect to any specific  Mortgage Loan, the
Indenture  Trustee shall not execute any  endorsement or assignment or otherwise
release or transfer  such title to any of the Mortgage  Loans until such time as
the  remaining  Trust Estate may be released  pursuant to Section  8.05(b).  The
Indenture  Trustee's  holding of such title shall in all  respects be subject to
its fiduciary obligations to the Noteholders hereunder.

     Section 3.14 Servicer as Agent and Bailee of the Indenture Trustee.  Solely
for  purposes of  perfection  under  Section  9-313 or 9-314 of the UCC or other
similar  applicable  law, rule or regulation of the state in which such property
is held by the Servicer, the Issuer and the Indenture Trustee hereby acknowledge
that the  Servicer  is acting as agent and  bailee of the  Indenture  Trustee in
holding amounts on deposit in the Custodial  Account pursuant to Section 3.03 of
the Servicing Agreement that are allocable to the Mortgage Loans, as well as the
agent and  bailee of the  Indenture  Trustee in holding  any  Related  Documents
released to the Servicer pursuant to Section 3.07(b) of the Servicing Agreement,
and any other items  constituting  a part of the Trust Estate which from time to
time come into the  possession  of the  Servicer.  It is intended  that,  by the
Servicer's  acceptance of such agency  pursuant to Section 3.03 of the Servicing
Agreement,  the Indenture  Trustee,  as a pledgee of the Mortgage Loans, will be
deemed to have possession of such Related Documents,  such monies and such other
items for  purposes  of Section  9-313 or 9-314 of the UCC of the state in which
such property is held by the Servicer.

     Section  3.15  Investment  Company  Act.  The  Issuer  shall not  become an
"investment  company" or under the "control" of an "investment  company" as such
terms are  defined in the  Investment  Company  Act of 1940,  as amended (or any
successor  or  amendatory  statute),  and the rules and  regulations  thereunder
(taking into  account not only the general  definition  of the term  "investment
company"  but  also  any  available  exceptions  to  such  general  definition);
provided,

                                       16

<PAGE>

however,  that the Issuer  shall be in  compliance  with this Section 3.15 if it
shall have  obtained an order  exempting it from  regulation  as an  "investment
company"  so long as it is in  compliance  with the  conditions  imposed in such
order.

     Section 3.16 Issuer May Consolidate, etc.

          (a) The Issuer shall not  consolidate  or merge with or into any other
Person, unless:

                    (i) the  Person  (if  other  than the  Issuer)  formed by or
          surviving such consolidation or merger shall be a Person organized and
          existing  under the laws of the United  States of America or any state
          or  the  District  of  Columbia  and  shall  expressly  assume,  by an
          indenture supplemental hereto, executed and delivered to the Indenture
          Trustee, in form reasonably satisfactory to the Indenture Trustee, the
          due and punctual payment of the principal of and interest on all Notes
          and   to   the   Certificate   Paying   Agent,   on   behalf   of  the
          Certificateholders   and  the   performance  or  observance  of  every
          agreement and covenant of this  Indenture on the part of the Issuer to
          be performed or observed, all as provided herein;

                    (ii) immediately after giving effect to such transaction, no
          Event of Default shall have occurred and be continuing;

                    (iii) the  Enhancer  shall have  consented  thereto and each
          Rating  Agency shall have  notified  the Issuer that such  transaction
          will not cause a Rating Event, without taking into account the Policy;

                    (iv) the Issuer  shall have  received  an Opinion of Counsel
          (and shall have delivered copies thereof to the Indenture Trustee, the
          Paying  Agent and the  Enhancer)  to the effect that such  transaction
          will not have any material adverse tax consequence to the Issuer,  any
          Noteholder or any Certificateholder;

                    (v) any action that is  necessary  to maintain  the lien and
          security interest created by this Indenture shall have been taken; and

                    (vi)  the  Issuer  shall  have  delivered  to the  Indenture
          Trustee,  the Paying Agent and the  Enhancer an Officer's  Certificate
          and an Opinion of Counsel  each  stating  that such  consolidation  or
          merger and such  supplemental  indenture  comply with this Article III
          and that all conditions precedent herein provided for relating to such
          transaction  have been complied with (including any filing required by
          the Exchange Act).

          (b) The Issuer shall not convey or transfer any of its  properties  or
assets, including those included in the Trust Estate, to any Person, unless:

                    (i) the Person that  acquires by  conveyance or transfer the
          properties  and assets of the Issuer the  conveyance  or  transfer  of
          which is hereby  restricted  shall (A) be a United States citizen or a
          Person  organized and existing  under the laws of the United States of
          America  or  any  state,  (B)  expressly  assumes,   by  an  indenture
          supplemental  hereto,  executed and delivered to the Indenture Trustee
          and the Paying Agent, in a form

                                       17

<PAGE>

          satisfactory  to the Indenture  Trustee and the Paying Agent,  the due
          and punctual payment of the principal of and interest on all Notes and
          the  performance or observance of every agreement and covenant of this
          Indenture on the part of the Issuer to be  performed or observed,  all
          as provided herein, (C) expressly agrees by means of such supplemental
          indenture   that  all  right,   title  and  interest  so  conveyed  or
          transferred  shall  be  subject  and  subordinate  to  the  rights  of
          Noteholders  of the  Notes,  (D)  unless  otherwise  provided  in such
          supplemental indenture, expressly agrees to indemnify, defend and hold
          harmless  the Issuer  against and from any loss,  liability or expense
          arising  under or  related  to this  Indenture  and the  Notes and (E)
          expressly  agrees by means of such  supplemental  indenture  that such
          Person (or if a group of Persons,  then one  specified  Person)  shall
          make all  filings  with the  Commission  (and  any  other  appropriate
          Person) required by the Exchange Act in connection with the Notes;

                    (ii) immediately after giving effect to such transaction, no
          Default or Event of Default shall have occurred and be continuing;

                    (iii) the Enhancer  shall have consented  thereto,  and each
          Rating  Agency shall have  notified  the Issuer that such  transaction
          will not cause a Rating  Event,  if determined  without  regard to the
          Policy;

                    (iv) the Issuer  shall have  received  an Opinion of Counsel
          (and shall have delivered copies thereof to the Indenture  Trustee and
          the Paying  Agent) to the effect that such  transaction  will not have
          any material adverse tax consequence to the Issuer or any Noteholder;

                    (v) any action that is  necessary  to maintain  the lien and
          security interest created by this Indenture shall have been taken; and

                    (vi)  the  Issuer  shall  have  delivered  to the  Indenture
          Trustee and the Paying Agent an Officer's  Certificate  and an Opinion
          of Counsel  each  stating  that such  conveyance  or transfer and such
          supplemental  indenture  comply  with  this  Article  III and that all
          conditions  precedent herein provided for relating to such transaction
          have been complied with (including any filing required by the Exchange
          Act).

     Section 3.17 Successor or Transferee.

          (a) Upon any  consolidation or merger of the Issuer in accordance with
Section 3.16(a),  the Person formed by or surviving such consolidation or merger
(if other than the Issuer)  shall  succeed to, and be  substituted  for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.

          (b) Upon a conveyance or transfer of all the assets and  properties of
the Issuer pursuant to Section 3.16(b),  the Issuer shall be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee of such conveyance or transfer.

                                       18

<PAGE>

     Section 3.18 No Other Business. The Issuer shall not engage in any business
other than financing,  purchasing,  owning and selling and managing the Mortgage
Loans and the issuance of the Notes and Certificates in the manner  contemplated
by this Indenture and the Basic Documents and all activities incidental thereto.

     Section  3.19 No  Borrowing.  The Issuer  shall not issue,  incur,  assume,
guarantee  or  otherwise  become  liable,   directly  or  indirectly,   for  any
indebtedness except for the Notes.

     Section 3.20 Guarantees,  Loans, Advances and Other Liabilities.  Except as
contemplated  by this Indenture or the other Basic  Documents,  the Issuer shall
not make any loan or advance or credit to, or guarantee  (directly or indirectly
or by  an  instrument  having  the  effect  of  assuring  another's  payment  or
performance on any  obligation or capability of so doing or otherwise),  endorse
or otherwise become contingently liable,  directly or indirectly,  in connection
with the obligations,  stocks or dividends of, or own,  purchase,  repurchase or
acquire  (or agree  contingently  to do so) any  stock,  obligations,  assets or
securities  of, or any other interest in, or make any capital  contribution  to,
any other Person.

     Section  3.21  Capital   Expenditures.   The  Issuer  shall  not  make  any
expenditure  (by long-term or operating  lease or otherwise)  for capital assets
(either realty or personalty).

     Section  3.22  Owner  Trustee  Not  Liable  for   Certificates  or  Related
Documents. The recitals contained herein shall be taken as the statements of the
Issuer, and the Owner Trustee, the Paying Agent and the Indenture Trustee assume
no  responsibility  for the correctness of the recitals  contained  herein.  The
Owner   Trustee,   the  Paying   Agent  and  the   Indenture   Trustee  make  no
representations as to the validity or sufficiency of this Indenture or any other
Basic  Document,  of the  Certificates  (other than the  signatures of the Owner
Trustee or the Indenture  Trustee on the  Certificates)  or the Notes, or of any
Related Documents. The Owner Trustee, the Paying Agent and the Indenture Trustee
shall at no time  have any  responsibility  or  liability  with  respect  to the
sufficiency  of the Trust  Estate or its ability to generate  the payments to be
distributed to  Certificateholders  under the Trust Agreement or the Noteholders
under this Indenture,  including,  the compliance by the Depositor or the Seller
with any  warranty  or  representation  made under any Basic  Document or in any
related document or the accuracy of any such warranty or representation,  or any
action of the Certificate  Paying Agent, the Certificate  Registrar or any other
person taken in the name of the Owner Trustee, the Paying Agent or the Indenture
Trustee.

     Section  3.23  Restricted  Payments.  The  Issuer  shall not,  directly  or
indirectly,  (i) pay any  dividend or make any  distribution  (by  reduction  of
capital or otherwise),  whether in cash,  property,  securities or a combination
thereof,  to the Owner  Trustee  or any owner of a  beneficial  interest  in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer,  (ii) redeem,  purchase,  retire or  otherwise  acquire for
value any such  ownership  or equity  interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose;  provided,  however,  that
the Issuer may make, or cause to be made, (x) distributions to the Owner Trustee
and the  Certificateholders  as  contemplated  by, and to the  extent  funds are
available for such purpose  under,  the Trust  Agreement and (y) payments to the
Servicer pursuant to the terms of the Servicing Agreement.  The Issuer will not,
directly or indirectly, make

                                       20

<PAGE>

payments to or  distributions  from the Custodial  Account  except in accordance
with this Indenture and the other Basic Documents.

     Section  3.24  Notice of Events  of  Default.  The  Issuer  shall  give the
Indenture Trustee, the Paying Agent, the Enhancer and the Rating Agencies prompt
written notice of each Event of Default hereunder and under the Trust Agreement.

     Section 3.25 Further Instruments and Acts. Upon request of the Paying Agent
or the  Indenture  Trustee,  the Issuer  shall  execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purposes of this Indenture.

     Section 3.26 Statements to  Noteholders.  On each Payment Date, each of the
Paying  Agent  and  the  Certificate  Registrar  shall  make  available  to  the
Depositor,  the  Owner  Trustee,  each  Rating  Agency,  each  Noteholder,  each
Certificateholder  and the Enhancer,  the Servicing  Certificate provided to the
Paying  Agent by the  Servicer  relating  to such  Payment  Date  and  delivered
pursuant to Section 4.01 of the Servicing Agreement.

     The Paying Agent will make the Servicing  Certificate  (and, at its option,
any additional files  containing the same information in an alternative  format)
available each month to Securityholders  and the Enhancer,  and other parties to
this  Indenture via the Paying  Agent's  internet  website.  The Paying  Agent's
internet   website  shall   initially  be  located  at   "www.firstlinkabs.com".
Assistance  in using the website  can be obtained by calling the Paying  Agent's
customer service desk at 800-665-9359.  Parties that are unable to use the above
distribution  options are entitled to have a paper copy mailed to them via first
class mail by calling the customer  service desk and indicating such. The Paying
Agent   shall  have  the  right  to  change  the  way  monthly   statements   to
Securityholders  are  distributed  in  order  to  make  such  distribution  more
convenient  and/or more  accessible  to the above  parties and the Paying  Agent
shall provide timely and adequate  notification  to all above parties  regarding
any such changes.  The Paying Agent may require registration and acceptance of a
disclaimer in connection with providing access to its website.

     Section 3.27  Determination of Note Rate. On the second LIBOR Business Day,
in the case of the Class A-I-1 Notes and Class A-II-1 Notes, and the first LIBOR
Business Day, in the case of the Class A-II-2 Notes,  immediately  preceding (i)
the Closing Date in the case of the first Interest Period and (ii) the first day
of each succeeding  Interest Period,  the Servicer shall determine LIBOR and the
Note Rate  (unless  the Note Rate on the Class  A-II-2  Notes is  determined  in
accordance  with the  Auction  Procedures)  for such  Interest  Period and shall
inform the Issuer,  the Auction  Agent,  the Paying  Agent and the  Depositor by
means of facsimile transmission, in writing or other electronic means.

     Section 3.28 Payments under the Policy.

          (a) (i) If the Servicing Certificate specifies a Deficiency Amount for
any Payment Date,  the  Indenture  Trustee shall make a draw on the Policy in an
amount  specified in the Servicing  Certificate  for such Payment Date or, if no
amount is specified,  the Indenture Trustee shall act in accordance with Section
3.28(b)(ii).

                                       20

<PAGE>

          (ii) The Indenture Trustee shall deposit or cause to be deposited such
draw on the Policy into the Note  Payment  Account on such  Payment  Date to the
extent  such  amount  relates to clause  (a) of the  definition  of  "Deficiency
Amount" for payment to Holders (as defined in the Policy) on the related Payment
Date.  Any Payment made by the Enhancer  under the Policy will be applied solely
to the payment of the related Notes or, in the case of money  deposited into the
applicable  Funding  Account,  to the  purchase of  Additional  Balances for the
related Loan Group, and for no other purpose. The Enhancer's payment obligations
under the Policy with respect to particular  Deficiency  Amounts and  Preference
Amounts  will  be  discharged  to the  extent  funds  equal  to  the  applicable
Deficiency Amounts and Preference Amounts are paid by the Enhancer to, or at the
direction of, the Indenture  Trustee in accordance with the Indenture  Trustee's
request,  whether  or not such  funds  are  properly  applied  by the  Indenture
Trustee.  Payment of Deficiency Amounts and Preference Amounts will be made only
at the time set forth in the Policy,  and no  accelerated  Insured  Payments (as
defined in the Policy)  will be made except to the extent that the  Enhancer has
specified an earlier date for payment at its sole option.

          (iii)  To  the  extent  such  amount  relates  to  clause  (b)  of the
definition of "Deficiency  Amount," the Indenture  Trustee shall (i) during each
Revolving  Period,  deposit  such  amount into the  related  Funding  Account as
Principal  Collections and (ii) during the  Amortization  Periods,  deposit such
amount into the Note Payment  Account.  Any amounts relating to clause (b)(1) of
the definition of Deficiency  Amount shall be allocated  between the Class A-I-1
Notes  and the  Class  A-II  Notes on a pro rata  basis in  accordance  with the
respective  amounts by which the related  Note Balance of the Notes would exceed
the sum of the  aggregate  Pool  Balance  of Loan  Group I or Loan  Group II, as
applicable,  in each  case as of the  close of  business  on the last day of the
related Collection Period.

          (b) (i) The Indenture  Trustee shall submit, if a Deficiency Amount is
specified in any statement to Securityholders  prepared pursuant to Section 4.01
of the Servicing Agreement and furnished to the Indenture Trustee, the Notice of
Nonpayment  and Demand for Payment of Insured  Amounts (in the form  attached as
Exhibit A to the Policy) to the Enhancer no later than 12:00 noon, New York City
time,  on the second (2nd)  Business Day prior to the  applicable  Payment Date;
provided,  that if such Notice is received after 12:00 noon, New York City time,
on such  Business Day, it will be deemed to be received  before 12:00 noon,  New
York City time,  on the  following  Business  Day.  If any such Notice is not in
proper form or is otherwise insufficient for the purpose of making a claim under
the Policy,  it will be deemed not to have been  received for purposes of making
such claim,  and the Enhancer will  promptly so advise the Indenture  Trustee in
writing and the Indenture  Trustee may submit an amended or corrected Notice. If
such  an  amended  or  corrected  Notice  is in  proper  form  and is  otherwise
sufficient for the purpose of making a claim under the Policy, it will be deemed
to have been timely received on the Business Day of such resubmission; provided,
that if such notice is received  after 12:00 noon,  New York City time, it shall
be deemed to be received before 12:00 noon, New York City time, on the following
Business Day.

     (ii) If no  Deficiency  Amount is specified in the  Servicing  Certificate,
then on the  Business Day  preceding  the Payment  Date,  the Paying Agent shall
check the amount on deposit in the Note Payment Account after  remittance by the
Servicer,  and shall  determine  whether  the amounts on deposit  therein,  plus
amounts  stated in the  Servicing  Certificate  to be payable  under

                                       21

<PAGE>

the related Yield  Maintenance  Agreement,  are  sufficient to make all payments
required pursuant to the Servicing  Certificate.  If the Paying Agent determines
that such amounts are not sufficient to make all such payments, the Paying Agent
shall  immediately  notify the Servicer and the Servicer shall  recalculate  the
amounts indicated on the Servicing Certificate and determine whether there is in
fact a Deficiency  Amount for such Payment Date.  The Servicer  shall notify the
Paying  Agent in writing of such  recalculated  amount,  even if such  amount is
zero,  and if a Deficiency  Amount  exists,  the Paying Agent will  instruct the
Indenture Trustee to make a draw on the Policy for the amount of such Deficiency
Amount and shall remit such  amounts to the  holders of the  related  Notes upon
receipt thereof from the Enhancer.

          (c) The Enhancer will have the right to inspect account statements for
the Note  Payment  Account and the Funding  Accounts  at  reasonable  times upon
reasonable written notice to the Paying Agent.

          (d) Only the  Indenture  Trustee on behalf of the Holders  pursuant to
the Servicing Certificate or a written servicer order will be entitled to make a
claim for an Insured Amount under the Policy.

          (e) The  Indenture  Trustee will  surrender the Policy to the Enhancer
for cancellation upon the expiration of such Policy in accordance with the terms
thereof.

     Section 3.29  Replacement  Enhancement.  The Issuer (or the Servicer on its
behalf) may, at its expense,  in accordance  with and upon  satisfaction  of the
conditions set forth herein,  but shall not be required to, arrange for any form
of additional credit  enhancement;  provided,  however,  that no such additional
credit  enhancement  shall be obtained if, as a result thereof,  a Rating Agency
would  inform the Issuer that a Rating  Event would  occur  (without  taking the
Policy into account);  provided, further, that the issuer of any such additional
credit  enhancement  and the timing and mechanism for drawing on such additional
enhancement  shall be acceptable to the Indenture  Trustee and the Enhancer.  It
shall be a condition to procurement of any such  additional  credit  enhancement
that there be  delivered  to the  Indenture  Trustee,  the Paying  Agent and the
Enhancer (a) an Opinion of Counsel, acceptable in form to the Indenture Trustee,
the  Paying  Agent  and the  Enhancer,  from  counsel  to the  provider  of such
additional  credit  enhancement with respect to the  enforceability  thereof and
such other  matters as the Indenture  Trustee,  the Paying Agent or the Enhancer
may require and (b) an Opinion of Counsel to the effect that the  procurement of
such  additional  enhancement  would not (i)  adversely  affect in any  material
respect the tax status of the Notes or the Certificates or (ii) cause the Issuer
to be taxable as an association (or a publicly traded  partnership)  for federal
income tax purposes or to be  classified  as a taxable  mortgage pool within the
meaning of Section 7701(i) of the Code.

     Section 3.30 Additional Representations of Issuer.

     The Issuer hereby  represents and warrants to the Indenture Trustee and the
Paying Agent that as of the Closing Date:

          (a) This Indenture  creates a valid and continuing  security  interest
(as  defined  in the  applicable  UCC) in the  Mortgage  Notes  in  favor of the
Indenture Trustee, which security

                                       22

<PAGE>

interest is prior to all other Liens (except as expressly permitted otherwise in
this  Indenture),  and is  enforceable  as  such  as  against  creditors  of and
purchasers from the Issuer.

          (b) The Loan Agreements constitute "instruments" within the meaning of
the applicable UCC.

          (c) The Issuer owns and has good and marketable  title to the Mortgage
Notes free and clear of any Lien of any Person.

          (d) The original  executed copy of each Loan Agreement (except for any
Loan Agreement with respect to which a Lost Note Affidavit has been delivered to
the Servicer) has been delivered to the Servicer.

          (e) The Issuer has received a written acknowledgment from the Servicer
that the Servicer  (in the capacity  described in Section 3.14 hereof) is acting
solely as agent of the Indenture Trustee for the benefit of the Noteholders.

          (f) Other than the security  interest granted to the Indenture Trustee
pursuant to this Indenture, the Issuer has not pledged,  assigned, sold, granted
a security  interest in, or otherwise  conveyed any of the Mortgage  Notes.  The
Issuer  has not  authorized  the  filing  of and is not  aware of any  financing
statements against the Issuer that include a description of collateral  covering
the Mortgage Notes other than any financing  statement  relating to the security
interest  granted to the Indenture  Trustee  hereunder or any security  interest
that has been  terminated.  The Issuer is not aware of any  judgment or tax lien
filings against the Issuer.

          (g) None of the Mortgage  Notes has any marks or notations  indicating
that they have been pledged,  assigned or otherwise conveyed to any Person other
than the Indenture  Trustee,  except for (i) any endorsements that are part of a
complete chain of  endorsements  from the originator of the Mortgage Note to the
Indenture Trustee, and (ii) any marks or notations pertaining to Liens that have
been terminated or released.

          (h) None of the  provisions  of this  Section  3.30  shall  be  waived
without the prior written  confirmation  from Standard & Poor's that such waiver
shall not result in a reduction or withdrawal of the then-current  rating of the
Notes.

     Section 3.31 Yield Maintenance Agreements.

          (a) In the event that the  Indenture  Trustee or the Paying Agent does
not receive any  required  payment  from the Yield  Maintenance  Provider  under
either the Group I Yield Maintenance Agreement or the Group II Yield Maintenance
Agreement,  as applicable,  the Indenture Trustee, upon the written direction of
any of the Enhancer, a majority of the Noteholders or the Servicer shall enforce
the obligation of the Yield Maintenance Provider thereunder.  The parties hereto
acknowledge that the Yield Maintenance Provider shall make all calculations, and
determine the amounts to be paid, under the Yield Maintenance Agreements. Absent
manifest error, the Indenture  Trustee and the Paying Agent, as applicable,  may
conclusively rely on such calculations and determinations.

                                       23

<PAGE>

          (b) The Indenture  Trustee or the Paying Agent,  as applicable,  shall
deposit  or cause  to be  deposited  any  amount  received  under  either  Yield
Maintenance  Agreement  into the Note  Payment  Account on the Payment  Date for
which such amount is received  from the Yield  Maintenance  Provider  under such
Yield Maintenance Agreement.

     Section 3.32 Preference Claims under Policy.

          (a) In the event that the  Indenture  Trustee has received a certified
copy of a final,  nonappealable  order  of an  appropriate  court or other  body
exercising jurisdiction that any interest on or principal of the Notes which has
become due for payment under the  Indenture,  the nonpayment of which would have
been  covered by the  Policy,  and which was made to a Holder by or on behalf of
the  Issuer  has  been  deemed  a  preferential  transfer  and  recoverable,  or
theretofore  recovered,  from such  Holder  pursuant  to Title 11 of the  United
States Code in  accordance  with an Order (as defined  below)  (such  amount,  a
"Preference  Amount"),  the Indenture Trustee will so notify the Enhancer,  will
comply with the  provisions  of the Policy to obtain  payment by the Enhancer of
such avoided payment,  and will, at the time it provides notice to the Enhancer,
notify the  Paying  Agent and the  Holders  by mail that,  in the event that any
Holder's  payment is so  recoverable,  such  Holder  will be entitled to payment
pursuant to the terms of the Policy. The Enhancer will pay any Preference Amount
when due to be paid pursuant to an Order (as defined below), but in any event no
earlier than the fifth Business Day following  actual receipt by the Enhancer of
(i) a certified  copy of a final,  nonappealable  order of a court or other body
exercising  jurisdiction  in such  insolvency  proceeding to the effect that the
Indenture  Trustee,  or  Holder,  as  applicable,  is  required  to return  such
Preference Amount paid during the term of this Policy because such payments were
avoided as a  preferential  transfer or  otherwise  rescinded  or required to be
restored by the Indenture Trustee or Holder (the "Order"), (ii) a certificate by
or on behalf of the Indenture Trustee or Holder,  as applicable,  that the Order
has been entered and is not subject to any stay,  (iii) an  assignment,  in form
and substance  satisfactory to the Enhancer,  duly executed and delivered by the
Indenture  Trustee or Holder,  irrevocably  assigning to the Enhancer all rights
and claims of the Indenture  Trustee or Holder  relating to or arising under the
Indenture  against the estate of the Indenture Trustee or otherwise with respect
to such Preference  Amount and (iv) a Notice of Nonpayment (in the form attached
to the  Policy  as  Exhibit  A)  appropriately  completed  and  executed  by the
Indenture  Trustee;  provided,  that (I) if such  documents  are received by the
Enhancer  after 12:00 noon,  New York City time, on such Business Day, they will
be deemed to be received before 12:00 noon, New York City time, on the following
Business Day and (II) the Enhancer  will not be obligated to pay any  Preference
Amount in respect of  principal  (other  than  Deficiency  Amounts  relating  to
principal)  prior to the Final Scheduled  Payment Date for the relevant class of
Notes.   Such  payment  will  be   disbursed  to  the   receiver,   conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, and not to the
Indenture  Trustee or the Holder directly,  unless the Indenture  Trustee or the
relevant Holder has made a payment of the Preference Amount to the court or such
receiver,  conservator,  debtor-in-possession  or trustee in bankruptcy named in
the Order,  in which case the Enhancer  will pay the  Indenture  Trustee,  or as
directed  by  the  Indenture  Trustee,  to the  extent  of  the  payment  of the
Preference  Amount,  subject to the  delivery  of (a) the items  referred  to in
clauses  (i),  (ii),  (iii)  and (iv)  above to the  Enhancer  and (b)  evidence
satisfactory  to the  Enhancer  that  payment  has  been  made to such  court or
receiver,  conservator,  debtor-in-possession  or trustee in bankruptcy named in
the Order; provided, further, that in no event will the Enhancer be obligated to
make any payment prior to the time the

                                       24

<PAGE>

Enhancer would have been required to make an Insured Payment pursuant to Section
3 of the Policy.

          (b) The  Indenture  Trustee will  promptly  notify the Enhancer of any
proceeding or the  institution of any action (of which a Responsible  Officer of
the  Indenture  Trustee  has  actual  knowledge)  seeking  the  avoidance  as  a
preferential  transfer under applicable  bankruptcy,  insolvency,  receivership,
rehabilitation or similar law (a "Note Preference Claim") of any payment made to
a Holder  that has been  deemed a  preferential  transfer  and  recoverable,  or
theretofore  recovered,  from such Holder  pursuant to Title 11 of United States
Code in accordance with an Order. Each Holder, by its purchase of Notes, and the
Indenture  Trustee hereby agree that so long as no Enhancer Default has occurred
and is continuing,  the Enhancer may at any time during the  continuation of any
proceeding  relating to a Note Preference  Claim direct all matters  relating to
such Note  Preference  Claim,  including  (i) the direction of any appeal of any
order relating to any Note Preference  Claim and (ii) the posting of any surety,
supersedeas  or  performance  bond pending any such appeal at the expense of the
Enhancer,  but subject to reimbursement as provided in the Insurance  Agreement.
In addition,  and without  limitation of the foregoing,  as set forth in Section
4.12,  the Enhancer  will be  subrogated  to, and each Holder and the  Indenture
Trustee hereby delegate and assign,  to the fullest extent permitted by law, the
rights of the  trustee and each  Holder in the  conduct of any  proceeding  with
respect  to a Note  Preference  Claim,  including  all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Note Preference Claim.

                                   ARTICLE IV

               The Notes; Satisfaction And Discharge Of Indenture

     Section 4.01 The Notes.

     The Notes shall be  registered  in the name of a nominee  designated by the
Depository.  Beneficial  Owners  will hold  interests  in the Notes  through the
book-entry  facilities of the Depository in the minimum  initial Note Balance of
$25,000 and integral multiples of $1,000 in excess thereof,  with respect to the
Class A-I-1  Notes and Class  A-II-1  Notes,  and in the  minimum  initial  Note
Balance of $25,000 and  integral  multiples of $25,000 in excess  thereof,  with
respect to the Class A-II-2 Notes.

     The Indenture Trustee, Paying Agent and Note Registrar may for all purposes
(including  the making of payments due on the Notes) deal with the Depository as
the authorized representative of the Beneficial Owners with respect to the Notes
for the purposes of exercising  the rights of Noteholders  hereunder.  Except as
provided in the next  succeeding  paragraph of this Section 4.01,  the rights of
Beneficial  Owners  with  respect  to  the  Notes  shall  be  limited  to  those
established  by law  and  agreements  between  such  Beneficial  Owners  and the
Depository  and  Depository  Participants.  Except as provided in Section  4.08,
Beneficial Owners shall not be entitled to definitive certificates for the Notes
as to which they are the Beneficial  Owners.  Requests and directions  from, and
votes  of,  the  Depository  as  Noteholder  of the  Notes  shall  not be deemed
inconsistent if they are made with respect to different  Beneficial  Owners. The
Indenture  Trustee may  establish a reasonable  record date in  connection  with
solicitations  of consents from or voting by Noteholders  and give notice to the
Depository  of such record  date.

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<PAGE>

Without the consent of the Issuer,  Indenture Trustee, Note Registrar and Paying
Agent,  no Note may be  transferred  by the  Depository  except  to a  successor
Depository  that  agrees  to hold such Note for the  account  of the  Beneficial
Owners.

     In the  event  the  Depository  Trust  Company  resigns  or is  removed  as
Depository,  the Indenture Trustee,  at the request of the Servicer and with the
approval  of the Issuer may  appoint a  successor  Depository.  If no  successor
Depository  has  been  appointed  within  30 days of the  effective  date of the
Depository's  resignation or removal, each Beneficial Owner shall be entitled to
certificates   representing  the  Notes  it  beneficially  owns  in  the  manner
prescribed in Section 4.08.

     The Notes shall,  on original issue, be executed on behalf of the Issuer by
the Owner Trustee,  not in its  individual  capacity but solely as Owner Trustee
and upon Issuer Order,  authenticated by the Indenture  Trustee and delivered by
the Indenture Trustee to or upon the order of the Issuer.

     Section 4.02  Registration  of and  Limitations on Transfer and Exchange of
Notes;  Appointment of Certificate Registrar.  The Issuer shall cause to be kept
at the Note Registrar's Corporate Trust Office a Note Register in which, subject
to such  reasonable  regulations as it may prescribe,  the Note Registrar  shall
provide for the registration of Notes and of transfers and exchanges of Notes as
herein provided.  The Issuer hereby appoints Wachovia Bank, National Association
as the initial  Note  Registrar.  Wachovia  Bank,  National  Association  hereby
accepts such appointment.

     Subject to the restrictions and limitations set forth below, upon surrender
for registration of transfer of any Note at the Note Registrar's Corporate Trust
Office,  the Issuer shall execute,  and the Indenture Trustee shall authenticate
and deliver,  in the name of the designated  transferee or  transferees,  one or
more new  Notes in the  authorized  initial  Note  Balance  evidencing  the same
aggregate Percentage Interests.

     Subject to the foregoing,  at the option of the  Noteholders,  Notes may be
exchanged for other Notes of like tenor, in each case in the authorized  initial
Note Balance evidencing the same aggregate Percentage Interests,  upon surrender
of the  Notes  to be  exchanged  at  the  Corporate  Trust  Office  of the  Note
Registrar.  Whenever any Notes are so surrendered for exchange, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver the Notes which
the Noteholder  making the exchange is entitled to receive.  Each Note presented
or surrendered for registration of transfer or exchange shall (if so required by
the  Note  Registrar)  be duly  endorsed  by,  or be  accompanied  by a  written
instrument of transfer in form  reasonably  satisfactory  to the Note  Registrar
duly  executed by, the  Noteholder  thereof or his attorney  duly  authorized in
writing with such  signature  guaranteed  by a commercial  bank or trust company
located  or  having  a  correspondent  located  in The City of New  York.  Notes
delivered upon any such transfer or exchange will evidence the same obligations,
and  will  be  entitled  to  the  same  rights  and  privileges,  as  the  Notes
surrendered.

     No service  charge  shall be imposed  for any  registration  of transfer or
exchange  of  Notes,  but the Note  Registrar  shall  require  payment  of a sum
sufficient  to cover  any tax or  governmental  charge  that may be  imposed  in
connection with any registration of transfer or exchange of Notes.

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<PAGE>

     All Notes  surrendered  for  registration of transfer and exchange shall be
cancelled  by the Note  Registrar  and  delivered to the  Indenture  Trustee for
subsequent destruction without liability on the part of either.

     The  Issuer  hereby  appoints  Wachovia  Bank,   National   Association  as
Certificate  Registrar  to keep at its  Corporate  Trust  Office  a  Certificate
Register  pursuant to Section 3.13 of the Trust  Agreement in which,  subject to
such reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the  registration  of  Certificates  and of transfers  and exchanges
thereof pursuant to Section 3.09 of the Trust Agreement. Wachovia Bank, National
Association hereby accepts such appointment.

     Each purchaser of a Note, by its acceptance of the Note, shall be deemed to
have  represented  that the  acquisition  of such Note by the purchaser does not
constitute or give rise to a prohibited  transaction  under Section 406 of ERISA
or  Section  4975  of  the  Code,   for  which  no   statutory,   regulatory  or
administrative exemption is available.

     Section  4.03  Mutilated,  Destroyed,  Lost  or  Stolen  Notes.  If (i) any
mutilated  Note is  surrendered  to the Note  Registrar,  or the Note  Registrar
receives  evidence to its satisfaction of the destruction,  loss or theft of any
Note,  and (ii)  there is  delivered  to the Note  Registrar  such  security  or
indemnity  as may be  required  by it to hold the Issuer and the Note  Registrar
harmless,  then,  in the  absence of notice to the Issuer or the Note  Registrar
that such Note has been acquired by a bona fide purchaser, and provided that the
requirements of Section 8-405 of the UCC are met, the Issuer shall execute,  and
upon receipt of an Issuer Request the Indenture  Trustee shall  authenticate and
deliver,  in exchange for or in lieu of any such mutilated,  destroyed,  lost or
stolen Note, a replacement Note of the same class;  provided,  however,  that if
any such destroyed,  lost or stolen Note, but not a mutilated  Note,  shall have
become or within  seven  days  shall be due and  payable,  instead  of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or  payable  without  surrender  thereof.  If,  after the  delivery  of such
replacement Note or payment of a destroyed,  lost or stolen Note pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Note in
lieu of which  such  replacement  Note was  issued  presents  for  payment  such
original Note,  the Issuer and the Note  Registrar  shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any  Person  taking  such  replacement  Note  from  such  Person to whom such
replacement  Note was  delivered or any  assignee of such Person,  except a bona
fide purchaser,  and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Note Registrar in connection therewith.

     Upon the  issuance of any  replacement  Note under this Section  4.03,  the
Issuer  may  require  the  payment  by the  Noteholder  of  such  Note  of a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
relation  thereto  and any other  reasonable  expenses  (including  the fees and
expenses of the Indenture Trustee and the Note Registrar) connected therewith.

     Every  replacement Note issued pursuant to this Section 4.03 in replacement
of any mutilated,  destroyed,  lost or stolen Note shall  constitute an original
additional  contractual  obligation of the Issuer, whether or not the mutilated,
destroyed,  lost or stolen Note shall be at

                                       27

<PAGE>

any time  enforceable  by anyone,  and shall be entitled to all the  benefits of
this  Indenture  equally and  proportionately  with any and all other Notes duly
issued hereunder.

     The  provisions of this Section 4.03 are  exclusive and shall  preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.

     Section  4.04  Persons  Deemed  Owners.   Prior  to  due   presentment  for
registration  of transfer of any Note,  the Issuer,  the Paying Agent,  the Note
Registrar,  the Indenture Trustee and any agent of the Issuer, the Paying Agent,
the Note  Registrar or the Indenture  Trustee may treat the Person in whose name
any Note is  registered  (as of the day of  determination)  as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever,  whether or not such Note be
overdue,  and none of the Issuer,  the Paying  Agent,  the Note  Registrar,  the
Indenture  Trustee  or any  agent of the  Issuer,  the  Paying  Agent,  the Note
Registrar or the Indenture Trustee shall be affected by notice to the contrary.

     Section 4.05 Cancellation.  All Notes surrendered for payment, registration
of transfer,  exchange or redemption  shall,  if surrendered to any Person other
than  the Note  Registrar,  be  delivered  to the Note  Registrar  and  shall be
promptly cancelled by the Note Registrar.  The Issuer may at any time deliver to
the Note  Registrar for  cancellation  any Notes  previously  authenticated  and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Note Registrar. No
Notes shall be  authenticated  in lieu of or in exchange for any Notes cancelled
as  provided  in this  Section  4.05,  except  as  expressly  permitted  by this
Indenture.  All cancelled Notes may be held or disposed of by the Note Registrar
in accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer  Request that they be destroyed
or returned to it; provided, however, that such Issuer Request is timely and the
Notes have not been previously disposed of by the Note Registrar.

     Section 4.06 Book-Entry Notes. The Notes, upon original issuance,  shall be
issued in the form of typewritten Notes representing the Book-Entry Notes, to be
delivered to The Depository  Trust Company,  the initial  Depository,  by, or on
behalf of, the Issuer.  Such Notes shall  initially  be  registered  on the Note
Register in the name of Cede & Co., the nominee of the initial  Depository,  and
no Beneficial Owner shall receive a Definitive Note representing such Beneficial
Owner's  interest in such Note,  except as provided in Section 4.08.  Unless and
until  definitive,  fully registered  Notes (the  "Definitive  Notes") have been
issued to Beneficial Owners pursuant to Section 4.08:

          (a) the  provisions  of this  Section  4.06 shall be in full force and
effect;

          (b) the Note  Registrar,  the Paying Agent and the  Indenture  Trustee
shall be entitled to deal with the Depository for all purposes of this Indenture
(including  the payment of principal of and interest on the Notes and the giving
of  instructions or directions  hereunder) as the sole holder of the Notes,  and
shall have no obligation to the Beneficial Owners;

                                       28

<PAGE>

          (c) to the extent that the  provisions  of this Section 4.06  conflict
with any other provisions of this Indenture, the provisions of this Section 4.06
shall control;

          (d) the rights of  Beneficial  Owners shall be exercised  only through
the Depository  and shall be limited to those  established by law and agreements
between  such  Owners  of  Notes  and  the  Depository   and/or  the  Depository
Participants.  Unless and until  Definitive Notes are issued pursuant to Section
4.08, the initial Depository will make book-entry transfers among the Depository
Participants  and receive and transmit  payments of principal of and interest on
the Notes to such Depository Participants; and

          (e) whenever this  Indenture  requires or permits  actions to be taken
based upon  instructions  or directions  of  Noteholders  of Notes  evidencing a
specified  percentage of the Note Balance of the Notes,  the Depository shall be
deemed to  represent  such  percentage  only to the extent that it has  received
instructions   to  such  effect  from   Beneficial   Owners  and/or   Depository
Participants owning or representing,  respectively,  such required percentage of
the beneficial  interest in the Notes and has delivered such instructions to the
Indenture Trustee.

     Section   4.07   Notices  to   Depository.   Whenever  a  notice  or  other
communication  to the Noteholders of the Notes is required under this Indenture,
unless and until  Definitive  Notes shall have been issued to Beneficial  Owners
pursuant  to  Section  4.08,  the  Indenture  Trustee or the  Paying  Agent,  as
applicable,  shall give all such notices and communications  specified herein to
be given to  Noteholders  of the  Notes to the  Depository,  and  shall  have no
obligation to the Beneficial Owners.

     Section  4.08  Definitive   Notes.  If  (i)  in  the  actual  knowledge  of
Responsible Officers of the Indenture Trustee or the Paying Agent the Depository
is no longer  willing or able to properly  discharge its  responsibilities  with
respect to the Notes and the Indenture Trustee, the Paying Agent or Depositor is
unable to locate a qualified successor, (ii) after the occurrence of an Event of
Default,   Beneficial  Owners  of  Notes   representing   beneficial   interests
aggregating  at least a majority  of the Note  Balance  of the Notes  advise the
Depository in writing that the  continuation of a book-entry  system through the
Depository is no longer in the best interests of the Beneficial Owners, then the
Depository  shall  notify  all  Beneficial  Owners,  the  Paying  Agent  and the
Indenture Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Beneficial Owners requesting the same. Upon surrender to the
Note Registrar of the typewritten Notes representing the Book-Entry Notes by the
Depository,  accompanied by registration instructions,  the Issuer shall execute
and the Indenture Trustee shall  authenticate the Definitive Notes in accordance
with the instructions of the Depository.  None of the Issuer,  the Paying Agent,
the Note  Registrar or the  Indenture  Trustee  shall be liable for any delay in
delivery of such  instructions,  and each may conclusively rely on, and shall be
protected  in relying on, such  instructions.  Upon the  issuance of  Definitive
Notes,  the  Indenture  Trustee,  the Note  Registrar and the Paying Agent shall
recognize the Noteholders of the Definitive Notes as Noteholders.

     Section 4.09 Tax Treatment. The Issuer has entered into this Indenture, and
the Notes will be issued, with the intention that, for federal,  state and local
income, single business and franchise tax purposes, the Notes will be treated as
indebtedness  for  purposes of such taxes.  The  Issuer,  by entering  into this
Indenture,  and  each  Noteholder,  by its  acceptance  of its  Note  (and

                                       29

<PAGE>

each  Beneficial  Owner  by its  acceptance  of an  interest  in the  applicable
Book-Entry Note), agree to treat the Notes for federal,  state and local income,
single business and franchise tax purposes as indebtedness  for purposes of such
taxes.

     Section 4.10 Satisfaction and Discharge of Indenture.  This Indenture shall
cease to be of further effect with respect to the Notes, and shall be discharged
and satisfied, except as to (i) rights of registration of transfer and exchange,
(ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of
Noteholders to receive payments of principal thereof and interest thereon,  (iv)
Sections  3.03,  3.04,  3.06,  3.09,  3.16,  3.18  and  3.19,  (v)  the  rights,
obligations and immunities of the Indenture  Trustee,  Note Registrar and Paying
Agent hereunder  (including the rights of the Indenture Trustee,  Note Registrar
and  Paying  Agent  under  Section  6.07 and the  obligations  of the  Indenture
Trustee, Note Registrar and Paying Agent under Section 4.11) and (vi) the rights
of Noteholders as beneficiaries hereof with respect to the property so deposited
with the  Indenture  Trustee or the Paying Agent  payable to all or any of them,
and the Indenture Trustee, on demand of and at the expense of the Issuer,  shall
execute  proper  instruments  acknowledging  satisfaction  and discharge of this
Indenture with respect to the Notes, when:

          (a) either:

          (i) all Notes theretofore  authenticated and delivered (other than (i)
Notes that have been  destroyed,  lost or stolen and that have been  replaced or
paid as  provided  in Section  4.03 and (ii) Notes for whose  payment  money has
theretofore  been  deposited  in  trust or  segregated  and held in trust by the
Issuer and  thereafter  repaid to the Issuer or discharged  from such trust,  as
provided  in  Section  3.03)  have  been  delivered  to the Note  Registrar  for
cancellation; or

          (ii) all Notes not  theretofore  delivered to the Note  Registrar  for
cancellation:

                    (A)   have become due and payable;

                    (B)   will become due and  payable at the Final  Payment
                          Date within one year; or

                    (C)   have been  declared  immediately  due and  payable
                          pursuant to Section 5.02;

          and the Issuer,  in the case of Section  4.10(a)(ii)(A)  or (B) above,
          has irrevocably  deposited or caused to be irrevocably  deposited with
          the Indenture  Trustee or the Paying Agent cash or direct  obligations
          of or  obligations  guaranteed by the United States of America  (which
          will mature prior to the date such amounts are payable),  in trust for
          such purpose,  in an amount sufficient to pay and discharge the entire
          indebtedness  on such  Notes and  Certificates  then  outstanding  not
          theretofore  delivered to the Note Registrar for cancellation when due
          on the Final Payment  Date,  as evidenced to the Note  Registrar by an
          accountant's letter or an Officer's Certificate of the Issuer;

          (b) the Issuer  has paid or caused to be paid all other  sums  payable
hereunder and under the Insurance Agreement by the Issuer; and

                                       30

<PAGE>

          (c) the Issuer has  delivered  to the  Indenture  Trustee,  the Paying
Agent and the Enhancer an Officer's  Certificate and an Opinion of Counsel, each
meeting the applicable  requirements  of Section 10.01 and each stating that all
conditions  precedent  herein  provided  for  relating to the  satisfaction  and
discharge  of this  Indenture  have been  complied  with and,  if the Opinion of
Counsel  relates to a deposit made in  connection  with  Section  4.10(a)(ii)(B)
above,  such opinion  shall  further be to the effect that such deposit will not
have any material adverse tax consequences to the Issuer, any Noteholders or any
Certificateholders.

     Section 4.11  Application  of Trust Money.  All monies  deposited  with the
Paying Agent  pursuant to Section 4.10 hereof shall be held in trust and applied
by it, in accordance with the provisions of the Notes and this Indenture, to the
payment,  either  directly or through  any Paying  Agent or  Certificate  Paying
Agent, as the Paying Agent may determine,  to the Securityholders of Securities,
of all sums due and to become due thereon for principal  and interest;  but such
monies need not be  segregated  from other funds  except to the extent  required
herein or required by law.

     Section 4.12 Subrogation and Cooperation.

          (a) Any and all Deficiency Amounts and Preference Amounts disbursed by
the  Indenture  Trustee from claims made under the Policy will not be considered
payment by the Trust  with  respect to the  Notes,  and will not  discharge  the
obligations  of the Trust with  respect  thereto.  The Enhancer  will,  upon any
payment  pursuant to the Policy,  in  furtherance  and not in  limitation of its
equitable right of subrogation and its rights under the Insurance Agreement,  to
the extent it makes any payment with respect to the Notes,  become subrogated to
the rights of any  Holders to receive  any and all amounts due in respect of the
Notes as to which such  payment was made.  Subject to and  conditioned  upon any
payment  with respect to the Notes by or on behalf of the  Enhancer,  the Paying
Agent will  assign to the  Enhancer  all rights to the  payment of  interest  or
principal with respect to the Notes which are then due for payment to the extent
of all payments made by the Enhancer,  and the Enhancer may exercise any option,
vote,  right,  power or the like with respect to the Notes to the extent that it
has made payment pursuant to the Policy. To evidence such subrogation,  the Note
Registrar  will note the  Enhancer's  rights as  subrogee  upon the  register of
Holders. The foregoing subrogation will in all cases be subject to the rights of
the  Holders  to  receive  all  Deficiency  Amounts  in  respect  of the  Notes.
Notwithstanding anything herein to the contrary, the Enhancer shall be paid such
principal and interest only from the sources and in the manner  provided  herein
and in the Insurance Agreement for the payment of such principal and interest.

     The Indenture  Trustee and the Paying Agent shall cooperate in all respects
with any  reasonable  request by the  Enhancer for action to preserve or enforce
the  Enhancer's  rights  or  interest  under  this  Indenture  or the  Insurance
Agreement, consistent with this Indenture and without limiting the rights of the
Noteholders  as  otherwise  set  forth  in the  Indenture,  including  upon  the
occurrence and continuance of a default under the Insurance Agreement, a request
(which  request  shall be in writing)  to take any one or more of the  following
actions:

                    (i) institute  Proceedings for the collection of all amounts
          then  payable on the Notes or under this  Indenture  in respect to the
          Notes and all amounts  payable

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<PAGE>

          under the Insurance Agreement and to enforce any judgment obtained and
          collect from the Issuer monies adjudged due;

                    (ii) sell the Trust Estate or any portion  thereof or rights
          or  interest  therein,  at one or more  public  or  private  Sales (as
          defined in Section  5.15  hereof)  called and  conducted in any manner
          permitted by law;

                    (iii) file or record all  Assignments  of Mortgage that have
          not previously been recorded, if filing is required in accordance with
          the Servicing Agreement;

                    (iv)  institute  Proceedings  from  time  to  time  for  the
          complete or partial foreclosure of this Indenture; and

                    (v) exercise  any remedies of a secured  party under the UCC
          and take any other  appropriate  action to  protect  and  enforce  the
          rights and remedies of the Enhancer hereunder.

     Following the payment in full of the Notes,  the Enhancer shall continue to
have all rights and  privileges  provided  to it under this  Section  and in all
other provisions of this Indenture, until all amounts owing to the Enhancer have
been paid in full.

     Section 4.13 Repayment of Monies Held by Paying Agent.  In connection  with
the  satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Paying Agent (other than the  Indenture  Trustee)  under
the provisions of this  Indenture with respect to such Notes shall,  upon demand
of the  Issuer,  be paid  to the  Indenture  Trustee,  to be  held  and  applied
according to Section 3.05;  and  thereupon,  such Paying Agent shall be released
from all further liability with respect to such monies.

     Section 4.14  Temporary  Notes.  Pending the  preparation of any Definitive
Notes,  the Issuer may  execute and upon its written  direction,  the  Indenture
Trustee may authenticate  and make available for delivery,  temporary Notes that
are printed,  lithographed,  typewritten,  photocopied or otherwise produced, in
any denomination,  substantially of the tenor of the Definitive Notes in lieu of
which  they  are  issued  and  with  such  appropriate  insertions,   omissions,
substitutions  and other  variations  as the officers  executing  such Notes may
determine, as evidenced by their execution of such Notes.

     If temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared  without  unreasonable  delay.  After the preparation of the Definitive
Notes,  the temporary  Notes shall be  exchangeable  for  Definitive  Notes upon
surrender of the temporary  Notes at the office or agency of the Note Registrar,
without charge to the Noteholder.  Upon surrender for cancellation of any one or
more temporary Notes,  the Issuer shall execute and the Indenture  Trustee shall
authenticate and make available for delivery,  in exchange therefor,  Definitive
Notes of  authorized  denominations  and of like tenor and  aggregate  principal
amount.  Until so  exchanged,  such  temporary  Notes  shall in all  respects be
entitled to the same benefits under this Indenture as Definitive Notes.

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<PAGE>

                                   ARTICLE V

                              Default And Remedies

     Section 5.01 Events of Default.  The Issuer shall  deliver to the Indenture
Trustee,  the Paying Agent and the Enhancer,  within five days after learning of
the occurrence of any event that with the giving of notice and the lapse of time
would become an Event of Default under clause (b) of the definition of "Event of
Default"  written  notice in the form of an Officer's  Certificate of its status
and what action the Issuer is taking or proposes to take with respect thereto.

     Section 5.02  Acceleration  of Maturity;  Rescission and  Annulment.  If an
Event of Default shall occur and be continuing,  then and in every such case the
Indenture  Trustee,  acting at the written direction of the Enhancer (so long as
no Enhancer  Default exists) or the Noteholders of Notes  representing  not less
than a  majority  of the Note  Balance  of the  Notes  (if an  Enhancer  Default
exists),  may declare the Notes to be immediately due and payable by a notice in
writing to the Issuer (and to the  Indenture  Trustee if given by  Noteholders);
and upon  any such  declaration,  the  unpaid  principal  amount  of the  Notes,
together  with  accrued  and  unpaid  interest   thereon  through  the  date  of
acceleration, shall become immediately due and payable.

     At any time after such declaration of acceleration of maturity with respect
to an Event of Default has been made and before a judgment or decree for payment
of the money due has been  obtained  by the  Indenture  Trustee  as  hereinafter
provided in this Article V, the Enhancer (so long as no Enhancer Default exists)
or the  Noteholders of Notes  representing a majority of the Note Balance of the
Notes (if an Enhancer Default  exists),  by written notice to the Issuer and the
Indenture Trustee, may in writing waive the related Event of Default and rescind
and annul  such  declaration  and its  consequences  if the  Issuer  has paid or
deposited with the Indenture Trustee a sum sufficient to pay:

          (a) all  payments of  principal  of and  interest on the Notes and all
other amounts that would then be due hereunder or upon the Notes if the Event of
Default giving rise to such acceleration had not occurred;

          (b) all sums paid or advanced by the Indenture  Trustee  hereunder and
the   reasonable   compensation,    expenses,   disbursements,    advances   and
indemnification of the Indenture Trustee, Paying Agent, Note Registrar and their
respective agents and counsel; and

          (c) all Events of Default,  other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.12.

     No such rescission shall affect any subsequent  default or impair any right
consequent thereto.

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<PAGE>

     Section  5.03  Collection  of  Indebtedness  and Suits for  Enforcement  by
Indenture Trustee.

          (a) The Issuer  covenants that if there is a default in the payment of
(i) any  interest on any Note when the same  becomes due and  payable,  and such
default  continues  for a period of five days,  or (ii) the  principal of or any
installment  of the principal of any Note when the same becomes due and payable,
the Issuer shall,  upon demand of the Indenture  Trustee pay to it or the Paying
Agent,  for the benefit of the Noteholders  and the Enhancer,  the entire amount
then due and payable on the Notes for principal  and interest,  with interest on
the overdue  principal,  and in addition thereto such further amount as shall be
sufficient  to cover  the  costs  and  expenses  of  collection,  including  the
reasonable compensation,  expenses, disbursements,  advances and indemnification
owed to the Indenture Trustee and its agents (including, without limitation, the
Paying Agent) and counsel.

          (b) In case the Issuer  shall fail  forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust,  subject to the  provisions  of Section  10.17  hereof,  may  institute a
Proceeding for the  collection of the sums so due and unpaid,  and may prosecute
such  Proceeding to judgment or final  decree,  and may enforce the same against
the Issuer or other  obligor on the Notes and collect in the manner  provided by
law out of the  property of the Issuer or other  obligor on the Notes,  wherever
situated, the monies adjudged or decreed to be payable.

          (c)  If an  Event  of  Default  shall  occur  and be  continuing,  the
Indenture  Trustee,  subject to the provisions of Section 10.17 hereof,  may, as
more particularly provided in Section 5.04, in its discretion proceed to protect
and enforce  its rights and the rights of the  Noteholders  and the  Enhancer by
such appropriate  Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights,  whether for the specific enforcement of
any  covenant or  agreement  in this  Indenture or in aid of the exercise of any
power  granted  herein,  or to  enforce  any  other  proper  remedy  or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.

          (d) If there  shall be  pending,  relative  to the Issuer or any other
obligor on the Notes or any Person  having or claiming an ownership  interest in
the Trust  Estate,  Proceedings  under Title 11 of the United States Code or any
other applicable  federal or state bankruptcy,  insolvency or other similar law,
or  if  a  receiver,  assignee  or  trustee  in  bankruptcy  or  reorganization,
liquidator,  sequestrator  or similar  official shall have been appointed for or
taken  possession of the Issuer or its property or such other obligor or Person,
or if there shall be any other comparable judicial  Proceedings  relative to the
Issuer or other any other obligor on the Notes,  or relative to the creditors or
property  of the  Issuer or such  other  obligor,  then the  Indenture  Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise, and irrespective of whether
the Indenture  Trustee shall have made any demand  pursuant to the provisions of
this  Section,  shall  be  entitled  and  empowered,  by  intervention  in  such
Proceedings or otherwise:

                    (i) to file  and  prove a claim  or  claims  for the  entire
          amount of principal  and  interest  owing and unpaid in respect of the
          Notes and to file such other  papers or  documents as may be necessary
          or  advisable  in order to have the  claims of the

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<PAGE>

          Indenture Trustee (including any claim for reasonable  compensation to
          the Indenture  Trustee and each  predecessor  Indenture  Trustee,  and
          their respective agents,  attorneys and counsel, and for reimbursement
          of all expenses and  liabilities  incurred,  and all advances made, by
          the Indenture Trustee and each predecessor  Indenture Trustee,  except
          as a result of negligence, willful misconduct or bad faith) and of the
          Noteholders and the Enhancer allowed in such Proceedings;

                    (ii) unless prohibited by applicable law and regulations, to
          vote on behalf of the  Noteholders and the Enhancer in any election of
          a trustee, a standby trustee or Person performing similar functions in
          any such Proceedings;

                    (iii) to collect and  receive  any monies or other  property
          payable  or  deliverable  on any such  claims  and to  distribute  all
          amounts  received with respect to the claims of the Noteholders and of
          the Indenture Trustee on their behalf; and

                    (iv) to file  such  proofs  of claim  and  other  papers  or
          documents as may be necessary or advisable in order to have the claims
          of the Indenture  Trustee or the  Noteholders  allowed in any judicial
          proceedings relative to the Issuer, its creditors and its property;

and any trustee,  receiver,  liquidator,  custodian or other similar official in
any such  Proceeding is hereby  authorized by each of such  Noteholders  and the
Enhancer  to make  payments  to the  Indenture  Trustee,  and,  in the event the
Indenture  Trustee  shall  consent to the making of  payments  directly  to such
Noteholders  and the Enhancer,  to pay to the Indenture  Trustee such amounts as
shall be sufficient to cover reasonable  compensation to the Indenture  Trustee,
each predecessor  Indenture Trustee and their respective  agents,  attorneys and
counsel, and all other expenses and liabilities incurred, and all advances made,
by the Indenture  Trustee and each predecessor  Indenture  Trustee,  except as a
result of negligence, willful misconduct or bad faith.

          (e)  Nothing  herein  contained  shall  be  deemed  to  authorize  the
Indenture  Trustee to  authorize or consent to or vote for or accept or adopt on
behalf  of  any  Noteholder  and  the  Enhancer  any  plan  of   reorganization,
arrangement,  adjustment or composition affecting the Notes or the rights of any
Noteholder  thereof or to authorize the Indenture  Trustee to vote in respect of
the claim of any Noteholder and the Enhancer in any such proceeding  except,  as
aforesaid,  to vote for the  election  of a trustee  in  bankruptcy  or  similar
Person.

          (f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture  Trustee without the
possession of any of the Notes or the  production  thereof in any trial or other
Proceedings relative thereto,  and any such action or proceedings  instituted by
the Indenture  Trustee shall be brought in its own name as trustee of an express
trust,  and any  recovery of judgment,  subject to the payment of the  expenses,
disbursements,  indemnification and compensation of the Indenture Trustee,  each
predecessor  Indenture Trustee and their respective agents and attorneys,  shall
be for the ratable benefit of the Noteholders and the Enhancer.

          (g) In any Proceedings to which the Indenture Trustee shall be a party
(including any Proceedings involving the interpretation of any provision of this
Indenture), the

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<PAGE>

Indenture  Trustee shall be held to represent all Noteholders,  and it shall not
be necessary to make any Noteholder a party to any such Proceedings.

     Section 5.04 Remedies; Priorities.

          (a) If an Event of Default shall have occurred and be continuing, then
the Indenture Trustee,  subject to the provisions of Section 10.17 hereof,  with
the written  consent of the Enhancer  may,  or, at the written  direction of the
Enhancer,  shall,  do one or more of the  following,  in each  case  subject  to
Section 5.05:

                    (i) institute  Proceedings in its own name and as trustee of
          an express trust for the collection of all amounts then payable on the
          Notes or  under  this  Indenture  with  respect  thereto,  whether  by
          declaration or otherwise,  and all amounts payable under the Insurance
          Agreement,  enforce any judgment obtained, and collect from the Issuer
          and any other obligor on the Notes monies adjudged due;

                    (ii)  institute  Proceedings  from  time  to  time  for  the
          complete or partial  foreclosure of this Indenture with respect to the
          Trust Estate;

                    (iii) exercise any remedies of a secured party under the UCC
          and take any other  appropriate  action to  protect  and  enforce  the
          rights and remedies of the Indenture Trustee and the Noteholders; and

                    (iv) sell the Trust Estate or any portion  thereof or rights
          or interest therein, at one or more public or private sales called and
          conducted in any manner permitted by law;

provided,  however,  that  the  Indenture  Trustee  may not  sell  or  otherwise
liquidate  the  Trust  Estate  following  an Event of  Default,  unless  (A) the
Indenture  Trustee  obtains the written  consent of the Enhancer,  so long as no
Enhancer Default exists,  or, if an Enhancer Default exists,  the Noteholders of
100% of the  Note  Balance  of the  Notes,  (B)  the  proceeds  of such  sale or
liquidation distributable to Noteholders are sufficient to discharge in full all
amounts  then due and unpaid upon the Notes for  principal  and  interest and to
reimburse  the  Enhancer  for any  amounts  drawn under the Policy and any other
amounts due the Enhancer  under the  Insurance  Agreement  or (C) the  Indenture
Trustee  determines  that the  Mortgage  Loans  will  not  continue  to  provide
sufficient  funds for the payment of  principal  of and interest on the Notes as
they would have become due if the Notes had not been  declared  due and payable,
and the Indenture  Trustee  obtains the written  consent of the Enhancer and the
Noteholders  of 66 2/3% of the Note Balance of the Notes.  In  determining  such
sufficiency  or  insufficiency  with  respect to clause  (B) and (C) above,  the
Indenture  Trustee may, but need not, obtain and rely, and shall be protected in
relying in good faith, upon an opinion of an Independent  investment  banking or
accounting  firm of national  reputation as to the  feasibility of such proposed
action  and  as to the  sufficiency  of  the  Trust  Estate  for  such  purpose.
Notwithstanding the foregoing,  provided that a Servicing Default shall not have
occurred, any Sale (as defined in Section 5.15 hereof) of the Trust Estate shall
be made subject to the continued servicing of the Mortgage Loans by the Servicer
as provided in the Servicing Agreement. Notwithstanding any sale of the Mortgage
Loans pursuant to this Section 5.04(a), the Indenture Trustee shall, for so long
as any principal or accrued  interest on

                                       36

<PAGE>

the Notes remains unpaid,  continue to act as Indenture Trustee hereunder and to
draw amounts payable under the Policy in accordance with its terms.

          (b) If the Indenture  Trustee collects any money or property  pursuant
to this  Article V, it, or the Paying  Agent on its  behalf,  shall pay out such
money or property in the following order:

          FIRST:  to the  Indenture  Trustee,  the  Paying  Agent  and the  Note
          Registrar for amounts due under Section 6.07;

          SECOND:  to the  Noteholders for amounts due and unpaid on the related
          Notes for interest, including accrued and unpaid interest on the Notes
          for any prior Payment Date, ratably, without preference or priority of
          any kind,  according  to the amounts due and payable on such Notes for
          interest  from  amounts   available  in  the  Trust  Estate  for  such
          Noteholders, but excluding any Interest Shortfalls;

          THIRD:  to the  Noteholders  for amounts due and unpaid on the related
          Notes for principal,  ratably,  without  preference or priority of any
          kind,  according  to the  amounts  due and  payable  on such Notes for
          principal,  from  amounts  available  in the  Trust  Estate  for  such
          Noteholders,  first,  from the  related  Loan  Group and then from the
          other Loan Group with all payments  made on the Class A-II-1 Notes and
          the  Class  A-II-2  Notes  made on a pro rata  basis,  until  the Note
          Balance of such Notes have been reduced to zero;

          FOURTH: to the payment of all amounts due and owing the Enhancer under
          the Insurance Agreement; FIFTH: to the Noteholders for amounts due and
          unpaid on the related Notes for Interest Shortfalls, if any, including
          any  unpaid  Interest  Shortfalls  on the Notes for any prior  Payment
          Date, ratably,  without preference or priority of any kind,  according
          to such amounts due and payable  from  amounts  available in the Trust
          Estate for such Noteholders;

          SIXTH: to the  Certificate  Paying Agent for amounts due under Article
          VIII of the Trust Agreement; and

          SEVENTH: to the payment of the remainder, if any, to the Issuer or any
          other person legally entitled thereto.

     The  Indenture  Trustee,  or the  Paying  Agent on behalf of the  Indenture
Trustee,  may fix a record date and payment date for any payment to  Noteholders
pursuant to this Section  5.04.  At least 15 days before such record  date,  the
Indenture  Trustee shall mail to each Noteholder a notice that states the record
date, the payment date and the amount to be paid.

     Section 5.05 Optional  Preservation of the Trust Estate.  If the Notes have
been declared due and payable  under Section 5.02  following an Event of Default
and such declaration and its consequences  have not been rescinded and annulled,
the  Indenture  Trustee may (with the prior  written  consent of the Enhancer so
long as no Enhancer Default exists), but need not (but

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<PAGE>

shall at the written  direction of the  Enhancer so long as no Enhancer  Default
exists),  elect to take and maintain  possession of the Trust Estate.  It is the
desire of the  parties  hereto  and the  Noteholders  that there be at all times
sufficient  funds for the payment of  principal of and interest on the Notes and
other obligations of the Issuer hereunder including payment to the Enhancer, and
the  Indenture  Trustee  shall take such desire into  account  when  determining
whether  or not  to  take  and  maintain  possession  of the  Trust  Estate.  In
determining  whether to take and maintain  possession of the Trust  Estate,  the
Indenture  Trustee may, but need not, obtain and rely, and shall be protected in
relying in good faith, upon an opinion of an Independent  investment  banking or
accounting  firm of national  reputation as to the  feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.

     Section 5.06  Limitation of Suits.  No  Noteholder  shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this Indenture,
including  with respect to the Policy,  or for the  appointment of a receiver or
trustee, or for any other remedy hereunder, unless and subject to the provisions
of Section 10.17 hereof:

          (a) such Noteholder  shall have previously given written notice to the
Indenture Trustee of a continuing Event of Default;

          (b) the  Noteholders  of not less than 25% of the Note  Balance of the
Notes shall have made written request to the Indenture Trustee to institute such
Proceeding  in respect  of such  Event of  Default in its own name as  Indenture
Trustee hereunder;

          (c) such  Noteholder or  Noteholders  shall have offered the Indenture
Trustee reasonable  indemnity against the costs,  expenses and liabilities to be
incurred by it in complying with such request;

          (d) the  Indenture  Trustee  for 60 days  after  its  receipt  of such
notice,  request  and offer of  indemnity  shall have failed to  institute  such
Proceedings;

          (e) unless an Enhancer  Default has  occurred,  the Enhancer has given
its written consent to the proposed proceedings; and

          (f) no written direction  inconsistent with such written request shall
have been  given to the  Indenture  Trustee  during  such  60-day  period by the
Noteholders of a majority of the Note Balance of the Notes or by the Enhancer.

     It is understood  and intended  that no Noteholder  shall have any right in
any manner  whatever  by virtue of, or by  availing  of, any  provision  of this
Indenture to affect, disturb or prejudice the rights of any other Noteholders or
to obtain or to seek to obtain priority or preference over any other Noteholders
or to enforce  any right  under  this  Indenture,  except in the  manner  herein
provided.

     In  the  event  the  Indenture   Trustee  shall  receive   conflicting   or
inconsistent requests and indemnity from two or more groups of Noteholders, each
representing  less  than a  majority  of the  Note  Balance  of the  Notes,  the
Indenture  Trustee shall act at the direction of the group of  Noteholders  with
the greater Note Balance.  In the event that the Indenture Trustee shall receive
conflicting  or  inconsistent  requests and indemnity from two or more groups of
Noteholders

                                       38

<PAGE>

representing  the same Note  Balance,  then the  Indenture  Trustee  in its sole
discretion  may determine what action,  if any, shall be taken,  notwithstanding
any other provisions of this Indenture.

     Section 5.07  Unconditional  Rights of Noteholders to Receive Principal and
Interest.  Subject to the  provisions of this  Indenture,  the Noteholder of any
Note shall have the  right,  which is  absolute  and  unconditional,  to receive
payment of the principal of and  interest,  if any, on such Note on or after the
respective due dates thereof  expressed in such Note or in this Indenture and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Noteholder.

     Section 5.08 Restoration of Rights and Remedies.  If the Indenture  Trustee
or any  Noteholder  has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been  discontinued or abandoned for
any reason or has been determined  adversely to the Indenture Trustee or to such
Noteholder,  then and in every such case the Issuer,  the Indenture  Trustee and
the Noteholders  shall,  subject to any  determination  in such  Proceeding,  be
restored  severally and  respectively to their former positions  hereunder,  and
thereafter all rights and remedies of the Indenture  Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.

     Section  5.09 Rights and  Remedies  Cumulative.  No right or remedy  herein
conferred  upon or  reserved  to the  Indenture  Trustee,  the  Enhancer  or the
Noteholders is intended to be exclusive of any other right or remedy,  and every
right and remedy shall,  to the extent  permitted by law, be  cumulative  and in
addition to every other right and remedy  given  hereunder  or now or  hereafter
existing at law, in equity or  otherwise.  The  assertion or  employment  of any
right or remedy  hereunder,  or  otherwise,  shall not  prevent  the  concurrent
assertion or employment of any other appropriate right or remedy.

     Section  5.10 Delay or Omission  Not a Waiver.  No delay or omission of the
Indenture  Trustee,  the  Enhancer or any  Noteholder  to exercise  any right or
remedy  accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence  therein.
Every  right  and  remedy  given by this  Article  V or by law to the  Indenture
Trustee or to the  Noteholders  may be exercised from time to time, and as often
as may be deemed expedient,  by the Indenture Trustee or by the Noteholders,  as
the case may be.

     Section 5.11 Control by Enhancer or  Noteholders.  The Enhancer (so long as
no Enhancer Default exists) or if an Enhancer Default exists, the Noteholders of
a  majority  of the Note  Balance  of Notes,  shall  have the right to direct in
writing the time,  method and place of conducting  any Proceeding for any remedy
available to the Indenture  Trustee with respect to the Notes or exercising  any
trust or power conferred on the Indenture Trustee, provided that:

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

          (b) subject to the express terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Trust Estate shall be by the Enhancer
(so long as no Enhancer

                                       39

<PAGE>

Default exists) or if an Enhancer  Default  exists,  by the Noteholders of Notes
representing not less than 100% of the Note Balance of the Notes;

          (c) if the  conditions  set  forth in  Section  5.05  shall  have been
satisfied and the Indenture  Trustee elects to retain the Trust Estate  pursuant
to such Section,  then any direction to the Indenture  Trustee by Noteholders of
Notes  representing  less than 100% of the Note  Balance of the Notes to sell or
liquidate the Trust Estate shall be of no force and effect; and

          (d) the  Indenture  Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.

Notwithstanding the rights of Noteholders set forth in this Section,  subject to
Section 6.01, the Indenture  Trustee need not take any action that it determines
(in its sole  discretion)  might  involve it in  liability  or might  materially
adversely  affect the rights of any  Noteholders  not consenting to such action,
unless the Trustee has received  satisfactory  indemnity  from the Enhancer or a
Noteholder.

     Section  5.12  Waiver of Past  Defaults.  Prior to the  declaration  of the
acceleration  of the  maturity  of the Notes as provided  in Section  5.02,  the
Enhancer  (so long as no  Enhancer  Default  exists) or if an  Enhancer  Default
exists,  the  Noteholders of not less than a majority of the Note Balance of the
Notes,  may waive in writing  any past Event of  Default  and its  consequences,
except an Event of  Default  (a) with  respect to  payment  of  principal  of or
interest on any of the Notes or (b) in respect of a covenant or provision hereof
that cannot be modified or amended without the consent of the Noteholder of each
Note. In the case of any such waiver,  the Issuer,  the Indenture  Trustee,  the
Enhancer  and the  Noteholders  shall be  restored  to their  respective  former
positions  and  rights  hereunder;  but  no  such  waiver  shall  extend  to any
subsequent or other Event of Default or impair any right consequent thereto.

     Upon any such  waiver,  any Event of  Default  arising  therefrom  shall be
deemed to have been cured and not to have  occurred,  for every  purpose of this
Indenture;  but no such waiver shall extend to any  subsequent or other Event of
Default or impair any right consequent thereto.

     Section 5.13  Undertaking for Costs.  All parties to this Indenture  agree,
and each Noteholder by such Noteholder's acceptance of the related Note shall be
deemed to have  agreed,  that any court may in its  discretion  require,  in any
Proceeding for the enforcement of any right or remedy under this  Indenture,  or
in any Proceeding  against the Indenture Trustee for any action taken,  suffered
or omitted by it as Indenture Trustee,  the filing by any party litigant in such
Proceeding of an undertaking to pay the costs of such Proceeding,  and that such
court  may in its  discretion  assess  reasonable  costs,  including  reasonable
attorneys'  fees and expenses,  against any party  litigant in such  Proceeding,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant;  but the provisions of this Section 5.13 shall not apply to
(a) any  Proceeding  instituted by the  Indenture  Trustee,  (b) any  Proceeding
instituted by any Noteholder,  or group of Noteholders,  in each case holding in
the  aggregate  more  than  10% of the  Note  Balance  of the  Notes  or (c) any
Proceeding  instituted by any Noteholder  for the  enforcement of the payment of
principal  of or  interest  on any Note on or after  the  respective  due  dates
expressed in such Note and in this Indenture.

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<PAGE>

     Section 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,  or
plead or in any manner  whatsoever,  claim or take the benefit or advantage  of,
any stay or extension  law  wherever  enacted,  now or at any time  hereafter in
force,  that may affect the covenants or the performance of this Indenture;  and
the Issuer (to the extent that it may  lawfully do so) hereby  expressly  waives
all  benefit  or  advantage  of any such law,  and  covenants  that it shall not
hinder,  delay or impede  the  execution  of any  power  herein  granted  to the
Indenture Trustee,  but will suffer and permit the execution of every such power
as though no such law had been enacted.

     Section 5.15 Sale of Trust Estate.

          (a) The power to effect  any sale or other  disposition  (a "Sale") of
any portion of the Trust Estate pursuant to Section 5.04 is expressly subject to
the  provisions of Section 5.05 and this Section  5.15.  The power to effect any
such Sale shall not be  exhausted  by any one or more Sales as to any portion of
the Trust Estate  remaining  unsold,  but shall  continue  unimpaired  until the
entire Trust Estate shall have been sold or all amounts payable on the Notes and
under this Indenture and under the Insurance Agreement shall have been paid. The
Indenture  Trustee  may from time to time  postpone  any  public  Sale by public
announcement  made at the time and place of such  Sale.  The  Indenture  Trustee
hereby expressly waives its right to any amount fixed by law as compensation for
any Sale (which,  for the avoidance of doubt, does not include any fees or other
expenses payable to the Indenture Trustee pursuant to this Indenture).

          (b) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless:

                    (i) the Enhancer,  if no Enhancer Default exists,  or, if an
          Enhancer  Default exists,  the Noteholders of 100% of the Note Balance
          of the  Notes,  direct the  Indenture  Trustee in writing to make such
          Sale,

                    (ii) the  proceeds  of such Sale  would be not less than the
          entire  amount  that  would be payable  to the  Noteholders  under the
          Notes, the Certificateholders  under the Certificates and the Enhancer
          in respect of amounts drawn under the Policy and any other amounts due
          the  Enhancer  under the  Insurance  Agreement  (as  certified  by the
          Enhancer in writing to the Indenture Trustee), in full payment thereof
          in accordance  with Section 5.02, on the Payment Date next  succeeding
          the date of such Sale, or

                    (iii)  the  Indenture  Trustee   determines,   in  its  sole
          discretion,  that the conditions for retention of the Trust Estate set
          forth  in  Section  5.05  cannot  be  satisfied  (in  making  any such
          determination,  the Indenture  Trustee may rely and shall be protected
          in relying in good faith upon an opinion of an Independent  investment
          banking firm obtained and delivered as provided in Section 5.05),  and
          the  Enhancer,  so long as no  Enhancer  Default  exists,  consents in
          writing  to  such  Sale,  and,  if an  Enhancer  Default  exists,  the
          Noteholders of Notes representing at least 66 2/3% of the Note Balance
          of the Notes consent in writing to such Sale.

The purchase by the Indenture  Trustee of all or any portion of the Trust Estate
at a private  Sale shall not be deemed a Sale or other  disposition  thereof for
purposes of this Section 5.15(b).

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<PAGE>

          (c) Unless the Enhancer, so long as no Enhancer Default exists, or, if
an Enhancer  Default exists,  the Noteholders of 100% of the Note Balance of the
Notes, shall have otherwise  consented or directed the Indenture Trustee, at any
public  Sale of all or any  portion of the Trust  Estate at which a minimum  bid
equal to or greater than the amount  described in paragraph  (ii) of  subsection
(b) of this Section 5.15 has not been  established by the Indenture  Trustee and
no  Person  bids an  amount  equal to or  greater  than  such  amount,  then the
Indenture Trustee shall bid an amount at least $1.00 more than the highest other
bid, which bid shall be subject to the provisions of Section 5.15(d)(ii) herein.

          (d) In  connection  with a Sale  of all or any  portion  of the  Trust
Estate:

                    (i) any  Noteholder may bid for and, with the consent of the
          Enhancer,  purchase the property offered for sale, and upon compliance
          with the terms of sale may hold,  retain and  possess  and  dispose of
          such property, without further accountability,  and may, in paying the
          purchase  money  therefor,  deliver  any Notes or claims for  interest
          thereon  in  lieu  of  cash  up  to  the  amount  which  shall,   upon
          distribution of the net proceeds of such sale, be payable thereon, and
          such Notes,  in case the amounts so payable thereon shall be less than
          the amount due thereon,  shall be returned to the Noteholders  thereof
          after being appropriately stamped to show such partial payment;

                    (ii)  the  Indenture  Trustee  may bid for and  acquire  the
          property  offered for Sale in  connection  with any Sale  thereof and,
          subject  to any  requirements  of,  and to the  extent  permitted  by,
          applicable  law  in  connection  therewith,  may  purchase  all or any
          portion of the Trust Estate in a private sale;

                    (iii) the  Indenture  Trustee  shall  execute and deliver an
          appropriate instrument of conveyance  transferring its interest in any
          portion of the Trust Estate in connection with a Sale thereof;

                    (iv) the Indenture Trustee is hereby  irrevocably  appointed
          the agent and  attorney-in-fact  of the Issuer to transfer  and convey
          its interest in any portion of the Trust Estate in  connection  with a
          Sale  thereof,  and to take all action  necessary to effect such Sale;
          and

                    (v) no purchaser or transferee at such a Sale shall be bound
          to  ascertain  the  Indenture  Trustee's  authority,  inquire into the
          satisfaction of any conditions  precedent or see to the application of
          any monies.

     Section 5.16 Action on Notes.  The  Indenture  Trustee's  right to seek and
recover  judgment on the Notes or under this Indenture  shall not be affected by
the seeking,  obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture  Trustee  against the Issuer or by the levy of any
execution  under such  judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer.  Any money or property  collected by the  Indenture
Trustee shall be applied in accordance with Section 5.04(b).

     Section 5.17 Performance and Enforcement of Certain Obligations.

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<PAGE>

          (a)  Promptly  following a written  request  from the  Enhancer or the
Indenture Trustee (with the written consent of the Enhancer), the Issuer, in its
capacity as owner of the Mortgage Loans,  shall, with the written consent of the
Enhancer,  take all such lawful action as the  Indenture  Trustee may request to
cause the  Issuer to compel or secure  the  performance  and  observance  by the
Seller and the Servicer,  as  applicable,  of each of their  obligations  to the
Issuer under or in  connection  with the Purchase  Agreement  and the  Servicing
Agreement, and to exercise any and all rights,  remedies,  powers and privileges
lawfully  available  to the  Issuer  under or in  connection  with the  Purchase
Agreement and the Servicing  Agreement to the extent and in the manner  directed
by the  Indenture  Trustee,  as pledgee of the  Mortgage  Loans,  including  the
transmission  of notices  of  default on the part of the Seller or the  Servicer
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure  performance  by the Seller or the Servicer of each of their
obligations under the Purchase Agreement and the Servicing Agreement.

          (b) If an Event of Default shall have occurred and be continuing,  the
Indenture  Trustee,  as pledgee of the Mortgage Loans,  subject to the rights of
the  Enhancer  hereunder  and under the  Servicing  Agreement,  may,  and at the
direction  (which  direction  shall be in  writing)  of the  Enhancer  or, if an
Enhancer  Default exists,  the Noteholders of 66 2/3% of the Note Balance of the
Notes, shall, exercise all rights,  remedies,  powers,  privileges and claims of
the Issuer  against the Seller or the Servicer  under or in connection  with the
Purchase Agreement and the Servicing Agreement,  including the right or power to
take any action to compel or secure  performance  or observance by the Seller or
the  Servicer,  as the case may be, of each of their  obligations  to the Issuer
thereunder  and to give  any  consent,  request,  notice,  direction,  approval,
extension or waiver under the Purchase Agreement and the Servicing Agreement, as
the case may be,  and any right of the Issuer to take such  action  shall not be
suspended.  In connection therewith, as determined by the Indenture Trustee, the
Issuer  shall take all actions  necessary to effect the transfer of the Mortgage
Loans to the Indenture Trustee.

                                   ARTICLE VI

                   The Indenture Trustee and the Paying Agent

     Section 6.01 Duties of Indenture Trustee and the Paying Agent.

          (a) (i) If an Event of Default shall have occurred and be  continuing,
the Indenture  Trustee shall exercise the rights and powers vested in it by this
Indenture  and use the same  degree  of care and  skill in their  exercise  as a
prudent Person would exercise or use under the  circumstances  in the conduct of
such Person's own affairs.

                    (ii) Except during the continuance of an Event of Default:

                              (1) the  Indenture  Trustee  undertakes to perform
                    such  duties and only such  duties as are  specifically  set
                    forth in this  Indenture  and any other  Basic  Document  to
                    which it is a party and no implied  covenants or obligations
                    shall be read into this  Indenture  or any such other  Basic
                    Document against the Indenture Trustee; and

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<PAGE>

                              (2) in the  absence of bad faith on its part,  the
                    Indenture Trustee may conclusively  rely, as to the truth of
                    the statements and the correctness of the opinions expressed
                    therein, upon certificates, reports or opinions furnished to
                    the Indenture  Trustee and conforming to the requirements of
                    this Indenture and any other Basic Document to which it is a
                    party;  provided,   --------  however,  that  the  Indenture
                    Trustee shall examine the certificates, reports and opinions
                    to determine whether or not they conform to the requirements
                    of this  Indenture and any other Basic  Document to which it
                    is a party.

                    (iii)  The  Indenture  Trustee  may  not  be  relieved  from
          liability for its own negligent  action,  its own negligent failure to
          act or its own willful misconduct, except that:

                              (1) this  paragraph  does not limit the  effect of
                    paragraph (a)(i) of this Section 6.01;

                              (2) the Indenture  Trustee shall not be liable for
                    any error of  judgment  made in good faith by a  Responsible
                    Officer  unless it is proved that the Indenture  Trustee was
                    negligent in ascertaining the pertinent facts; and

                              (3) the Indenture Trustee shall not be liable with
                    respect  to any  action  it  takes  or omits to take in good
                    faith in accordance with a direction received by it pursuant
                    to Section  5.11 or any  direction  from the Enhancer or the
                    Noteholders  that the  Enhancer  or the  Noteholders  are is
                    entitled to give under any of the Basic Documents.

                    (iv) The Indenture  Trustee shall not be liable for interest
          on any money received by it except as the Indenture  Trustee may agree
          in writing with the Issuer.

                    (v) Money held in trust by the Indenture Trustee need not be
          segregated  from other funds  except to the extent  required by law or
          the terms of this Indenture or the Trust Agreement.

                    (vi)  No  provision  of this  Indenture  shall  require  the
          Indenture  Trustee to expend or risk its own funds or otherwise  incur
          financial  liability in the performance of any of its duties hereunder
          or in the  exercise  of any of its rights or powers,  if it shall have
          reasonable grounds to believe that repayment of such funds or adequate
          indemnity against such risk or liability is not reasonably  assured to
          it.

                    (vii)  Every  provision  of this  Indenture  relating to the
          conduct or affecting the  liability of or affording  protection to the
          Indenture  Trustee shall be subject to the  provisions of this Section
          and to the provisions of TIA.

                    (viii) [reserved].

                    (ix) [reserved]

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<PAGE>

                    (x) The  Indenture  Trustee  shall not be  required  to take
          notice  or be  deemed  to have  notice  or  knowledge  of any Event of
          Default (except for an Event of Default specified in clause (a) of the
          definition  thereof)  unless a  Responsible  Officer of the  Indenture
          Trustee shall have received  written  notice or have actual  knowledge
          thereof.  In the absence of receipt of such notice or such  knowledge,
          the Indenture Trustee may conclusively assume that there is no default
          or Event of Default.

                    (xi) The Indenture  Trustee shall have no duty to see to any
          recording or filing of any Assignment of Mortgage  (except as provided
          in Section 4.12) or any financing statement or continuation  statement
          evidencing  a security  interest or to see to the  maintenance  of any
          such  recording  or filing or to any  rerecording  or  refiling of any
          thereof.

          (b) (i) the Paying  Agent  undertakes  to perform such duties and only
such duties as are  specifically set forth in this Indenture and any other Basic
Document to which it is a party and no implied covenants or obligations shall be
read into this  Indenture  or any such other Basic  Document  against the Paying
Agent; and

                    (ii) in the  absence  of bad faith on its part,  the  Paying
          Agent may conclusively rely, as to the truth of the statements and the
          correctness  of the opinions  expressed  therein,  upon  certificates,
          reports or opinions  furnished to the Paying Agent and  conforming  to
          the  requirements  of this  Indenture and any other Basic  Document to
          which it is a party;  provided,  however,  that the Paying Agent shall
          examine the certificates, reports and opinions to determine whether or
          not they conform to the  requirements  of this Indenture and any other
          Basic Document to which it is a party.

                    (i) The Paying Agent may not be relieved from  liability for
          its own negligent action,  its own negligent failure to act or its own
          willful  misconduct,  except that the Paying Agent shall not be liable
          for any error of judgment made in good faith by a Responsible  Officer
          unless  it  is  proved  that  the  Paying   Agent  was   negligent  in
          ascertaining the pertinent facts.

                    (ii) The Paying  Agent  shall not be liable for  interest on
          any  money  received  by it except  as the  Paying  Agent may agree in
          writing with the Issuer.

                    (iii)  Money held in trust by the  Paying  Agent need not be
          segregated  from other funds  except to the extent  required by law or
          the terms of this Indenture or the Trust Agreement.

                    (iv) No provision of this Indenture shall require the Paying
          Agent to  expend or risk its own funds or  otherwise  incur  financial
          liability in the performance of any of its duties  hereunder or in the
          exercise of any of its rights or powers,  if it shall have  reasonable
          grounds to believe that repayment of such funds or adequate  indemnity
          against such risk or liability is not reasonably assured to it.

                    (v)  Every  provision  of  this  Indenture  relating  to the
          conduct or affecting the  liability of or affording  protection to the
          Paying Agent shall be subject to the  provisions  of this Section 6.01
          and to the provisions of TIA.

                                       45

<PAGE>

                    (vi) The Paying  Agent  shall not be required to take notice
          or be  deemed  to have  notice or  knowledge  of any Event of  Default
          (except  for an  Event  of  Default  specified  in  clause  (a) of the
          definition  thereof) unless a Responsible  Officer of the Paying Agent
          shall have received written notice or have actual  knowledge  thereof.
          In the absence of receipt of such notice or such knowledge, the Paying
          Agent may  conclusively  assume  that  there is no default or Event of
          Default.

                    (vii)  The  Paying  Agent  hereby  accepts   appointment  as
          Certificate  Paying Agent under the Trust  Agreement  and agrees to be
          bound  by  the  provisions  of the  Trust  Agreement  relating  to the
          Certificate  Paying Agent.  The Paying Agent hereby agrees to be bound
          by the provisions of the Trust Agreement.

     Section 6.02 Rights of Indenture Trustee and Paying Agent.

          (a) (i) The Indenture  Trustee and the Paying Agent may rely and shall
be  protected  in acting  or  refraining  from  acting  in good  faith  upon any
resolution,  Officer's Certificate, opinion of counsel, certificate of auditors,
or any other certificate,  statement,  instrument,  report,  notice,  consent or
other document believed by it to be genuine and to have been signed or presented
by the proper  person.  Neither the Indenture  Trustee nor the Paying Agent need
investigate any fact or matter stated in any such document.

                    (i) Before the  Indenture  Trustee or the Paying  Agent,  as
          applicable,  acts or refrains from acting, it may require an Officer's
          Certificate  or an Opinion of Counsel.  Neither the Indenture  Trustee
          nor the Paying Agent, as applicable, shall be liable for any action it
          takes or omits to take in good faith in reliance on any such Officer's
          Certificate or Opinion of Counsel.

                    (ii)  The  Indenture   Trustee  or  the  Paying  Agent,   as
          applicable,  may  execute  any of the  trusts or powers  hereunder  or
          perform any duties  hereunder  either directly or by or through agents
          or  attorneys  or a custodian  or nominee,  and neither the  Indenture
          Trustee nor the Paying Agent, as applicable,  shall be responsible for
          any  misconduct or  negligence on the part of, or for the  supervision
          of, any such agent, attorney,  custodian or nominee appointed with due
          care by it hereunder.

                    (iii)  Neither the  Indenture  Trustee nor the Paying  Agent
          shall be liable for any action it takes or omits to take in good faith
          which it  believes  to be  authorized  or within its rights or powers;
          provided,  however, that the Indenture Trustee's or the Paying Agent's
          conduct,  as  applicable,  does  not  constitute  willful  misconduct,
          negligence or bad faith.

                    (iv) The Indenture  Trustee and the Paying Agent may consult
          with  counsel,  and the advice or opinion of counsel  with  respect to
          legal matters  relating to this  Indenture and the Notes shall be full
          and complete authorization and protection from liability in respect to
          any action  taken,  omitted or suffered by it  hereunder in good faith
          and in accordance with the advice or opinion of such counsel.

                    (v) Neither the Indenture  Trustee nor the Paying Agent,  as
          applicable,  shall be personally liable for any action taken, suffered
          or omitted by it in good faith and

                                       46

<PAGE>

believed by it to be  authorized  or within the  discretion  or rights or powers
conferred  upon it by this  Indenture,  unless  it  shall  be  proved  that  the
Indenture  Trustee  or  the  Paying  Agent,  as  applicable,  was  negligent  in
ascertaining the pertinent facts.

                    (vi)  Prior  to  the  occurrence  of  an  Event  of  Default
          hereunder,  and after the  curing or waiver of all  Events of  Default
          that may have occurred,  neither the Indenture Trustee, nor the Paying
          Agent, as applicable,  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 Enhancer or the Noteholders representing a majority of
          the Note  Balance;  provided,  --------  however,  that if the payment
          within a reasonable time to the Indenture Trustee or the Paying Agent,
          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  Indenture  Trustee or the Paying  Agent,  as  applicable,  not
          assured to the Indenture  Trustee or the Paying Agent,  as applicable,
          by the  security  afforded to it by the terms of this  Indenture,  the
          Indenture  Trustee or the Paying  Agent,  as  applicable,  may require
          indemnity  satisfactory  to such party  against such cost,  expense or
          liability as a condition to taking any such action.

                    (vii)  Neither the  Indenture  Trustee nor the Paying  Agent
          shall be under any  obligation to exercise any of the trusts or powers
          vested in it by this Indenture or to institute,  conduct or defend any
          litigation  hereunder or in relation  hereto at the request,  order or
          direction of any of the Enhancer or the  Noteholders,  pursuant to the
          provisions of this  Indenture,  unless the Enhancer or the Noteholders
          shall have offered to the Indenture  Trustee or the Paying  Agent,  as
          applicable,  reasonable  security  or  indemnity  against  the  costs,
          expenses  and  liabilities  which may be incurred  therein or thereby;
          nothing contained herein shall, however, relieve the Indenture Trustee
          or the  Paying  Agent,  as  applicable,  of the  obligation,  upon the
          occurrence  of an  Event  of  Default  (which  has not  been  cured or
          waived),  to  exercise  such of the rights and powers  vested in it by
          this Indenture,  and to use the same degree of care and skill in their
          exercise  as a  prudent  investor  would  exercise  or use  under  the
          circumstances in the conduct of such investor's own affairs.

                    (viii)   Anything  in  this   Indenture   to  the   contrary
          notwithstanding, in no event shall either the Indenture Trustee or the
          Paying  Agent,  as  applicable,  be liable for  special,  indirect  or
          consequential loss or damage of any kind whatsoever (including but not
          limited to lost profits),  even if the Indenture Trustee or the Paying
          Agent, as applicable,  has been advised of the likelihood of such loss
          or damage and regardless of the form of action,  so long as the action
          taken by the such party was in accordance  with this Indenture and the
          Insurance Agreement.

          (b) The Paying  Agent  undertakes  only to perform  such duties as are
specifically  set forth in the  Basic  Documents  and no  implied  covenants  or
obligations shall be read into the Basic Documents against the Paying Agent.

     Section 6.03 Individual  Rights of Indenture  Trustee and the Paying Agent.
The Indenture  Trustee in its  individual  or any other  capacity may become the
owner or pledgee of

                                       47

<PAGE>

Notes and may  otherwise  deal with the Issuer or its  Affiliates  with the same
rights it would have if it were not Indenture  Trustee.  The Paying Agent,  Note
Registrar,  any other paying agent,  co-registrar  or co-paying agent may do the
same with like rights.  However, the Indenture Trustee and the Paying Agent must
comply with Sections 6.11 and 6.12.

Section 6.04 Disclaimer of the Indenture Trustee and Paying Agent. Neither the
Indenture Trustee nor the Paying Agent shall be (i) responsible for and makes
any representation as to the validity, sufficiency or adequacy of this Indenture
or the Notes or any other Basic Document to which it is a party or the Auction
Agent Agreement, (ii) accountable for the Issuer's use of the proceeds from the
Notes, (iii) responsible for any statement of the Issuer in this Indenture or in
any document issued in connection with the sale of the Notes or in the Notes,
other than the Indenture Trustee's certificate of authentication thereon or (iv)
responsible or liable for any acts or omissions of any of the Servicer, the
Depositor, the Owner Trustee, any Yield Maintenance Provider, the Auction Agent,
the Broker-Dealer, the Depository or any Depository Participant.

     Section 6.05 Notice of Event of Default. If an Event of Default shall occur
and be  continuing,  and if such  Event of  Default  is  known to a  Responsible
Officer of the Indenture Trustee or the Paying Agent, then the Indenture Trustee
or the Paying Agent,  as applicable,  shall give notice thereof to the Enhancer.
The Indenture  Trustee or the Paying Agent,  as  applicable,  shall mail to each
Noteholder  notice of such  Event of  Default  within 90 days  after it  occurs.
Except  in the  case of an Event of  Default  with  respect  to the  payment  of
principal of or interest on any Note, the Indenture Trustee or the Paying Agent,
as  applicable,  may  withhold  such notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding such notice is in
the interests of the Noteholders.

     Section 6.06 Reports by Paying Agent to Noteholders. The Paying Agent shall
deliver to each  Noteholder  such  information as may be required to enable such
Noteholder  to prepare its federal and state  income tax  returns.  In addition,
upon Issuer Request,  the Paying Agent shall promptly  furnish such  information
reasonably in writing  requested by the Issuer that is  reasonably  available to
the Paying  Agent to enable the Issuer to perform its  federal and state  income
tax reporting obligations.

     Section 6.07 Compensation and Indemnity.

          (a) The Indenture  Trustee shall be compensated and indemnified by the
Servicer in accordance with Section 6.06 of the Servicing Agreement. All amounts
owing the Indenture  Trustee  hereunder in excess of such amount, as well as any
amount owed to the  Indenture  Trustee in  accordance  with  Section 6.06 of the
Servicing  Agreement,  to the extent the Servicer has failed to pay such amount,
shall be paid  solely  as  provided  in  Section  3.05  hereof  (subject  to the
priorities set forth therein). The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust.  The Issuer
shall reimburse the Indenture Trustee for all reasonable  out-of-pocket expenses
incurred  or made by it,  including  costs of  collection,  in  addition  to the
compensation  for its  services.  Such  expenses  shall  include the  reasonable
compensation,  expenses,  disbursements and advances of the Indenture  Trustee's
agents,  counsel,  accountants  and  experts.  The Issuer  shall  indemnify  the
Indenture  Trustee  against any and all loss,  liability  or expense  (including
attorneys'   fees  and  expenses)   incurred  by

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it in connection  with the  administration  of this trust and the performance of
its duties hereunder.  The Indenture Trustee shall notify the Issuer promptly of
any claim for which it may seek indemnity.  Failure by the Indenture  Trustee to
so notify the Issuer shall not relieve the Issuer of its obligations  hereunder.
The Issuer  shall  defend any such  claim,  and the  Indenture  Trustee may have
separate counsel and the Issuer shall pay the fees and expenses of such counsel.
The Issuer is not  obligated to reimburse  any expense or indemnify  against any
loss,  liability  or expense  incurred  by the  Indenture  Trustee  through  the
Indenture Trustee's own willful misconduct, negligence or bad faith.

     The Issuer's payment  obligations to the Indenture Trustee pursuant to this
Section 6.07 shall survive the discharge of this  Indenture.  When the Indenture
Trustee incurs expenses after the occurrence of an Event of Default specified in
clause (c) or (d) of the  definition  thereof with  respect to the Issuer,  such
expenses are intended to constitute expenses of administration under Title 11 of
the United  States  Code or any other  applicable  federal or state  bankruptcy,
insolvency or similar law.

          (b) The Paying  Agent  shall be  compensated  and  indemnified  by the
Servicer in accordance with Section 6.06 of the Servicing Agreement. All amounts
owing the Paying Agent hereunder in excess of such amount, as well as any amount
owed to the  Paying  Agent in  accordance  with  Section  6.06 of the  Servicing
Agreement,  to the extent the Servicer  has failed to pay such amount,  shall be
paid solely as provided in Section 3.05 hereof  (subject to the  priorities  set
forth  therein).  The Issuer shall reimburse the Paying Agent for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation  for its services.  Such expenses shall include the
reasonable  compensation,  expenses,  disbursements  and  advances of the Paying
Agent's agents, counsel, accountants and experts. The Issuer shall indemnify the
Paying  Agent  against  any  and  all  loss,  liability  or  expense  (including
attorneys'   fees  and  expenses)   incurred  by  it  in  connection   with  the
administration  of this trust and the performance of its duties  hereunder.  The
Paying Agent shall notify the Issuer promptly of any claim for which it may seek
indemnity. Failure by the Paying Agent to so notify the Issuer shall not relieve
the Issuer of its obligations hereunder. The Issuer shall defend any such claim,
and the Paying Agent may have separate counsel and the Issuer shall pay the fees
and expenses of such  counsel.  The Issuer is not  obligated  to  reimburse  any
expense or  indemnify  against any loss,  liability  or expense  incurred by the
Paying Agent through the Paying  Agent's own willful  misconduct,  negligence or
bad faith.

     The  Issuer's  payment  obligations  and  indemnities  to the Paying  Agent
pursuant to this Section shall  survive the  discharge of this  Indenture or the
earlier  resignation or removal of the Paying Agent.  When the Indenture Trustee
incurs expenses after the occurrence of an Event of Default  specified in clause
(c) or (d) of the definition  thereof with respect to the Issuer,  such expenses
are  intended to  constitute  expenses of  administration  under Title 11 of the
United  States  Code  or any  other  applicable  federal  or  state  bankruptcy,
insolvency or similar law.

     Section 6.08 Replacement of Indenture Trustee or Paying Agent.

          (a)  No  resignation  or  removal  of  the  Indenture  Trustee  and no
appointment of a successor  Indenture  Trustee shall become  effective until the
acceptance of appointment by the successor  Indenture  Trustee  pursuant to this
Section 6.08. The Indenture Trustee may resign at

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any time by so notifying the Issuer and the  Enhancer.  The Enhancer (so long as
no Enhancer Default exists) or if an Enhancer Default exists, the Noteholders of
a majority of the Note Balance of the Notes, may remove the Indenture Trustee by
so notifying the Indenture Trustee and the Enhancer in writing (if given by such
Noteholders) and may appoint a successor  Indenture  Trustee.  Unless a Servicer
Default  has  occurred  and is  continuing,  the  appointment  of any  successor
Indenture  Trustee  shall  be  subject  to the  prior  written  approval  of the
Servicer. The Issuer shall remove the Indenture Trustee if:

                    (i) the Indenture Trustee fails to comply with Section 6.11;

                    (ii)  the  Indenture  Trustee  is  adjudged  a  bankrupt  or
          insolvent;

                    (iii) a receiver or other public officer takes charge of the
          Indenture Trustee or its property; or

                    (iv) the Indenture  Trustee  otherwise  becomes incapable of
          fulfilling its duties under the Basic Documents.

     If the Indenture  Trustee  resigns or is removed or if a vacancy  exists in
the office of the  Indenture  Trustee for any reason (the  Indenture  Trustee in
such event being  referred to herein as the  retiring  Indenture  Trustee),  the
Issuer shall promptly appoint a successor  Indenture Trustee with the consent of
the Enhancer, which consent shall not be unreasonably withheld. In addition, the
Indenture Trustee shall resign to avoid being directly or indirectly  controlled
by the Issuer.

     A successor  Indenture  Trustee shall  deliver a written  acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer.  Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture.  The successor  Indenture Trustee
shall mail a notice of its succession to the Noteholders. The retiring Indenture
Trustee shall promptly  transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.

     If a successor  Indenture Trustee does not take office within 60 days after
the  retiring  Indenture  Trustee  resigns  or is  removed,  then  the  retiring
Indenture  Trustee,  the Issuer or the Noteholders of a majority of Note Balance
of  the  Notes  may  petition  any  court  of  competent  jurisdiction  for  the
appointment of a successor Indenture Trustee.

     If the Indenture  Trustee fails to comply with Section 6.11, any Noteholder
may  petition  any  court  of  competent  jurisdiction  for the  removal  of the
Indenture Trustee and the appointment of a successor Indenture Trustee.

     Notwithstanding  the replacement of the Indenture  Trustee pursuant to this
Section,  the Issuer's  obligations  under  Section 6.07 shall  continue for the
benefit of the retiring Indenture Trustee.

          (b) No  resignation  or removal of the Paying Agent and no appointment
of a successor  paying  agent shall become  effective  until the  acceptance  of
appointment  by the successor  paying agent  pursuant to this Section 6.08.  The
Paying Agent may resign at any time

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<PAGE>

by so notifying the Issuer, the Indenture Trustee and the Enhancer. The Enhancer
(so long as no Enhancer  Default exists) or if an Enhancer  Default exists,  the
Noteholders  of a majority  of the Note  Balance  of the  Notes,  may remove the
Paying Agent by so notifying the Paying Agent and the Enhancer (if given by such
Noteholders) in writing and may appoint a successor  paying agent. The Indenture
Trustee shall remove the Paying Agent if:

                    (i) the Paying Agent is adjudged a bankrupt or insolvent;

                    (ii) a receiver or other public  officer takes charge of the
          Paying Agent or its property;

                    (iii)  the  Paying  Agent  otherwise  becomes  incapable  of
          acting; or

                    (iv) the Paying Agent breaches any representation,  warranty
          or covenant made by it under any Basic Document.

     If the Paying  Agent  resigns  or is removed or if a vacancy  exists in the
office of Paying  Agent for any reason  (the  Paying  Agent in such event  being
referred to herein as the retiring  Paying Agent),  the Indenture  Trustee shall
promptly  appoint a successor  Paying  Agent with the  consent of the  Enhancer,
which consent shall not be  unreasonably  withheld.  Any Paying Agent  appointed
hereunder shall also be the Certificate Paying Agent.

     A  successor  Paying  Agent  shall  deliver  a  written  acceptance  of its
appointment to the retiring Paying Agent,  the Indenture  Trustee,  the Enhancer
and the Issuer.  Thereupon  the  resignation  or removal of the retiring  Paying
Agent shall become effective,  and the successor paying agent shall have all the
rights, powers and duties of the Paying Agent under this Indenture. The retiring
Paying  Agent  shall be paid all  amounts  owed to it upon  its  resignation  or
removal.  The retiring Paying Agent shall promptly transfer all property held by
it as Paying Agent to the  successor  paying  agent.  The retiring  Paying Agent
shall not be liable for the acts or omissions of any successor paying agent.

     If a  successor  paying  agent does not take office  concurrently  with the
effective resignation or removal of the Paying Agent, the Indenture Trustee will
perform  the duties of the Paying  Agent until a  successor  paying  agent takes
office.

     Notwithstanding  the  replacement  of the  Paying  Agent  pursuant  to this
Section,  the Issuer's and the Trust  Administrator's  obligations under Section
6.07 shall continue for the benefit of the retiring Paying Agent.

     Section 6.09 Successor Indenture Trustee or Paying Agent by Merger.

          (a) If the Indenture  Trustee  consolidates  with,  merges or converts
into, or transfers all or  substantially  all its  corporate  trust  business or
assets to,  another  corporation  or banking  association,  then the  resulting,
surviving  or  transferee  corporation  without  any  further  act  shall be the
successor   Indenture  Trustee,   provided  that  such  corporation  or  banking
association  shall be otherwise  qualified and eligible  under Section 6.11. The
Indenture  Trustee shall provide the Rating  Agencies with written notice of any
such transaction occurring after the Closing Date.

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<PAGE>

          If at the  time  of any  such  succession  by  merger,  conversion  or
consolidation, any of the Notes shall have been authenticated but not delivered,
then any such  successor to the Indenture  Trustee may adopt the  certificate of
authentication   of  any  predecessor   trustee,   and  deliver  such  Notes  so
authenticated.   If  at  such  time  any  of  the  Notes  shall  not  have  been
authenticated,  any successor to the  Indenture  Trustee may  authenticate  such
Notes  either  in the name of any  predecessor  hereunder  or in the name of the
successor to the Indenture  Trustee;  and in all such cases,  such  certificates
shall have the full force that it is anywhere in the Notes or in this  Indenture
provided that the certificate of the Indenture Trustee shall have.

          (b) If the Paying Agent consolidates with, merges or converts into, or
transfers all or  substantially  all its corporate  trust business or assets to,
another  corporation or banking  association,  then the resulting,  surviving or
transferee  corporation or banking  association without any further act shall be
the  successor   paying  agent;   provided  that  such  corporation  or  banking
association shall be an Eligible Institution.

     Section 6.10  Appointment  of  Co-Indenture  Trustee or Separate  Indenture
Trustee.

          (a)  Notwithstanding  any other  provisions of this Indenture,  at any
time, for the purpose of meeting any legal  requirement of any  jurisdiction  in
which any part of the Trust  Estate may at such time be located,  the  Indenture
Trustee  shall have the power and may execute and  deliver  all  instruments  to
appoint one or more Persons to act as a co-trustee or  co-trustees,  or separate
trustee or separate  trustees,  of all or any part of the Issuer, and to vest in
such Person or Persons, in such capacity and for the benefit of the Noteholders,
such title to the Trust Estate,  or any part thereof,  and, subject to the other
provisions of this Section, such powers, duties, obligations,  rights and trusts
as the Indenture Trustee may consider  necessary or desirable.  No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor  trustee  under Section 6.11,  and no notice to  Noteholders  of the
appointment  of any  co-trustee  or separate  trustee  shall be  required  under
Section 6.08 hereof.

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

                    (i) all rights,  powers, duties and obligations conferred or
          imposed upon the Indenture  Trustee shall be conferred or imposed upon
          and exercised or performed by the Indenture  Trustee and such separate
          trustee or co-trustee  jointly (it being understood that such separate
          trustee or co-trustee is not authorized to act separately  without the
          Indenture  Trustee  joining  in such act),  except to the extent  that
          under any law of any  jurisdiction in which any particular act or acts
          are to be performed the  Indenture  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 Estate or any portion thereof in any such jurisdiction) shall be
          exercised and performed singly by such separate trustee or co-trustee,
          but solely at the direction of the Indenture Trustee;

                    (ii) no  trustee  hereunder  shall be  personally  liable by
          reason of any act or omission of any other trustee hereunder; and

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<PAGE>

                    (iii)  the  Indenture  Trustee  may at any time  accept  the
          resignation of or remove any separate trustee or co-trustee.

          (c) Any  notice,  request  or other  writing  given  to the  Indenture
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 Indenture and
the conditions of this Article VI. 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
Indenture Trustee or separately,  as may be provided therein, subject to all the
provisions of this  Indenture,  specifically  including  every provision of this
Indenture  relating to the conduct of,  affecting the liability of, or affording
protection to, the Indenture Trustee.  Every such instrument shall be filed with
the Indenture Trustee.

          (d) Any separate  trustee or co-trustee may at any time constitute the
Indenture 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  Indenture  on its  behalf  and in its name.  If any  separate  trustee  or
co-trustee shall die, become incapable of acting,  resign or be removed,  all of
its  estates,  properties,  rights,  remedies  and  trusts  shall vest in and be
exercised by the Indenture Trustee,  to the extent permitted by law, without the
appointment of a new or successor trustee.

     Section 6.11 Eligibility;  Disqualification.  The Indenture Trustee and the
Paying Agent shall at all times satisfy the requirements of TIA ss. 310(a). Each
of the  Indenture  Trustee  and the  Paying  Agent,  shall  individually  have a
combined  capital and surplus of at least  $50,000,000  as set forth in its most
recent  published  annual  report of condition  and it or its parent  either (a)
shall have a  long-term  debt rating of A or better by Moody's or (b) such other
rating as would not cause  any  Rating  Agency to lower the  rating of the Notes
below its initial rating  thereof,  without taking into account the Policy.  The
Indenture  Trustee  shall  comply with TIA ss.  310(b),  including  the optional
provision  permitted  by the second  sentence  of TIA ss.  310(b)(9);  provided,
however,  that there shall be excluded from the  operation of TIA ss.  310(b)(1)
any  indenture  or  indentures  under which other  securities  of the Issuer are
outstanding  if the  requirements  for  such  exclusion  set  forth  in TIA  ss.
310(b)(1) are met.

     Section  6.12  Preferential   Collection  of  Claims  Against  Issuer.  The
Indenture  Trustee  shall  comply with TIA ss.  311(a),  excluding  any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee that has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.

     Section 6.13 Representations and Warranties.

          (a) The Indenture Trustee hereby represents and warrants that:

                    (i)  The  Indenture  Trustee  is  duly  organized,   validly
          existing and in good standing as a national bank under the laws of the
          United  States with power and authority to own its  properties  and to
          conduct its business as such  properties are currently  owned and such
          business is currently conducted.

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<PAGE>

                    (ii) The  Indenture  Trustee has the power and  authority to
          execute and deliver this Indenture and to carry out its terms; and the
          execution,  delivery and  performance of this Indenture have been duly
          authorized by the Indenture Trustee by all necessary corporate action.

                    (iii) The consummation of the  transactions  contemplated by
          this Indenture and the fulfillment of the terms hereof do not conflict
          with,  result in any breach of any of the terms and  provisions of, or
          constitute  (with or without notice or lapse of time) a default under,
          the articles of organization or bylaws of the Indenture Trustee or any
          agreement  or other  instrument  to which the  Indenture  Trustee is a
          party or by which it is bound.

                    (iv) To the Indenture Trustee's best knowledge, there are no
          Proceedings or investigations  pending or threatened before any court,
          regulatory   body,   administrative   agency  or  other   governmental
          instrumentality  having jurisdiction over the Indenture Trustee or its
          properties (A) asserting the invalidity of this Indenture, (B) seeking
          to prevent the consummation of any of the transactions contemplated by
          this Indenture or (C) seeking any  determination  or ruling that might
          materially  and  adversely  affect the  performance  by the  Indenture
          Trustee of its obligations  under,  or the validity or  enforceability
          of, this Indenture.

                    (v) The  Indenture  Trustee  does  not  have  notice  of any
          adverse  claim (as such terms are used in Section  8-302 of the UCC in
          effect in the State of Delaware) with respect to the Mortgage Loans.

          (b) The Paying Agent hereby represents and warrants that:

                    (i) The Paying Agent is duly organized, validly existing and
          in good standing as a national banking  association  under the laws of
          the United States with power and authority to own its  properties  and
          to conduct its business as such  properties  are  currently  owned and
          such business is currently conducted.

                    (ii) The Paying Agent has the power and authority to execute
          and  deliver  this  Indenture  and to  carry  out its  terms;  and the
          execution,  delivery and  performance of this Indenture have been duly
          authorized by the Paying Agent by all necessary corporate action.

                    (iii) The consummation of the  transactions  contemplated by
          this Indenture and the fulfillment of the terms hereof do not conflict
          with,  result in any breach of any of the terms and  provisions of, or
          constitute  (with or without notice or lapse of time) a default under,
          the  articles  of  organization  or bylaws of the Paying  Agent or any
          agreement or other  instrument to which the Paying Agent is a party or
          by which it is bound.

                    (iv) To the  Paying  Agent's  best  knowledge,  there are no
          Proceedings or investigations  pending or threatened before any court,
          regulatory   body,   administrative   agency  or  other   governmental
          instrumentality  having  jurisdiction  over  the  Paying  Agent or its
          properties (A) asserting the invalidity of this Indenture, (B) seeking
          to prevent the

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<PAGE>

          consummation of any of the transactions contemplated by this Indenture
          or (C) seeking any  determination  or ruling that might materially and
          adversely   affect  the   performance  by  the  Paying  Agent  of  its
          obligations   under,  or  the  validity  or  enforceability  of,  this
          Indenture.

                    (v) The  Paying  Agent does not have  notice of any  adverse
          claim (as such terms are used in Section 8-302 of the UCC in effect in
          the State of Delaware) with respect to the Mortgage Loans.

     Section 6.14  Directions to Indenture  Trustee.  The  Indenture  Trustee is
hereby directed:

                    (a) to accept the pledge of the Mortgage  Loans and hold the
          assets of the Trust in trust in accordance with the Granting Clause;

                    (b) to authenticate  and deliver the Notes  substantially in
          the form  prescribed by Exhibit A in accordance with the terms of this
          Indenture; and

                    (c) to take all other  actions  as shall be  required  to be
          taken by the terms of this Indenture.

     Section 6.15 Indenture Trustee May Own Securities.  The Indenture  Trustee,
in its  individual  or any other  capacity,  may  become the owner or pledgee of
Securities with the same rights it would have if it were not Indenture Trustee.

     Section  6.16  Rights of  Paying  Agent,  Certificate  Paying  Agent,  Note
Registrar and Certificate Registrar.  All the rights and protections included in
this  Article VI for the  Indenture  Trustee  shall also apply to the  Indenture
Trustee in its separate capacities,  if applicable, as Paying Agent, Certificate
Paying Agent, Note Registrar and Certificate Registrar.  In addition, the Paying
Agent shall be afforded the rights,  indemnities and protections afforded to the
Paying Agent  pursuant to this Article VI and in the event that the Paying Agent
is also  acting as Note  Registrar,  the  rights,  indemnities  and  protections
afforded to the  Indenture  Trustee  pursuant to Article VI shall be afforded to
such Note Registrar.

                                  ARTICLE VII

                         Noteholders' Lists and Reports

     Section  7.01  Issuer  to  Furnish  Paying  Agent  Names and  Addresses  of
Noteholders.  The Issuer  shall  furnish or cause to be  furnished to the Paying
Agent (a) not more than five days after each Record Date,  a list,  in such form
as the Paying Agent may  reasonably  require,  of the names and addresses of the
Noteholders  as of such Record  Date,  and (b) at such other times as the Paying
Agent and the Enhancer may request in writing,  within 30 days after  receipt by
the Issuer of any such request,  a list of similar form and content as of a date
not more  than 10 days  prior  to the time  such  list is  furnished;  provided,
however,  that for so long as the Paying  Agent is the Note  Registrar,  no such
list need be furnished.

     Section 7.02 Preservation of Information; Communications to Noteholders.

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<PAGE>

          (a) The  Paying  Agent  shall  preserve,  in as  current  a form as is
reasonably practicable,  the names and addresses of the Noteholders contained in
the most recent list  furnished  to the Paying Agent as provided in Section 7.01
and the names and addresses of the  Noteholders  received by the Paying Agent in
its capacity as Note Registrar.  The Paying Agent may destroy any list furnished
to it as provided in such Section 7.01 upon receipt of a new list so furnished.

          (b) Noteholders may  communicate  pursuant to TIAss.312(b)  with other
Noteholders  with  respect to their  rights  under this  Indenture  or under the
Notes.

          (c) The Issuer, the Indenture  Trustee,  the Paying Agent and the Note
Registrar shall have the protection of TIA ss. 312(c).

     Section 7.03 Reports by Issuer.

          (a) The Issuer shall:

                    (i) file with the  Indenture  Trustee,  within 15 days after
          the Issuer is required to file the same with the Commission, copies of
          the annual  reports and the  information,  documents and other reports
          including  any  certifications  required to be filed with Form 10-K by
          the  Sarbanes-Oxley  Act of 2002 (or copies of such portions of any of
          the  foregoing  as the  Commission  may from time to time by rules and
          regulations  prescribe)  that the Issuer may be  required to file with
          the Commission pursuant to Section 13 or 15(d) of the Exchange Act;

                    (ii) file with the Indenture Trustee and the Commission,  in
          accordance with rules and regulations  prescribed from time to time by
          the  Commission,  such additional  information,  documents and reports
          with  respect to  compliance  by the Issuer  with the  conditions  and
          covenants of this  Indenture  as may be required  from time to time by
          such rules and regulations; and

                    (iii) supply to the  Indenture  Trustee  (and the  Indenture
          Trustee shall transmit by mail to all Noteholders described in TIA ss.
          313(c))  such  summaries  of any  information,  documents  and reports
          required to be filed by the Issuer pursuant to clauses (i) and (ii) of
          this Section 7.03(a) and by rules and regulations prescribed from time
          to time by the Commission.

          (b) Unless the Issuer  otherwise  determines,  the fiscal  year of the
Issuer shall end on December 31 of each year.

     Section 7.04 Reports by Indenture  Trustee.  If required by TIA ss. 313(a),
within 60 days after each May 15,  beginning  with May 15, 2004,  the  Indenture
Trustee  shall make  available to each  Noteholder as required by TIA ss. 313(c)
and to the Enhancer a brief report dated as of such date that  complies with TIA
ss. 313(a). The Indenture Trustee also shall comply with TIA ss. 313(b).

     A copy of each report at the time of its distribution to Noteholders  shall
be filed by the Indenture  Trustee with the  Commission,  if required,  and each
stock exchange,  if any, on which

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<PAGE>

the Notes are listed.  The Issuer shall notify the Indenture Trustee if and when
the Notes are listed on any stock exchange.

                                  ARTICLE VIII

                      Accounts, Disbursements and Releases

     Section 8.01 Collection of Money.  Except as otherwise  expressly  provided
herein, the Indenture Trustee or the Paying Agent may demand payment or delivery
of,  and shall  receive  and  collect,  directly  and  without  intervention  or
assistance  of any  fiscal  agent or other  intermediary,  all  money  and other
property payable to or receivable by the Indenture  Trustee or the Paying Agent,
as applicable,  pursuant to this Indenture.  The Indenture Trustee or the Paying
Agent,  as applicable,  shall apply all such money received by it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or  performance  under any agreement
or instrument that is part of the Trust Estate,  the Indenture  Trustee may take
such  action as may be  appropriate  to enforce  such  payment  or  performance,
including the institution and prosecution of appropriate  Proceedings.  Any such
action  shall be without  prejudice  to any right to claim a Default or Event of
Default under this Indenture and any right to proceed  thereafter as provided in
Article V.

     Section 8.02 Trust Accounts.

          (a) On or prior to the Closing Date, the Issuer shall cause the Paying
Agent to  establish  and  maintain,  in the name of the  Paying  Agent,  for the
benefit of the  Noteholders,  the  Certificate  Paying  Agent,  on behalf of the
Certificateholders,  and the Enhancer,  the Note Payment  Account as provided in
Section 3.01 of this Indenture.

          (b) All monies deposited from time to time in the Note Payment Account
pursuant to the Servicing  Agreement and all deposits  therein  pursuant to this
Indenture  are for the benefit of the  Noteholders  and the  Certificate  Paying
Agent, on behalf of the  Certificateholders,  and all Permitted Investments made
with such monies, including all income or other gain from such investments,  are
for the benefit of the Servicer,  the Indenture  Trustee and the Paying Agent as
provided in Section 5.01 of the Servicing Agreement.

     On each Payment Date, the Paying Agent shall  distribute,  on behalf of the
Indenture  Trustee,  all amounts on deposit in the Note  Payment  Account to the
Noteholders in respect of the Notes and, in its capacity as  Certificate  Paying
Agent, to the  Certificateholders  from the Distribution Account in the order of
priority  set forth in Section  3.05  (except as  otherwise  provided in Section
5.04(b)) and in accordance with the Servicing Certificate.

     The Paying  Agent  shall  invest any funds in the Note  Payment  Account in
Permitted Investments selected in writing by the Servicer maturing no later than
the Business Day  preceding  the next  succeeding  Payment Date and shall not be
sold or disposed of prior to the  maturity  (except that any  investment  in the
institution  with which the Note Payment  Account is maintained may mature or be
payable on demand on such Payment Date). In addition, such Permitted Investments
shall not be  purchased  at a price in excess of par.  The  amount of any losses
incurred  in  respect of any such  investments  shall be  deposited  in the Note
Payment  Account by the  Servicer  and the  Paying  Agent out of their own funds
immediately  as realized  and shall be  allocated  between the  Servicer and the
Paying  Agent on a pro rata  basis,  such that the  percentage  of any such loss
allocated  to the Paying  Agent shall equal a fraction,  the  numerator of which
equals one (1) and the  denominator of which equals the number of days the funds
in the Note Payment

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Account were invested in such investment. Subject to this Section 8.02(b) of the
Indenture,  and  except  as  provided  in this  Section  5.01  of the  Servicing
Agreement,  the Paying Agent shall not be liable for investment  losses on funds
on deposit in the Note Payment Account..

     Section 8.03 Officer's Certificate.  The Indenture Trustee shall receive at
least  seven  days'  notice  when  requested  by the  Issuer to take any  action
pursuant to Section  8.05(a),  accompanied  by copies of any  instruments  to be
executed,  and the Indenture Trustee shall also require,  as a condition to such
action,  an Officer's  Certificate,  in form and substance  satisfactory  to the
Indenture  Trustee,  stating the legal effect of any such action,  outlining the
steps  required  to  complete  the  same,  and  concluding  that all  conditions
precedent to the taking of such action have been complied with.

     Section 8.04 Termination Upon  Distribution to Noteholders.  This Indenture
and the  respective  obligations  and  responsibilities  of the  Issuer  and the
Indenture  Trustee created hereby shall  terminate upon the  distribution to the
Noteholders,  the Certificate Paying Agent on behalf of the  Certificateholders,
the Enhancer and the Indenture Trustee of all amounts required to be distributed
pursuant to Article  III;  provided,  however,  that in no event shall the trust
created hereby  continue beyond the expiration of 21 years from the death of the
survivor of the  descendants  of Joseph P. Kennedy,  the late  ambassador of the
United States to the Court of St. James's, living on the date hereof.

     Section 8.05 Release of Trust Estate.

          (a) Subject to the payment of its fees, expenses and  indemnification,
the Indenture Trustee may, and when required by the provisions of this Indenture
or the Servicing Agreement,  shall, execute instruments to release property from
the lien of this Indenture,  or convey the Indenture  Trustee's  interest in the
same, in a manner and under  circumstances  that are not  inconsistent  with the
provisions of this Indenture.  No Person relying upon an instrument  executed by
the Indenture  Trustee as provided in Article VIII  hereunder  shall be bound to
ascertain the Indenture  Trustee's  authority,  inquire into the satisfaction of
any conditions precedent, or see to the application of any monies.

          (b) The  Indenture  Trustee  shall,  at such  time as (i) there are no
Notes Outstanding,  (ii) all sums due the Indenture Trustee and the Paying Agent
pursuant to this  Indenture  have been paid and (iii) all sums due the  Enhancer
have been paid,  release any remaining  portion of the Trust Estate that secured
the Notes from the lien of this Indenture.

          (c) The Indenture Trustee shall release property from the lien of this
Indenture  pursuant  to this  Section  8.05 only upon  receipt  of (i) an Issuer
Request  accompanied by an Officers'  Certificate and a letter from the Enhancer
stating that the  Enhancer has no objection to such request from the Issuer,  or
(ii) a Request for Release from the Servicer in  accordance  with the  Servicing
Agreement.

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          (d) The Indenture  Trustee shall  surrender the Policy to the Enhancer
for  cancellation  upon the final  payment of  principal  of and interest on the
Notes.

     Section 8.06  Surrender of Notes Upon Final  Payment.  By acceptance of any
Note,  the  Noteholder  thereof  agrees to surrender  such Note to the Indenture
Trustee  promptly,  prior to such  Noteholder's  receipt  of the  final  payment
thereon.

                                   ARTICLE IX

                            Supplemental Indentures

     Section 9.01 Supplemental Indentures Without Consent of Noteholders.

          (a)  Without  the consent of the  Noteholders  of any Notes,  but with
prior  notice to the  Rating  Agencies  and the  prior  written  consent  of the
Enhancer (which consent shall not be unreasonably  withheld)  unless an Enhancer
Default  shall have  occurred,  the Issuer,  the Paying Agent and the  Indenture
Trustee,  when  authorized  by an Issuer  Request,  at any time and from time to
time,  may enter into one or more  indentures  supplemental  hereto (which shall
conform to the provisions of the Trust  Indenture Act as in force at the date of
the execution  thereof),  in form  satisfactory to the Indenture Trustee and the
Paying Agent, for any of the following purposes:

                    (i) to correct or amplify the description of any property at
          any time subject to the lien of this  Indenture,  or better to assure,
          convey and confirm unto the Indenture  Trustee any property subject or
          required to be subjected to the lien of this Indenture,  or to subject
          to the lien of this Indenture additional property;

                    (ii) to evidence  the  succession,  in  compliance  with the
          applicable provisions hereof, of another Person to the Issuer, and the
          assumption by any such successor of the covenants of the Issuer herein
          and in the Notes contained;

                    (iii) to add to the covenants of the Issuer, for the benefit
          of the Noteholders or the Enhancer, or to surrender any right or power
          herein conferred upon the Issuer;

                    (iv) to convey,  transfer,  assign,  mortgage  or pledge any
          property to or with the Indenture Trustee;

                    (v) to cure  any  ambiguity,  to  correct  any  error  or to
          correct or  supplement  any  provision  herein or in any  supplemental
          indenture that may be inconsistent  with any other provision herein or
          in any supplemental indenture;

                    (vi) to make any other provisions with respect to matters or
          questions   arising  under  this  Indenture  or  in  any  supplemental
          indenture,   provided  that  such  action  shall  not  materially  and
          adversely  affect the interests of the Noteholders or the Enhancer (as
          evidenced by an Opinion of Counsel);

                    (vii) to  evidence  and provide  for the  acceptance  of the
          appointment hereunder by a successor trustee with respect to the Notes
          and to add to or change any of

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the  provisions  of this  Indenture  as shall be  necessary  to  facilitate  the
administration of the trusts hereunder by more than one trustee, pursuant to the
requirements of Article VI; or

                    (viii) to modify, eliminate or add to the provisions of this
          Indenture  to  such  extent  as  shall  be  necessary  to  effect  the
          qualification of this Indenture under TIA or under any similar federal
          statute  hereafter  enacted  and to add to this  Indenture  such other
          provisions as may be expressly required by TIA;

provided,  however,  that no such  supplemental  indenture shall be entered into
unless the  Indenture  Trustee,  the Paying  Agent and the  Enhancer  shall have
received  an  Opinion  of  Counsel  to the  effect  that the  execution  of such
supplemental   indenture  will  not  give  rise  to  any  material  adverse  tax
consequence to the Noteholders.

     Each of the Paying Agent and the Indenture  Trustee is hereby authorized to
join in the execution of any such supplemental indenture and to make any further
appropriate agreements and stipulations that may be therein contained.

          (b) The  Issuer,  the Paying  Agent and the  Indenture  Trustee,  when
authorized by an Issuer Request,  may, without the consent of any Noteholder but
with  prior  notice to the  Rating  Agencies  and the  Enhancer,  enter  into an
indenture  or  indentures  supplemental  hereto  for the  purpose  of adding any
provisions  to, or changing in any manner or  eliminating  any of the provisions
of, this  Indenture or of modifying in any manner the rights of the  Noteholders
under  this  Indenture;  provided,  however,  that such  action  shall  not,  as
evidenced by an Opinion of Counsel, (i) adversely affect in any material respect
the  interests of any  Noteholder or the Enhancer or (ii) cause the Issuer to be
subject to an entity level tax.

     Section  9.02  Supplemental  Indentures  With Consent of  Noteholders.  The
Issuer, the Paying Agent and the Indenture Trustee, when authorized by an Issuer
Request,  may,  with prior  notice to the Rating  Agencies  and with the written
consent of the Enhancer and the  Noteholders  of not less than a majority of the
Note Balance  affected  thereby,  by Act (as defined in Section 10.03 hereof) of
such  Noteholders  delivered to the Issuer,  the Paying Agent and the  Indenture
Trustee,  enter into an  indenture  or  indentures  supplemental  hereto for the
purpose of adding any  provisions  to, or changing in any manner or  eliminating
any of the  provisions  of, this  Indenture  or of  modifying  in any manner the
rights of the Noteholders under this Indenture;  provided, however, that no such
supplemental indenture shall, without the consent of the Noteholder of each Note
affected thereby:

          (a) change the date of payment of any  installment  of principal of or
interest on any Note,  or reduce the principal  amount  thereof or the Note Rate
thereon,  change the provisions of this Indenture relating to the application of
collections  on, or the  proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes,  or change any place of payment where, or
the coin or currency in which, any Note or the interest  thereon is payable,  or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor,  as provided in
Article V, to the  payment  of any such  amount due on the Notes on or after the
respective due dates thereof;

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<PAGE>

          (b) reduce the  percentage  of the Note  Balance,  the  consent of the
Noteholders  of which is required for any such  supplemental  indenture,  or the
consent of the  Noteholders  of which is required  for any waiver of  compliance
with certain  provisions  of this  Indenture or certain  defaults  hereunder and
their consequences provided for in this Indenture;

          (c) modify or alter the provisions of the proviso to the definition of
the term "Outstanding" or modify or alter the exception in the definition of the
term "Noteholder";

          (d) reduce the percentage of the Note Balance of the Notes required to
direct the Indenture Trustee to direct the Issuer to sell or liquidate the Trust
Estate pursuant to Section 5.04;

          (e) modify any  provision  of this Section 9.02 except to increase any
percentage specified herein or to provide that certain additional  provisions of
this Indenture or the other Basic Documents cannot be modified or waived without
the consent of the Noteholder of each Note affected thereby;

          (f) modify any of the  provisions of this  Indenture in such manner as
to affect the  calculation of the amount of any payment of interest or principal
due on any Note on any Payment Date  (including  the  calculation  of any of the
individual components of such calculation); or

          (g) permit the  creation of any lien  ranking  prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust Estate or,
except as otherwise permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject  hereto or deprive the  Noteholder
of any Note of the security  provided by the lien of this  Indenture;  provided,
further,  that such  action  shall not, as  evidenced  by an Opinion of Counsel,
cause the Issuer to be subject to an entity level tax.

     Either the Paying Agent or the Indenture  Trustee may in its  discretion or
at the advice of counsel determine whether or not any Notes would be affected by
any supplemental  indenture and any such determination  shall be conclusive upon
the Noteholders of all Notes,  whether  theretofore or thereafter  authenticated
and  delivered  hereunder.  Neither the Paying Agent nor the  Indenture  Trustee
shall be liable for any such determination made in good faith.

     It shall not be necessary  for any Act (as defined in Section 10.03 hereof)
of  Noteholders  under this Section 9.02 to approve the  particular  form of any
proposed  supplemental  indenture,  but it shall be sufficient if such Act shall
approve the substance thereof.

     Promptly  after the  execution  by the  Issuer,  the  Paying  Agent and the
Indenture Trustee of any supplemental  indenture  pursuant to this Section 9.02,
the  Paying  Agent  shall  mail to the  Noteholders  of the Notes to which  such
amendment or  supplemental  indenture  relates a notice setting forth in general
terms the substance of such  supplemental  indenture.  Any failure of the Paying
Agent to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.

     Section  9.03  Execution  of  Supplemental  Indentures.  In  executing,  or
permitting  the  additional  trusts  created  by,  any  supplemental   indenture
permitted by this Article IX or the

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modification  thereby of the trusts  created by this  Indenture,  the  Indenture
Trustee  and the Paying  Agent  shall be  entitled  to receive  and,  subject to
Sections 6.01 and 6.02,  shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental  indenture is authorized
or permitted by this Indenture.  The Indenture Trustee and the Paying Agent may,
but shall not be obligated to, enter into any such  supplemental  indenture that
affects  the Paying  Agent's or the  Indenture  Trustee's  own  rights,  duties,
liabilities or immunities under this Indenture or otherwise.

     Section 9.04 Effect of  Supplemental  Indenture.  Upon the execution of any
supplemental  indenture pursuant to the provisions hereof,  this Indenture shall
be and shall be deemed to be modified and amended in accordance  therewith  with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations,  duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Paying Agent, the Note Registrar,  the Issuer and the
Noteholders  shall  thereafter be determined,  exercised and enforced  hereunder
subject in all respects to such modifications and amendments,  and all the terms
and conditions of any such  supplemental  indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.

     Section 9.05  Conformity  with Trust Indenture Act. Every amendment of this
Indenture and every supplemental  indenture executed pursuant to this Article IX
shall  conform  to the  requirements  of TIA as in  effect  at the  time of such
amendment or supplement so long as this Indenture  shall then be qualified under
TIA.

     Section  9.06  Reference  in  Notes  to  Supplemental   Indentures.   Notes
authenticated  and delivered after the execution of any  supplemental  indenture
pursuant  to this  Article IX may,  and if required  by the  Indenture  Trustee,
shall,  bear a notation  in form  approved  by the  Indenture  Trustee as to any
matter  provided  for in  such  supplemental  indenture.  If the  Issuer  or the
Indenture  Trustee shall so determine,  new Notes so modified as to conform,  in
the opinion of the Indenture  Trustee and the Issuer,  to any such  supplemental
indenture  may be  prepared  and  executed by the Issuer and  authenticated  and
delivered by the Indenture Trustee in exchange for Outstanding Notes.

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                                   ARTICLE X

                                 Miscellaneous

     Section 10.01 Compliance Certificates and Opinions, etc.

          (a) Upon any  application  or request  by the Issuer to the  Indenture
Trustee  or the  Paying  Agent to take any action  under any  provision  of this
Indenture,  the Issuer shall furnish to the Indenture Trustee,  the Paying Agent
and to the  Enhancer (i) an Officer's  Certificate  stating that all  conditions
precedent,  if any,  provided  for in this  Indenture  relating to the  proposed
action have been  complied  with and (ii) an Opinion of Counsel  stating that in
the opinion of such counsel all such  conditions  precedent,  if any,  have been
complied with, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.

     Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

                    (i) a statement that each  signatory of such  certificate or
          opinion has read or has caused to be read such  covenant or  condition
          and the definitions herein relating thereto;

                    (ii) a brief  statement  as to the  nature  and scope of the
          examination  or  investigation  upon which the  statements or opinions
          contained in such certificate or opinion are based;

                    (iii)  a  statement  that,  in  the  opinion  of  each  such
          signatory,  such signatory has made such  examination or investigation
          as is  necessary  to enable  such  signatory  to express  an  informed
          opinion as to  whether  or not such  covenant  or  condition  has been
          complied with;

                    (iv) a statement as to whether,  in the opinion of each such
          signatory, such condition or covenant has been complied with; and

                    (v) if the signer of such certificate or opinion is required
          to be  Independent,  the statement  required by the  definition of the
          term "Independent".

          (b) (i) Prior to the deposit of any  Collateral  or other  property or
securities with the Indenture Trustee or the Paying Agent that is to be made the
basis for the release of any property or securities  subject to the lien of this
Indenture,  the Issuer shall,  in addition to any obligation  imposed in Section
10.01(a) or elsewhere in this  Indenture,  furnish to the Indenture  Trustee and
the Paying Agent an Officer's  Certificate  certifying or stating the opinion of
each person  signing such  certificate  as to the fair value  (within 90 days of
such deposit) to the Issuer of the Collateral or other property or securities to
be so deposited.

                    (ii)  Whenever  the  Issuer is  required  to  furnish to the
          Indenture  Trustee  or  the  Paying  Agent  an  Officer's  Certificate
          certifying or stating the opinion of any signer

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<PAGE>

thereof as to the matters  described in clause (i) above,  the Issuer shall also
deliver to the Indenture Trustee and the Paying Agent an Independent Certificate
as to the same matters,  if the fair value to the Issuer of the securities to be
so  deposited  and of all  other  such  securities  made  the  basis of any such
withdrawal or release since the commencement of the then-current  fiscal year of
the Issuer,  as set forth in the certificates  delivered  pursuant to clause (i)
above and this clause (ii), is 10% or more of the Note Balance of the Notes, but
such a  certificate  need not be  furnished  with respect to any  securities  so
deposited,  if the fair value  thereof to the Issuer as set forth in the related
Officer's  Certificate is less than $25,000 or less than one percent of the Note
Balance of the Notes.

                    (iii) Whenever any property or securities are to be released
          from the lien of this  Indenture,  the  Issuer  shall  furnish  to the
          Indenture  Trustee  and the  Paying  Agent  an  Officer's  Certificate
          certifying  or  stating  the  opinion  of  each  person  signing  such
          certificate  as to the fair value  (within 90 days of such release) of
          the property or securities proposed to be released and stating that in
          the opinion of such person the  proposed  release  will not impair the
          security  under this  Indenture  in  contravention  of the  provisions
          hereof.

                    (iv)  Whenever  the  Issuer is  required  to  furnish to the
          Indenture  Trustee  or  the  Paying  Agent  an  Officer's  Certificate
          certifying  or stating  the  opinion  of any signer  thereof as to the
          matters described in clause (iii) above, the Issuer shall also furnish
          to  the  Indenture   Trustee  and  the  Paying  Agent  an  Independent
          Certificate  as to the same  matters if the fair value of the property
          or  securities  and of all other  property,  other  than  property  as
          contemplated by clause (v) below or securities  released from the lien
          of this Indenture since the commencement of the then-current  calendar
          year, as set forth in the certificates  required by clause (iii) above
          and this clause  (iv),  equals 10% or more of the Note  Balance of the
          Notes,  but such  certificate need not be furnished in the case of any
          release of property  or  securities  if the fair value  thereof as set
          forth in the related  Officer's  Certificate  is less than  $25,000 or
          less than one percent of the Note Balance of the Notes.

                    (v)  Notwithstanding  any provision of this  Indenture,  the
          Issuer may,  without  compliance  with the  requirements  of the other
          provisions of this Section 10.01,  (A) collect upon, sell or otherwise
          dispose  of the  Mortgage  Loans  as and to the  extent  permitted  or
          required by the Basic  Documents or (B) make cash  payments out of the
          Note Payment Account as and to the extent permitted or required by the
          Basic Documents,  so long as the Issuer shall deliver to the Indenture
          Trustee  every six months,  commencing  June 30,  2003,  an  Officer's
          Certificate  of the  Issuer  stating  that  all  the  dispositions  of
          Collateral  described in clauses (A) or (B) above that occurred during
          the preceding six calendar months (or such longer period,  in the case
          of the first such Officer's  Certificate)  were in the ordinary course
          of the Issuer's business and that the proceeds thereof were applied in
          accordance with the Basic Documents.

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     Section  10.02 Form of  Documents  Delivered  to  Indenture  Trustee or the
Paying Agent.

     In any case where  several  matters  are  required to be  certified  by, or
covered by an opinion of, any specified  Person,  it is not  necessary  that all
such  matters  be  certified  by, or covered by the  opinion  of,  only one such
Person,  or that they be so certified or covered by only one  document,  but one
such Person may certify or give an opinion  with respect to some matters and one
or more other such Persons as to other matters,  and any such Person may certify
or give an opinion as to such matters in one or several documents.

     Any  certificate  or opinion of an Authorized  Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or  representations
with respect to the matters upon which his  certificate  or opinion is based are
erroneous.  Any such certificate of an Authorized  Officer or Opinion of Counsel
may be based,  insofar as it relates to factual  matters,  upon a certificate or
opinion of, or  representations  by, an officer or officers of either  Seller or
the Issuer, stating that the information with respect to such factual matters is
in the possession of either Seller or the Issuer,  unless such counsel knows, or
in the exercise of reasonable  care should know, that the certificate or opinion
or representations with respect to such matters are erroneous.

     Where  any  Person  is  required  to  make,  give  or  execute  two or more
applications,  requests, consents,  certificates,  statements, opinions or other
instruments  under this Indenture,  they may, but need not, be consolidated  and
form one instrument.

     Whenever  in  this  Indenture,   in  connection  with  any  application  or
certificate  or report to the  Indenture  Trustee  or the  Paying  Agent,  it is
provided  that the Issuer  shall  deliver any  document  as a  condition  of the
granting of such application, or as evidence of the Issuer's compliance with any
term  hereof,  it is intended  that the truth and  accuracy,  at the time of the
granting of such  application  or at the effective  date of such  certificate or
report (as the case may be), of the facts and opinions  stated in such  document
shall in such case be  conditions  precedent  to the right of the Issuer to have
such  application  granted or to the sufficiency of such  certificate or report.
The foregoing shall not, however, be construed to affect the Indenture Trustee's
or the Paying Agent's right to rely upon the truth and accuracy of any statement
or opinion contained in any such document as provided in Article VI.

     Section 10.03 Acts of Noteholders.

          (a) Any request, demand,  authorization,  direction,  notice, consent,
waiver  or  other  action  provided  by this  Indenture  to be given or taken by
Noteholders  may be  embodied in and  evidenced  by one or more  instruments  of
substantially  similar tenor signed by such  Noteholders  in person or by agents
duly appointed in writing;  and except as herein  otherwise  expressly  provided
such action shall become  effective  when such  instrument  or  instruments  are
delivered to the Indenture Trustee,  and, where it is hereby expressly required,
to the Issuer.  Such instrument or instruments  (and the action embodied therein
and  evidenced  thereby)  are herein  sometimes  referred to as the "Act" of the
Noteholders  signing such instrument or  instruments.  Proof of execution of any
such  instrument or of a writing  appointing  any such agent shall be

                                       65
<PAGE>

sufficient  for any purpose of this  Indenture  and  (subject  to Section  6.01)
conclusive  in favor of the  Indenture  Trustee and the  Issuer,  if made in the
manner provided in this Section 10.03.

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

          (c) The ownership of Notes shall be proved by the Note Register.

          (d) Any request, demand,  authorization,  direction,  notice, consent,
waiver or other action by the  Noteholder of any Note shall bind the  Noteholder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon,  whether or not notation of
such action is made upon such Note.

     Section 10.04 Notices,  etc., to Indenture Trustee,  Paying Agent,  Issuer,
Enhancer,  Yield Maintenance Provider and Rating Agencies. Any request,  demand,
authorization, direction, notice, consent, waiver or Act of Noteholders or other
documents  provided or  permitted by this  Indenture  shall be in writing and if
such request, demand,  authorization,  direction, notice, consent, waiver or Act
of Noteholders is to be made upon, given or furnished to or filed with:

          (a) the Indenture  Trustee by any  Noteholder,  the Paying Agent or by
the Issuer shall be  sufficient  for every  purpose  hereunder  if made,  given,
furnished or filed in writing to or with the Indenture  Trustee at its Corporate
Trust Office.  The Indenture Trustee shall promptly transmit any notice received
by it from the Noteholders to the Issuer,

          (b) the Issuer by the  Indenture  Trustee,  the Paying Agent or by any
Noteholder  shall be sufficient  for every  purpose  hereunder if in writing and
mailed  first-class,  postage prepaid to the Issuer addressed to: Wachovia Asset
Securitization,  Inc.  2003-HE2 Trust,  in care of the Owner Trustee,  or at any
other address  previously  furnished in writing to the Indenture Trustee and the
Paying  Agent by the  Issuer.  The Issuer  shall  promptly  transmit  any notice
received by it from the Noteholders to the Indenture Trustee,

          (c) the  Enhancer by the Issuer,  the  Indenture  Trustee,  the Paying
Agent or by any Noteholder shall be sufficient for every purpose hereunder to in
writing and mailed,  first-class  postage pre-paid,  or personally  delivered or
telecopied to: Financial Guaranty Insurance Company,  125 Park Avenue, New York,
New  York  10017,  Attention:  Research  and  Risk  Management  (Wachovia  Asset
Securitization,  Inc.  2003-HE2 Trust),  telecopier  number (212) 312-3215.  The
Enhancer shall promptly transmit any notice received by it from the Issuer,  the
Paying Agent, the Indenture Trustee or the Noteholders to the Issuer, the Paying
Agent or Indenture Trustee, as the case may be,

          (d) the Yield  Maintenance  Provider by the Issuer,  the Paying Agent,
the Indenture Trustee or by any Noteholder shall be sufficient for every purpose
hereunder if in writing and mailed,  first-class postage pre-paid, or personally
delivered or telecopied  to:  Wachovia  Bank,  National  Association,  301 South
College Street, DC-8, Charlotte, North Carolina 28202-0600,  Attention: Bruce M.
Young, Sr. Vice President, Risk Management,  telecopier number 704-383-0575. The
Yield Maintenance Provider shall promptly transmit any

                                       66

<PAGE>

notice received by it from the Issuer,  the Paying Agent, the Indenture  Trustee
or the Noteholders to the Issuer, the Paying Agent or Indenture Trustee,  as the
case may be; or, as to each of the foregoing  Persons,  at such other address as
shall be designated by written notice to the other foregoing Persons, or

          (e) the Paying  Agent by any  Noteholder  or by the  Issuer,  shall be
sufficient  for every purpose  hereunder if made,  given,  furnished or filed in
writing to or with the Paying Agent at its Corporate Trust Office.

     Notices  required to be given to the Rating  Agencies  by the  Issuer,  the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified  mail,  return receipt  requested,  to (i) in the case of
Moody's,  at  the  following  address:  Moody's  Investors  Service,  Inc.,  ABS
Monitoring  Department,  99 Church Street,  New York, New York 10007 and (ii) in
the case of Standard & Poor's, at the following  address:  Standard & Poor's, 26
Broadway,  15th  Floor,  New  York,  New York  10004,  Attention:  Asset  Backed
Surveillance Department;  or, as to each of the foregoing Persons, at such other
address as shall be designated by written notice to the other foregoing Persons.

     Section 10.05 Notices to Noteholders; Waiver. Where this Indenture provides
for notice to Noteholders of any event, such notice shall be sufficiently  given
(unless  otherwise  herein  expressly   provided)  if  in  writing  and  mailed,
first-class,  postage prepaid to each Noteholder affected by such event, at such
Person's  address as it appears on the Note Register,  not later than the latest
date, and not earlier than the earliest date,  prescribed for the giving of such
notice.  In any case where notice to Noteholders  is given by mail,  neither the
failure  to mail  such  notice  nor any  defect  in any  notice so mailed to any
particular  Noteholder  shall affect the sufficiency of such notice with respect
to other  Noteholders,  and any  notice  that is  mailed  in the  manner  herein
provided shall  conclusively  be presumed to have been duly given  regardless of
whether such notice is in fact actually received.

     Where this Indenture provides for notice in any manner,  such notice may be
waived in writing by any Person  entitled to receive such notice,  either before
or after the event,  and such waiver  shall be the  equivalent  of such  notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee,  but
such filing  shall not be a condition  precedent  to the  validity of any action
taken in reliance upon such a waiver.

     In case, by reason of the suspension of regular mail service as a result of
a strike,  work stoppage or similar  activity,  it shall be  impractical to mail
notice of any event to  Noteholders  when such  notice is  required  to be given
pursuant  to any  provision  of this  Indenture,  then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.

     Where this Indenture provides for notice to the Rating Agencies, failure to
give such  notice  shall not  affect  any other  rights or  obligations  created
hereunder, and shall not under any circumstance constitute an Event of Default.

     Section 10.06 Alternate Payment and Notice Provisions.  Notwithstanding any
provision of this Indenture or any of the Notes to the contrary,  the Issuer may
enter into any

                                       67

<PAGE>

agreement  with any Noteholder  providing for a method of payment,  or notice by
the Indenture  Trustee to such  Noteholder,  that is different  from the methods
provided for in this  Indenture for such  payments or notices.  The Issuer shall
furnish  to the  Paying  Agent  and the  Indenture  Trustee  a copy of each such
agreement and the Indenture  Trustee or the Paying Agent,  as applicable,  shall
cause  payments  to be made and  notices  to be given in  accordance  with  such
agreements.

     Section 10.07 Conflict with Trust  Indenture  Act. If any provision  hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this  Indenture by any of the  provisions  of TIA,  such required
provision shall control.

     The  provisions  of TIA ss.ss.  310 through  317 that impose  duties on any
Person  (including the provisions  automatically  deemed  included herein unless
expressly  excluded by this  Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.

     Section 10.08 Effect of Headings.  The Article and Section  headings herein
are for convenience only and shall not affect the construction hereof.

     Section 10.09 Successors and Assigns.  All covenants and agreements in this
Indenture  and the Notes by the Issuer  shall bind its  successors  and assigns,
whether so expressed or not. All  agreements  of the  Indenture  Trustee and the
Paying  Agent in this  Indenture  shall  bind its  successors,  co-trustees  and
agents.

     Section 10.10  Severability.  In case any provision in this Indenture or in
the  Notes  shall be held  invalid,  illegal  or  unenforceable,  the  validity,
legality, and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby.

     Section 10.11  Benefits of Indenture.  Nothing in this  Indenture or in the
Notes,  express or  implied,  shall give to any  Person,  other than the parties
hereto  (including the Paying Agent in its capacities as Certificate  Registrar,
Certificate  Paying Agent, Note Registrar and Paying Agent) and their successors
hereunder,  and the  Noteholders,  the  Enhancer,  and any other  party  secured
hereunder,  and any other Person with an  ownership  interest in any part of the
Trust Estate, any benefit or any legal or equitable right, remedy or claim under
this Indenture. The Enhancer shall be an express third party beneficiary of this
Indenture.

     The Enhancer,  the Paying Agent and the Indenture Trustee  acknowledge that
nothing in this Indenture is intended to create any fiduciary  obligation of the
Indenture  Trustee  or the  Paying  Agent  hereunder  or under any  other  Basic
Document to the Enhancer,  except for the Indenture Trustee to the extent of its
rights as a subrogee of the  Noteholders  in accordance  with the  provisions of
Section 5.12 of this  Indenture,  and that  Indenture  Trustee's  and the Paying
Agent's other obligations hereunder and under any Basic Document to the Enhancer
are intended to be contractual in nature.

     Section  10.12  Legal  Holidays.  In any case  where  the date on which any
payment  is due shall not be a Business  Day,  then  (notwithstanding  any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next  succeeding  Business  Day with the same  force  and
effect as if made on the date on which  nominally  due,  and no  interest  shall
accrue for the period from and after any such nominal date.

                                       68

<PAGE>

     Section  10.13   GOVERNING  LAW.  THIS  INDENTURE  SHALL  BE  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW  YORK,  WITHOUT  REFERENCE  TO ITS
CONFLICTS  OF  LAW  PROVISIONS   (OTHER  THAN  SECTION  5-1401  OF  THE  GENERAL
OBLIGATIONS  LAW),  AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE  PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

     Section 10.14 Counterparts. This Indenture may be executed in any number of
counterparts,  each of which so executed shall be deemed to be an original,  but
all such counterparts shall together constitute but one and the same instrument.

     Section  10.15  Recording  of  Indenture.  If this  Indenture is subject to
recording in any appropriate public recording  offices,  such recording is to be
effected by the Issuer and at its expense  accompanied  by an Opinion of Counsel
(which counsel shall be reasonably  acceptable to the Indenture  Trustee and the
Paying  Agent) to the effect that such  recording  is  necessary  either for the
protection of the  Noteholders or any other Person secured  hereunder or for the
enforcement of any right or remedy  granted to the Indenture  Trustee under this
Indenture.

     Section  10.16 Issuer  Obligation.  No recourse  may be taken,  directly or
indirectly,  with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other  writing  delivered in connection  herewith or therewith,  against (i) the
Indenture Trustee,  the Paying Agent, the Note Registrar or the Owner Trustee in
its individual  capacity,  (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary,  agent, officer, director, employee or
agent of the  Indenture  Trustee,  the Paying Agent,  the Note  Registrar or the
Owner Trustee in its individual capacity, any holder of a beneficial interest in
the Issuer,  the Owner  Trustee,  the Paying  Agent,  the Note  Registrar or the
Indenture  Trustee or of any successor or assign of the Indenture  Trustee,  the
Paying  Agent,  the  Note  Registrar  or the  Owner  Trustee  in its  individual
capacity,  except  as any  such  Person  may have  expressly  agreed  (it  being
understood that the Indenture Trustee,  the Paying Agent, the Note Registrar and
the  Owner  Trustee  have no such  obligations  in their  respective  individual
capacities),  and except that any such partner,  owner or  beneficiary  shall be
fully  liable,  to the  extent  provided  by  applicable  law,  for  any  unpaid
consideration  for  stock,  unpaid  capital  contribution  or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder,  the Owner
Trustee  shall be subject  to, and  entitled to the  benefits  of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.

     Section 10.17 No Petition.  The Indenture  Trustee and the Paying Agent, by
entering into this Indenture, and each Noteholder,  by its acceptance of a Note,
hereby  covenants and agrees that it will not at any time institute  against the
Depositor or the Issuer, or join in any institution against the Depositor or the
Issuer  of,  any   bankruptcy,   reorganization,   arrangement,   insolvency  or
liquidation proceedings, or other proceedings under any United States federal or
state  bankruptcy or similar law in connection with any obligations  relating to
the Notes, this Indenture or any of the other Basic Documents.

     Section 10.18  Inspection.  The Issuer  agrees that,  on  reasonable  prior
notice,  it shall permit any  representative of the Indenture Trustee and of the
Paying Agent,  during the Issuer's

                                       69

<PAGE>

normal business hours, to examine all the books of account, records, reports and
other papers of the Issuer, to make copies and extracts therefrom, to cause such
books to be audited by Independent certified public accountants,  and to discuss
the  Issuer's  affairs,  finances  and  accounts  with  the  Issuer's  officers,
employees, and Independent certified public accountants,  all at such reasonable
times and as often as may be reasonably requested. The Indenture Trustee and the
Paying Agent shall each cause its representatives to hold in confidence all such
information  except to the extent  disclosure  may be  required  by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the  extent  that the  Indenture  Trustee  or the  Paying  Agent may  reasonably
determine that such disclosure is consistent with its obligations hereunder.

                                       70

<PAGE>

            IN WITNESS WHEREOF, the Issuer and the Indenture 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.

                                         WACHOVIA ASSET SECURITIZATION, INC.
                                         2003-HE2 TRUST, as Issuer

                                         By: Wilmington Trust Company, not in
                                             its individual capacity but solely
                                             as Owner Trustee

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                         U.S.  BANK NATIONAL ASSOCIATION,
                                          as Indenture Trustee

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                         WACHOVIA BANK, NATIONAL ASSOCIATION,
                                          as Paying Agent pursuant to Section
                                          3.03 hereof and as Note Registrar
                                          pursuant to Section 4.02 hereof.

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

<PAGE>

STATE OF              )
        --------------
                      ) ss.:
COUNTY OF             )
         -------------

          On  this  ___  day  of  July,  2003,  before  me  personally  appeared
____________,  to me known, who being by me duly sworn, did depose and say, that
he/she resides at  _____________,  that he/she is the ____________ of Wilmington
Trust Company, the Owner Trustee, one of the corporations described in and which
executed the above  instrument;  that he/she knows the seal of said corporation;
that the seal affixed to said  instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation;  and that he/she
signed his/her name thereto by like order.

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

Acknowledgements

<PAGE>

STATE OF              )
        --------------
                      ) ss.:
COUNTY OF             )
         -------------

          On  this  ___  day  of  July,  2003,  before  me  personally  appeared
____________,  to me known, who being by me duly sworn, did depose and say, that
he/she resides at  _____________,  that he/she is the  ____________  of Wachovia
Bank, National Association,  the Paying Agent, one of the corporations described
in and which executed the above  instrument;  that he/she knows the seal of said
corporation;  that the seal affixed to said  instrument is such corporate  seal;
that it was so affixed by order of the Board of Directors  of said  corporation;
and that he/she signed his/her name thereto by like order.

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

Acknowledgements

<PAGE>

STATE OF              )
        --------------
                      ) ss.:
COUNTY OF             )
         -------------

          On  this  ___  day  of  July,  2003,  before  me  personally  appeared
____________,  to me known, who being by me duly sworn, did depose and say, that
he/she resides at  _____________,  that he/she is the  ____________ of U.S. Bank
National Association,  the Indenture Trustee, one of the corporations  described
in and which executed the above  instrument;  that he/she knows the seal of said
corporation;  that the seal affixed to said  instrument is such corporate  seal;
that it was so affixed by order of the Board of Directors  of said  corporation;
and that he/she signed his/her name thereto by like order.

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

Acknowledgements

<PAGE>

                   Class A-I-1 Notes

                    Schedule I-A-1

<TABLE>
<CAPTION>
    Payment                 Scheduled                 Payment                 Scheduled
     Date                Notional Balance              Date                Notional Balance
     ----                ----------------              ----                ----------------
<S>                       <C>                     <C>                       <C>
   July 2003              400,000,000.00           February 2006            400,000,000.00
  August 2003             400,000,000.00            March 2006              400,000,000.00
September 2003            400,000,000.00            April 2006              400,000,000.00
 October 2003             400,000,000.00             May 2006               400,000,000.00
 November 2003            400,000,000.00             June 2006              400,000,000.00
 December 2003            400,000,000.00             July 2006              400,000,000.00
 January 2004             400,000,000.00            August 2006             385,623,745.06
 February 2004            400,000,000.00          September 2006            371,171,786.86
  March 2004              400,000,000.00           October 2006             356,643,726.78
  April 2004              400,000,000.00           November 2006            342,039,164.07
   May 2004               400,000,000.00           December 2006            327,357,695.87
   June 2004              400,000,000.00           January 2007             312,598,917.22
   July 2004              400,000,000.00           February 2007            297,762,421.01
  August 2004             400,000,000.00            March 2007              282,847,797.99
September 2004            400,000,000.00            April 2007              267,854,636.75
 October 2004             400,000,000.00             May 2007               252,782,523.72
 November 2004            400,000,000.00             June 2007              237,631,043.16
 December 2004            400,000,000.00             July 2007              222,399,777.13
 January 2005             400,000,000.00            August 2007             207,088,305.49
 February 2005            400,000,000.00          September 2007            191,696,205.88
  March 2005              400,000,000.00           October 2007             176,223,053.74
  April 2005              400,000,000.00           November 2007            160,668,422.26
   May 2005               400,000,000.00           December 2007            145,031,882.36
   June 2005              400,000,000.00           January 2008             129,313,002.74
   July 2005              400,000,000.00           February 2008            113,511,349.82
  August 2005             400,000,000.00            March 2008               97,626,487.70
September 2005            400,000,000.00            April 2008               81,657,978.24
 October 2005             400,000,000.00             May 2008                65,605,380.95
 November 2005            400,000,000.00             June 2008               49,468,253.03
 December 2005            400,000,000.00             July 2008               33,246,149.37
 January 2006             400,000,000.00
</TABLE>

<PAGE>

                               Class A-II-1 Notes

                                 Schedule I-A-II

<TABLE>
<CAPTION>
    Payment                 Scheduled                 Payment                 Scheduled
     Date                Notional Balance              Date                Notional Balance
     ----                ----------------              ----                ----------------
<S>                       <C>                     <C>                       <C>
  July 2003               750,000,000.00          February 2006             750,000,000.00
 August 2003              750,000,000.00            March 2006              750,000,000.00
September 2003            750,000,000.00            April 2006              750,000,000.00
 October 2003             750,000,000.00             May 2006               750,000,000.00
November 2003             750,000,000.00            June 2006               750,000,000.00
December 2003             750,000,000.00            July 2006               750,000,000.00
 January 2004             750,000,000.00           August 2006              723,043,468.34
February 2004             750,000,000.00          September 2006            695,944,987.54
  March 2004              750,000,000.00           October 2006             668,703,810.12
  April 2004              750,000,000.00          November 2006             641,319,184.67
   May 2004               750,000,000.00          December 2006             613,790,355.79
  June 2004               750,000,000.00           January 2007             586,116,564.14
  July 2004               750,000,000.00          February 2007             558,297,046.37
 August 2004              750,000,000.00            March 2007              530,331,035.10
September 2004            750,000,000.00            April 2007              502,217,758.93
 October 2004             750,000,000.00             May 2007               473,956,442.36
November 2004             750,000,000.00            June 2007               445,546,305.86
December 2004             750,000,000.00            July 2007               416,986,565.74
 January 2005             750,000,000.00           August 2007              388,276,434.23
February 2005             750,000,000.00          September 2007            359,415,119.38
  March 2005              750,000,000.00           October 2007             330,401,825.09
  April 2005              750,000,000.00          November 2007             301,235,751.05
   May 2005               750,000,000.00          December 2007             271,916,092.74
  June 2005               750,000,000.00           January 2008             242,442,041.41
  July 2005               750,000,000.00          February 2008             212,812,784.06
 August 2005              750,000,000.00            March 2008              183,027,503.40
September 2005            750,000,000.00            April 2008              153,085,377.81
 October 2005             750,000,000.00             May 2008               122,985,581.39
November 2005             750,000,000.00            June 2008                92,727,283.86
December 2005             750,000,000.00            July 2008                62,309,650.58
 January 2006             750,000,000.00
</TABLE>

<PAGE>

                                    EXHIBIT A

                                  FORM OF NOTE

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED  REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY,  A NEW YORK CORPORATION  ("DTC"),  TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE  OF DTC (AND ANY  PAYMENT  IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF DTC),  ANY TRANSFER,
PLEDGE  OR OTHER  USE  HEREOF  FOR  VALUE OR  OTHERWISE  BY OR TO ANY  PERSON IS
WRONGFUL  INASMUCH AS THE REGISTERED  OWNER HEREOF,  CEDE & CO., HAS AN INTEREST
HEREIN.

THE  PRINCIPAL  OF THIS NOTE IS PAYABLE  IN  INSTALLMENTS  AS SET FORTH  HEREIN.
ACCORDINGLY,  THE OUTSTANDING  PRINCIPAL  AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

THIS NOTE DOES NOT  REPRESENT AN INTEREST IN OR  OBLIGATION  OF THE SELLER,  THE
DEPOSITOR,  THE SERVICER,  THE INDENTURE TRUSTEE,  THE OWNER TRUSTEE, THE PAYING
AGENT,  THE NOTE  REGISTRAR  OR ANY OF THEIR  RESPECTIVE  AFFILIATES,  EXCEPT AS
EXPRESSLY PROVIDED IN THE INDENTURE OR THE OTHER BASIC DOCUMENTS.

               WACHOVIA ASSET SECURITIZATION, INC. 2003-HE2 TRUST

             Wachovia Asset Securitization, Inc. Asset-Backed Note,
                          Series 2003-HE2, Class A-I-1

Registered                                                 Initial Note Balance:
                                                                   $[----------]

No. 1                                                        Note Rate: Variable

                                                                CUSIP No. [____]

     Wachovia  Asset  Securitization,  Inc.  2003-HE2,  a  statutory  trust duly
organized and existing under the laws of the State of Delaware  (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
its  registered  assigns,  the  principal  sum of  [__________________]  dollars
($[__________]), payable on each Payment Date in an amount equal to the pro rata
portion  allocable hereto (based on the Initial Note Balance specified above and
the Initial Note Balance) of the aggregate amount, if any, payable from the Note
Payment Account in respect of principal of the Notes (defined below) pursuant to
Section 3.05 of the indenture dated as of July 2, 2003 (the "Indenture"),  among
the Issuer, U.S. Bank National Association, as indenture trustee (the "Indenture
Trustee"), and Wachovia Bank, National Association, as Paying Agent (the "Paying
Agent"); provided, however, that the entire unpaid principal amount of this Note
shall be due and payable on the Payment Date in June 2033, to the

                                     A-1-1
<PAGE>

extent not  previously  paid on a prior  Payment  Date.  Capitalized  terms used
herein that are not otherwise  defined shall have the meanings  ascribed thereto
in Appendix A to the Indenture.

     Interest on the Notes will be paid monthly on each Payment Date at the Note
Rate for the related  Interest Period subject to limitations  that may result in
Interest  Shortfalls (as further described in the Indenture).  The Note Rate for
each  Interest  Period  will be a floating  rate equal to the least of (i) LIBOR
plus 0.26% per annum and (ii) the Class A-I-1 Net WAC Rate.  LIBOR for the Class
A-I-1 Notes and each applicable Interest Period will be determined on the second
LIBOR Business Day immediately preceding (i) the Closing Date in the case of the
first Interest Period and (ii) the first day of each succeeding  Interest Period
by the Servicer as set forth in the Indenture.  All  determinations  of LIBOR by
the Servicer  shall,  in the absence of manifest  error,  be conclusive  for all
purposes,  and each holder of this Note,  by accepting  this Note,  agrees to be
bound by such determination.  Interest on this Note will accrue for each Payment
Date from the most recent  Payment Date on which  interest has been paid (in the
case of the first  Payment Date,  from the Closing  Date) to but excluding  such
Payment  Date.  Interest  will be computed on the basis of the actual  number of
days  in each  Interest  Period  and a year  assumed  to  consist  of 360  days.
Principal of and interest on this Note shall be paid in the manner  specified on
the reverse hereof.

     Principal of and interest on this Note are payable in such coin or currency
of the United  States of  America as at the time of payment is legal  tender for
payment  of public and  private  debts.  All  payments  made by the Issuer  with
respect to this Note shall be applied  first to interest due and payable on this
Note as provided above and then to the unpaid principal of this Note.

     This  Note  is one of a duly  authorized  issue  of  Notes  of the  Issuer,
designated as its Wachovia Asset Securitization, Inc. Asset-Backed Notes, Series
2003-HE2 (the "Notes"),  all issued under the Indenture,  to which Indenture and
all indentures  supplemental thereto reference is hereby made for a statement of
the  respective  rights and  obligations  thereunder  of the Issuer,  the Paying
Agent, the Indenture  Trustee and the Noteholders.  The Notes are subject to all
terms of the Indenture.

     The Notes are and will be equally  and  ratably  secured by the  collateral
pledged as security therefor as provided in the Indenture.

     This Note is entitled to the benefits of an irrevocable  and  unconditional
financial  guaranty  insurance  policy  issued by Financial  Guaranty  Insurance
Company.

     Principal  of and  interest  on this Note will be payable  on each  Payment
Date, commencing on July 25, 2003, as described in the Indenture. "Payment Date"
means the twenty-fifth day of each month, or, if any such date is not a Business
Day, then the next succeeding Business Day.

     The entire unpaid principal amount of this Note shall be due and payable in
full on the Payment Date in June 2033 pursuant to the  Indenture,  to the extent
not previously paid on a prior Payment Date.  Notwithstanding the foregoing,  if
an Event of Default  shall have occurred and be  continuing,  then the Indenture
Trustee,  the  Enhancer  or the  holders of Notes  representing  not less than a
majority of the Note Balance of the Notes, with the consent of the Enhancer, may
declare

                                     A-1-2
<PAGE>

the Notes to be  immediately  due and payable in the manner  provided in Section
5.02 of the  Indenture.  All  principal  payments on the Notes shall be made pro
rata to the Noteholders entitled thereto.

     Any installment of interest or principal,  if any, payable on any Note that
is punctually paid or duly provided for by the Issuer on the applicable  Payment
Date shall be paid to the related  Noteholder on the  preceding  Record Date, by
wire transfer to an account  specified in writing by such Noteholder  reasonably
satisfactory to the Paying Agent as of the preceding  Record Date or, if no such
instructions have been delivered to the Paying Agent, by check or money order to
such Noteholder  mailed to such  Noteholder's  address as it appears in the Note
Register,  the amount  required to be  distributed  to such  Noteholder  on such
Payment Date pursuant to such Noteholder's Notes;  provided,  however,  that the
Paying Agent shall not pay to such Noteholder any amount required to be withheld
from a payment to such  Noteholder  by the Code.  Any reduction in the principal
amount  of this  Note (or any one or more  predecessor  Notes)  effected  by any
payments  made on any Payment Date shall be binding  upon all future  holders of
this Note and of any Note issued upon the  registration of transfer hereof or in
exchange  hereof or in lieu hereof,  whether or not noted  hereon.  If funds are
expected to be available,  as provided in the Indenture,  for payment in full of
the then remaining  unpaid principal amount of this Note on a Payment Date, then
the Paying  Agent,  in the name of and on behalf of the Issuer,  will notify the
Person who was the registered  Noteholder hereof as of the Record Date preceding
such Payment Date by notice  mailed or  transmitted  by facsimile  prior to such
Payment  Date,  and the amount then due and payable  shall be payable  only upon
presentation and surrender of this Note at the address  specified in such notice
of final payment.

     As provided in the Indenture and subject to certain  limitations  set forth
therein,  the transfer of this Note may be  registered on the Note Register upon
surrender  of this Note for  registration  of  transfer at the  Corporate  Trust
Office of the Note  Registrar,  duly  endorsed by, or  accompanied  by a written
instrument of transfer in form  satisfactory to the Note Registrar duly executed
by, the  Noteholder  hereof or such  Noteholder's  attorney  duly  authorized in
writing,  with such signature guaranteed by an "eligible guarantor  institution"
meeting the  requirements  of the Note  Registrar,  which  requirements  include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other  "signature  guarantee  program" as may be determined by
the Note  Registrar  in  addition  to, or in  substitution  for,  STAMP,  all in
accordance  with the  Exchange  Act,  and  thereupon  one or more  new  Notes in
authorized  denominations  and in the same  aggregate  principal  amount will be
issued to the designated  transferee or  transferees.  No service charge will be
charged for any  registration of transfer or exchange of this Note, but the Note
Registrar  shall  require  payment  of a sum  sufficient  to  cover  any  tax or
governmental  charge that may be imposed in connection with any  registration of
transfer or exchange of this Note.

     Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note,
or, in the case of a  Beneficial  Owner of a Note,  a  beneficial  interest in a
Note,  covenants  and  agrees  that  no  recourse  may  be  taken,  directly  or
indirectly,  with respect to the  obligations of the Issuer,  the Owner Trustee,
the Seller, the Servicer, the Depositor or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing  delivered in connection
therewith,  against  (i) the  Indenture  Trustee,  the  Paying  Agent,  the Note
Registrar or the Owner Trustee in its

                                     A-1-3
<PAGE>

individual  capacity,  (ii) any owner of a beneficial  interest in the Issuer or
(iii) any partner, owner,  beneficiary,  agent, officer, director or employee of
the Indenture Trustee, the Paying Agent, the Note Registrar or the Owner Trustee
in its individual  capacity,  any holder of a beneficial interest in the Issuer,
the Owner Trustee, the Paying Agent, the Note Registrar or the Indenture Trustee
or of any successor or assign of the Indenture  Trustee,  the Paying Agent,  the
Note  Registrar or the Owner Trustee in its individual  capacity,  except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary  shall be fully liable, to the extent provided by applicable law for
any unpaid  consideration for stock,  unpaid capital  contribution or failure to
pay any installment or call owing to such entity.

     Each Noteholder or Beneficial  Owner of a Note, by its acceptance of a Note
or, in the case of a  Beneficial  Owner of a Note,  a  beneficial  interest in a
Note,  covenants and agrees by accepting the benefits of the Indenture that such
Noteholder  or  Beneficial  Owner  will not at any time  institute  against  the
Depositor,  the Seller,  the Servicer or the Issuer,  or join in any institution
against  the  Depositor,  the  Seller,  the  Servicer  or  the  Issuer  of,  any
bankruptcy,  reorganization,  arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any  obligations  relating to the Notes,  the  Indenture or the other Basic
Documents.

     The Issuer has entered into the  Indenture and this Note is issued with the
intention  that,  for  federal,  state and local  income,  single  business  and
franchise tax purposes,  the Notes will qualify as  indebtedness  of the Issuer.
Each Noteholder by its acceptance of a Note (and each Beneficial Owner of a Note
by its acceptance of a beneficial interest in a Note), agrees to treat the Notes
for federal,  state and local income, single business and franchise tax purposes
as indebtedness of the Issuer.

     Prior to the due presentment for registration of transfer of this Note, the
Issuer,  the Indenture  Trustee,  the Note  Registrar,  the Paying Agent and any
agent of the  Issuer,  the Note  Registrar,  the Paying  Agent or the  Indenture
Trustee may treat the Person in the name of which this Note is registered (as of
the day of  determination  or as of such other date as may be  specified  in the
Indenture)  as the owner  hereof for all  purposes,  whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar,  the
Paying Agent or any such agent shall be affected by notice to the contrary.

     The  Indenture  permits,  with certain  exceptions  therein  provided,  the
amendment  thereof and the  modification  of the rights and  obligations  of the
Issuer,  the  Paying  Agent  and the  Indenture  Trustee  and the  rights of the
Noteholders under the Indenture at any time by the Issuer,  the Paying Agent and
the Indenture  Trustee with the consent of the Enhancer and the holders of Notes
representing  a majority of the Note Balance of the Notes then  Outstanding  and
with prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the holders of Notes representing  specified  percentages of the Note
Balance,  on behalf of the  Noteholders,  to waive compliance by the Issuer with
certain  provisions  of the  Indenture  and  certain  past  defaults  under  the
Indenture and their  consequences.  Any such consent or waiver by the Noteholder
of this Note (or any one of more  predecessor  Notes)  shall be  conclusive  and
binding upon such Noteholder and upon all future holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof  whether or not notation of such consent

                                     A-1-4
<PAGE>

or waiver is made upon this Note.  The  Indenture  also permits the Issuer,  the
Paying  Agent and the  Indenture  Trustee  to amend or waive  certain  terms and
conditions  set forth in the Indenture  without the consent of  Noteholders  but
with prior notice to the Rating Agencies and the Enhancer.

     The term "Issuer" as used in this Note includes any successor or the Issuer
under the Indenture.

     The Issuer is permitted by the Indenture,  under certain circumstances,  to
merge or  consolidate,  subject to the rights of the  Indenture  Trustee and the
Noteholders under the Indenture.

     The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.

     This Note and the Indenture  shall be construed in accordance with the laws
of the State of New York,  without reference to its conflicts of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.

     No reference  herein to the  Indenture  and no provision of this Note or of
the  Indenture  shall alter or impair the  obligation  of the  Issuer,  which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.

     Anything  herein  to the  contrary  notwithstanding,  except  as  expressly
provided  in the  Basic  Documents,  none of  Wilmington  Trust  Company  in its
individual capacity,  U.S. Bank National Association in its individual capacity,
any owner of a  beneficial  interest in the Issuer,  or any of their  respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Note or the performance of,
or the failure to perform, any of the covenants, obligations or indemnifications
contained in the  Indenture.  The  Noteholder  of this Note,  by its  acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in the
case of an Event of Default under the Indenture,  such Noteholder  shall have no
claim against any of the foregoing for any deficiency,  loss or claim therefrom;
provided,  however,  that  nothing  contained  herein  shall be taken to prevent
recourse to, and enforcement  against,  the assets of the Issuer for any and all
liabilities,  obligations and undertakings contained in the Indenture or in this
Note.

     The  Servicer  shall have the right to purchase  from the Issuer all of the
Mortgage  Loans and related REO  Property if the Note Balance of the Notes as of
any  Payment  Date is less than 10% of the Note  Balance  of the Notes as of the
Closing Date, (provided that a draw on the Policy would not occur as a result of
such  purchase,  and  provided  further  that the  purchase  price will  provide
sufficient  funds to pay the  outstanding  Note  Balance  and accrued and unpaid
interest  on the  Notes to the  Payment  Date on which  such  amounts  are to be
distributed to the  Securityholders),  at a price equal to 100% of the aggregate
unpaid Principal Balance of all such

                                     A-1-5
<PAGE>

remaining  Mortgage  Loans,  plus  accrued  and unpaid  interest  thereon at the
weighted  average of the Loan Rates thereon up to the date preceding the Payment
Date on which such amounts are to be distributed to the Securityholders  (and in
the case of REO Property,  the fair market value of the REO Property),  plus any
amounts due and owing to the Enhancer under the Insurance  Agreement  related to
the Mortgage  Loans or the Notes (and any unpaid  Servicing  Fee relating to the
Mortgage  Loans  shall be  deemed  to have  been  paid at such  time),  plus any
Interest  Shortfall and interest owed thereon to the  Noteholders.  The purchase
price paid by the Servicer shall also include certain amounts owed by the Seller
pursuant  to the  Purchase  Agreement  that  remain  unpaid  on the date of such
purchase.

     Unless the  certificate of  authentication  hereon has been executed by the
Indenture Trustee whose name appears below by manual signature,  this Note shall
not be entitled to any benefit  under the  Indenture  referred to on the reverse
hereof, or be valid or obligatory for any purpose.

                                     A-1-6
<PAGE>

     IN WITNESS WHEREOF,  the Owner Trustee,  on behalf of the Issuer and not in
its individual capacity, has caused this Note to be duly executed.

                                             WACHOVIA ASSET SECURITIZATION, INC.
                                             2003-HE2 TRUST

                                             By:  WILMINGTON  TRUST COMPANY,
                                                  not in its  individual
                                                  capacity but solely as
                                                  Owner Trustee

Dated:  __________, 20__

                                             By:
                                                  ------------------------------
                                                       Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in the within-mentioned Indenture.

                                             U.S. BANK NATIONAL ASSOCIATION, not
                                             in  its  individual   capacity  but
                                             solely as Indenture Trustee

Dated:  __________, 20__

                                             By:
                                                  ------------------------------
                                                       Authorized Signatory

                                     A-1-7
<PAGE>

                                   ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:

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

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto

 ------------------------------
 (name and address of assignee)

the within Note and all rights thereunder,  and hereby  irrevocably  constitutes
and appoints __________________________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.

Dated:
        --------------------------------         -----------------------------*/
                                                 Signature Guaranteed:

                                                 -----------------------------*/

------------------------
*    NOTICE:  The signature to this  assignment must correspond with the name of
the registered  owner as it appears on the face of the within Term Note in every
particular,  without  alteration,  enlargement  or  any  change  whatever.  Such
signature must be guaranteed by an "eligible guarantor  institution" meeting the
requirements of the Note Registrar,  which  requirements  include  membership or
participation  in STAMP or such other  "signature  guarantee  program" as may be
determined by the Note Registrar in addition to, or in substitution  for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

                                     A-1-8
<PAGE>

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED  REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY,  A NEW YORK CORPORATION  ("DTC"),  TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE  OF DTC (AND ANY  PAYMENT  IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF DTC),  ANY TRANSFER,
PLEDGE  OR OTHER  USE  HEREOF  FOR  VALUE OR  OTHERWISE  BY OR TO ANY  PERSON IS
WRONGFUL  INASMUCH AS THE REGISTERED  OWNER HEREOF,  CEDE & CO., HAS AN INTEREST
HEREIN.

THE  PRINCIPAL  OF THIS NOTE IS PAYABLE  IN  INSTALLMENTS  AS SET FORTH  HEREIN.
ACCORDINGLY,  THE OUTSTANDING  PRINCIPAL  AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

THIS NOTE DOES NOT  REPRESENT AN INTEREST IN OR  OBLIGATION  OF THE SELLER,  THE
DEPOSITOR,  THE SERVICER,  THE INDENTURE TRUSTEE,  THE OWNER TRUSTEE, THE PAYING
AGENT,  THE NOTE  REGISTRAR  OR ANY OF THEIR  RESPECTIVE  AFFILIATES,  EXCEPT AS
EXPRESSLY PROVIDED IN THE INDENTURE OR THE OTHER BASIC DOCUMENTS.

               WACHOVIA ASSET SECURITIZATION, INC. 2003-HE2 TRUST

             Wachovia Asset Securitization, Inc. Asset-Backed Note,
                         Series 2003-HE2, Class A-II-1

Registered                                                 Initial Note Balance:
                                                                   $[----------]

No. 1                                                        Note Rate: Variable

                                                                CUSIP No. [____]

     Wachovia  Asset  Securitization,  Inc.  2003-HE2,  a  statutory  trust duly
organized and existing under the laws of the State of Delaware  (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
its  registered  assigns,  the  principal  sum of  [__________________]  dollars
($[__________]), payable on each Payment Date in an amount equal to the pro rata
portion  allocable hereto (based on the Initial Note Balance specified above and
the Initial Note Balance) of the aggregate amount, if any, payable from the Note
Payment Account in respect of principal of the Notes (defined below) pursuant to
Section 3.05 of the indenture dated as of July 2, 2003 (the "Indenture"),  among
the Issuer, U.S. Bank National Association, as indenture trustee (the "Indenture
Trustee") and Wachovia Bank, National Association,  as Paying Agent (the "Paying
Agent"); provided, however, that the entire unpaid principal amount of this Note
shall be due and  payable on the  Payment  Date in June 2033,  to the extent not
previously paid on a prior Payment Date.  Capitalized terms used herein that are
not otherwise  defined shall have the meanings ascribed thereto in Appendix A to
the Indenture.

                                     A-2-1
<PAGE>

     Interest on the Notes will be paid monthly on each Payment Date at the Note
Rate for the related  Interest Period subject to limitations  that may result in
Interest  Shortfalls (as further described in the Indenture).  The Note Rate for
each  Interest  Period  will be a floating  rate equal to the least of (i) LIBOR
plus 0.26% per annum and (ii) the Class A-II-1 Net WAC Rate. LIBOR for the Class
A-II-1  Notes and each  applicable  Interest  Period will be  determined  on the
second LIBOR Business Day immediately preceding (i) the Closing Date in the case
of the first Interest Period and (ii) the first day of each succeeding  Interest
Period by the  Servicer as set forth in the  Indenture.  All  determinations  of
LIBOR by the Servicer shall, in the absence of manifest error, be conclusive for
all purposes, and each holder of this Note, by accepting this Note, agrees to be
bound by such determination.  Interest on this Note will accrue for each Payment
Date from the most recent  Payment Date on which  interest has been paid (in the
case of the first  Payment Date,  from the Closing  Date) to but excluding  such
Payment  Date.  Interest  will be computed on the basis of the actual  number of
days  in each  Interest  Period  and a year  assumed  to  consist  of 360  days.
Principal of and interest on this Note shall be paid in the manner  specified on
the reverse hereof.

     Principal of and interest on this Note are payable in such coin or currency
of the United  States of  America as at the time of payment is legal  tender for
payment  of public and  private  debts.  All  payments  made by the Issuer  with
respect to this Note shall be applied  first to interest due and payable on this
Note as provided above and then to the unpaid principal of this Note.

     This  Note  is one of a duly  authorized  issue  of  Notes  of the  Issuer,
designated as its Wachovia Asset Securitization, Inc. Asset-Backed Notes, Series
2003-HE2 (the "Notes"),  all issued under the Indenture,  to which Indenture and
all indentures  supplemental thereto reference is hereby made for a statement of
the  respective  rights and  obligations  thereunder  of the Issuer,  the Paying
Agent, the Indenture  Trustee and the Noteholders.  The Notes are subject to all
terms of the Indenture.

     The Notes are and will be equally  and  ratably  secured by the  collateral
pledged as security therefor as provided in the Indenture.

     This Note is entitled to the benefits of an irrevocable  and  unconditional
financial  guaranty  insurance  policy  issued by Financial  Guaranty  Insurance
Company.

            Principal of and interest on this Note will be payable on each
Payment Date, commencing on July 25, 2003, as described in the Indenture.
"Payment Date" means the twenty-fifth day of each month, or, if any such date is
not a Business Day, then the next succeeding Business Day.

     The entire unpaid principal amount of this Note shall be due and payable in
full on the Payment Date in June 2033 pursuant to the  Indenture,  to the extent
not previously paid on a prior Payment Date.  Notwithstanding the foregoing,  if
an Event of Default  shall have occurred and be  continuing,  then the Indenture
Trustee,  the  Enhancer  or the  holders of Notes  representing  not less than a
majority of the Note Balance of the Notes, with the consent of the Enhancer, may
declare the Notes to be  immediately  due and payable in the manner  provided in
Section 5.02 of the Indenture. All principal payments on the Notes shall be made
pro rata to the Noteholders entitled thereto.

                                     A-2-2
<PAGE>

     Any installment of interest or principal,  if any, payable on any Note that
is punctually paid or duly provided for by the Issuer on the applicable  Payment
Date shall be paid to the related  Noteholder on the  preceding  Record Date, by
wire transfer to an account  specified in writing by such Noteholder  reasonably
satisfactory to the Paying Agent as of the preceding  Record Date or, if no such
instructions have been delivered to the Paying Agent, by check or money order to
such Noteholder  mailed to such  Noteholder's  address as it appears in the Note
Register,  the amount  required to be  distributed  to such  Noteholder  on such
Payment Date pursuant to such Noteholder's Notes;  provided,  however,  that the
Paying Agent shall not pay to such Noteholder any amount required to be withheld
from a payment to such  Noteholder  by the Code.  Any reduction in the principal
amount  of this  Note (or any one or more  predecessor  Notes)  effected  by any
payments  made on any Payment Date shall be binding  upon all future  holders of
this Note and of any Note issued upon the  registration of transfer hereof or in
exchange  hereof or in lieu hereof,  whether or not noted  hereon.  If funds are
expected to be available,  as provided in the Indenture,  for payment in full of
the then remaining  unpaid principal amount of this Note on a Payment Date, then
the Paying  Agent,  in the name of and on behalf of the Issuer,  will notify the
Person who was the registered  Noteholder hereof as of the Record Date preceding
such Payment Date by notice  mailed or  transmitted  by facsimile  prior to such
Payment  Date,  and the amount then due and payable  shall be payable  only upon
presentation and surrender of this Note at the address  specified in such notice
of final payment.

     As provided in the Indenture and subject to certain  limitations  set forth
therein,  the transfer of this Note may be  registered on the Note Register upon
surrender  of this Note for  registration  of  transfer at the  Corporate  Trust
Office of the Note  Registrar,  duly  endorsed by, or  accompanied  by a written
instrument of transfer in form  satisfactory to the Note Registrar duly executed
by, the  Noteholder  hereof or such  Noteholder's  attorney  duly  authorized in
writing,  with such signature guaranteed by an "eligible guarantor  institution"
meeting the  requirements  of the Note  Registrar,  which  requirements  include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other  "signature  guarantee  program" as may be determined by
the Note  Registrar  in  addition  to, or in  substitution  for,  STAMP,  all in
accordance  with the  Exchange  Act,  and  thereupon  one or more  new  Notes in
authorized  denominations  and in the same  aggregate  principal  amount will be
issued to the designated  transferee or  transferees.  No service charge will be
charged for any  registration of transfer or exchange of this Note, but the Note
Registrar  shall  require  payment  of a sum  sufficient  to  cover  any  tax or
governmental  charge that may be imposed in connection with any  registration of
transfer or exchange of this Note.

     Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note,
or, in the case of a  Beneficial  Owner of a Note,  a  beneficial  interest in a
Note,  covenants  and  agrees  that  no  recourse  may  be  taken,  directly  or
indirectly,  with respect to the  obligations of the Issuer,  the Owner Trustee,
the Seller, the Servicer, the Depositor or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing  delivered in connection
therewith,  against  (i) the  Indenture  Trustee,  the  Paying  Agent,  the Note
Registrar or the Owner Trustee in its individual  capacity,  (ii) any owner of a
beneficial  interest  in the Issuer or (iii) any  partner,  owner,  beneficiary,
agent, officer, director or employee of the Indenture Trustee, the Paying Agent,
the Note Registrar or the Owner Trustee in its individual  capacity,  any holder
of a beneficial interest in the Issuer, the Owner Trustee, the Paying Agent, the
Note Registrar or the Indenture Trustee

                                     A-2-3
<PAGE>

or of any successor or assign of the Indenture  Trustee,  the Paying Agent,  the
Note  Registrar or the Owner Trustee in its individual  capacity,  except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary  shall be fully liable, to the extent provided by applicable law for
any unpaid  consideration for stock,  unpaid capital  contribution or failure to
pay any installment or call owing to such entity.

     Each Noteholder or Beneficial  Owner of a Note, by its acceptance of a Note
or, in the case of a  Beneficial  Owner of a Note,  a  beneficial  interest in a
Note,  covenants and agrees by accepting the benefits of the Indenture that such
Noteholder  or  Beneficial  Owner  will not at any time  institute  against  the
Depositor,  the Seller,  the Servicer or the Issuer,  or join in any institution
against  the  Depositor,  the  Seller,  the  Servicer  or  the  Issuer  of,  any
bankruptcy,  reorganization,  arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any  obligations  relating to the Notes,  the  Indenture or the other Basic
Documents.

            The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the
Issuer. Each Noteholder by its acceptance of a Note (and each Beneficial Owner
of a Note by its acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.

     Prior to the due presentment for registration of transfer of this Note, the
Issuer,  the Indenture  Trustee,  the Note  Registrar,  the Paying Agent and any
agent of the  Issuer,  the Note  Registrar,  the Paying  Agent or the  Indenture
Trustee may treat the Person in the name of which this Note is registered (as of
the day of  determination  or as of such other date as may be  specified  in the
Indenture)  as the owner  hereof for all  purposes,  whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar,  the
Paying Agent or any such agent shall be affected by notice to the contrary.

     The  Indenture  permits,  with certain  exceptions  therein  provided,  the
amendment  thereof and the  modification  of the rights and  obligations  of the
Issuer,  the  Paying  Agent  and the  Indenture  Trustee  and the  rights of the
Noteholders under the Indenture at any time by the Issuer,  the Paying Agent and
the Indenture  Trustee with the consent of the Enhancer and the holders of Notes
representing  a majority of the Note Balance of the Notes then  Outstanding  and
with prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the holders of Notes representing  specified  percentages of the Note
Balance,  on behalf of the  Noteholders,  to waive compliance by the Issuer with
certain  provisions  of the  Indenture  and  certain  past  defaults  under  the
Indenture and their  consequences.  Any such consent or waiver by the Noteholder
of this Note (or any one of more  predecessor  Notes)  shall be  conclusive  and
binding upon such Noteholder and upon all future holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof  whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Issuer,  the Paying Agent and the Indenture
Trustee  to  amend  or waive  certain  terms  and  conditions  set  forth in the
Indenture without the consent of Noteholders but with prior notice to the Rating
Agencies and the Enhancer.

                                     A-2-4
<PAGE>

     The term "Issuer" as used in this Note includes any successor or the Issuer
under the Indenture.

            The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.

     The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.

     This Note and the Indenture  shall be construed in accordance with the laws
of the State of New York,  without reference to its conflicts of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.

     No reference  herein to the  Indenture  and no provision of this Note or of
the  Indenture  shall alter or impair the  obligation  of the  Issuer,  which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.

     Anything  herein  to the  contrary  notwithstanding,  except  as  expressly
provided  in the  Basic  Documents,  none of  Wilmington  Trust  Company  in its
individual capacity,  U.S. Bank National Association in its individual capacity,
any owner of a  beneficial  interest in the Issuer,  or any of their  respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Note or the performance of,
or the failure to perform, any of the covenants, obligations or indemnifications
contained in the  Indenture.  The  Noteholder  of this Note,  by its  acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in the
case of an Event of Default under the Indenture,  such Noteholder  shall have no
claim against any of the foregoing for any deficiency,  loss or claim therefrom;
provided,  however,  that  nothing  contained  herein  shall be taken to prevent
recourse to, and enforcement  against,  the assets of the Issuer for any and all
liabilities,  obligations and undertakings contained in the Indenture or in this
Note.

     The  Servicer  shall have the right to purchase  from the Issuer all of the
Mortgage  Loans and related REO  Property if the Note Balance of the Notes as of
any  Payment  Date is less than 10% of the Note  Balance  of the Notes as of the
Closing Date, (provided that a draw on the Policy would not occur as a result of
such  purchase,  and  provided  further  that the  purchase  price will  provide
sufficient  funds to pay the  outstanding  Note  Balance  and accrued and unpaid
interest  on the  Notes to the  Payment  Date on which  such  amounts  are to be
distributed to the  Securityholders),  at a price equal to 100% of the aggregate
unpaid Principal Balance of all such remaining  Mortgage Loans, plus accrued and
unpaid interest  thereon at the weighted average of the Loan Rates thereon up to
the date  preceding the Payment Date on which such amounts are to be distributed
to the Securityholders  (and in the case of REO Property,  the fair market value
of the REO  Property),  plus any amounts due and owing to the Enhancer under the
Insurance  Agreement  related to the Mortgage Loans or the Notes (and any unpaid
Servicing  Fee relating to

                                     A-2-5
<PAGE>

the  Mortgage  Loans shall be deemed to have been paid at such  time),  plus any
Interest  Shortfall and interest owed thereon to the  Noteholders.  The purchase
price paid by the Servicer shall also include certain amounts owed by the Seller
pursuant  to the  Purchase  Agreement  that  remain  unpaid  on the date of such
purchase.

     Unless the  certificate of  authentication  hereon has been executed by the
Indenture Trustee whose name appears below by manual signature,  this Note shall
not be entitled to any benefit  under the  Indenture  referred to on the reverse
hereof, or be valid or obligatory for any purpose.

                                     A-2-6
<PAGE>

     IN WITNESS WHEREOF,  the Owner Trustee,  on behalf of the Issuer and not in
its individual capacity, has caused this Note to be duly executed.

                                             WACHOVIA ASSET SECURITIZATION, INC.
                                             2003-HE2 TRUST

                                             By:  WILMINGTON  TRUST COMPANY,
                                                  not in its  individual
                                                  capacity but solely as
                                                  Owner Trustee

Dated:  __________, 20__

                                             By:
                                                  ------------------------------
                                                       Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in the within-mentioned Indenture.

                                             U.S. BANK NATIONAL ASSOCIATION, not
                                             in  its  individual   capacity  but
                                             solely as Indenture Trustee

Dated:  __________, 20__

                                             By:
                                                  ------------------------------
                                                       Authorized Signatory

                                     A-2-7
<PAGE>

                                   ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:

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

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto

 ------------------------------
 (name and address of assignee)

the within Note and all rights thereunder,  and hereby  irrevocably  constitutes
and appoints __________________________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.

Dated:
        --------------------------------         -----------------------------*/
                                                 Signature Guaranteed:

                                                 -----------------------------*/

------------------------
*    NOTICE:  The signature to this  assignment must correspond with the name of
the registered  owner as it appears on the face of the within Term Note in every
particular,  without  alteration,  enlargement  or  any  change  whatever.  Such
signature must be guaranteed by an "eligible guarantor  institution" meeting the
requirements of the Note Registrar,  which  requirements  include  membership or
participation  in STAMP or such other  "signature  guarantee  program" as may be
determined by the Note Registrar in addition to, or in substitution  for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

                                     A-2-8
<PAGE>

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED  REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY,  A NEW YORK CORPORATION  ("DTC"),  TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE  OF DTC (AND ANY  PAYMENT  IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF DTC),  ANY TRANSFER,
PLEDGE  OR OTHER  USE  HEREOF  FOR  VALUE OR  OTHERWISE  BY OR TO ANY  PERSON IS
WRONGFUL  INASMUCH AS THE REGISTERED  OWNER HEREOF,  CEDE & CO., HAS AN INTEREST
HEREIN.

THE  PRINCIPAL  OF THIS NOTE IS PAYABLE  IN  INSTALLMENTS  AS SET FORTH  HEREIN.
ACCORDINGLY,  THE OUTSTANDING  PRINCIPAL  AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

THIS NOTE DOES NOT  REPRESENT AN INTEREST IN OR  OBLIGATION  OF THE SELLER,  THE
DEPOSITOR,  THE SERVICER,  THE INDENTURE  TRUSTEE,  THE OWNER TRUSTEE,  THE NOTE
REGISTRAR,  THE PAYING AGENT OR ANY OF THEIR  RESPECTIVE  AFFILIATES,  EXCEPT AS
EXPRESSLY PROVIDED IN THE INDENTURE OR THE OTHER BASIC DOCUMENTS.

               WACHOVIA ASSET SECURITIZATION, INC. 2003-HE2 TRUST

             Wachovia Asset Securitization, Inc. Asset-Backed Note,
                         Series 2003-HE2, Class A-II-2

Registered                                                 Initial Note Balance:
                                                                   $[----------]

No. 1                                                        Note Rate: Variable

                                                                CUSIP No. [____]

     Wachovia  Asset  Securitization,  Inc.  2003-HE2,  a  statutory  trust duly
organized and existing under the laws of the State of Delaware  (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
its  registered  assigns,  the  principal  sum of  [__________________]  dollars
($[__________]), payable on each Payment Date in an amount equal to the pro rata
portion  allocable hereto (based on the Initial Note Balance specified above and
the Initial Note Balance) of the aggregate amount, if any, payable from the Note
Payment Account in respect of principal of the Notes (defined below) pursuant to
Section 3.05 of the indenture dated as of July 2, 2003 (the "Indenture"),  among
the Issuer  and U.S.  Bank  National  Association,  as  indenture  trustee  (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Payment  Date in June 2033,  to the
extent not  previously  paid on a prior  Payment  Date.  Capitalized  terms used
herein that are not otherwise  defined shall have the meanings  ascribed thereto
in Appendix A to the Indenture.

                                     A-3-1
<PAGE>

     Interest on the Notes will be paid monthly on each Payment Date at the Note
Rate for the related  Interest Period subject to limitations  that may result in
Interest  Shortfalls  (as further  described in the  Indenture).  So long as the
Class A-II-2 Notes are Book-Entry  Notes, the Note Rate for each Interest Period
will be the Note Rate determined pursuant to the Auction Procedures as set forth
in the Indenture.  If the Class A-II-2 Notes are not Book-Entry  Notes, the Note
Rate on such Notes shall be the lesser of the Maximum Auction Rate and the Class
A-II-2 Net WAC Rate.  Interest  on this Note will accrue for each  Payment  Date
from the most recent  Payment Date on which  interest has been paid (in the case
of the first Payment Date,  from the Closing Date) to but excluding such Payment
Date.  Interest  will be computed  on the basis of the actual  number of days in
each Interest Period and a year assumed to consist of 360 days. Principal of and
interest  on this Note  shall be paid in the  manner  specified  on the  reverse
hereof.

     Principal of and interest on this Note are payable in such coin or currency
of the United  States of  America as at the time of payment is legal  tender for
payment  of public and  private  debts.  All  payments  made by the Issuer  with
respect to this Note shall be applied  first to interest due and payable on this
Note as provided above and then to the unpaid principal of this Note.

     This  Note  is one of a duly  authorized  issue  of  Notes  of the  Issuer,
designated as its Wachovia Asset Securitization, Inc. Asset-Backed Notes, Series
2003-HE2 (the "Notes"),  all issued under the Indenture,  to which Indenture and
all indentures  supplemental thereto reference is hereby made for a statement of
the  respective  rights and  obligations  thereunder  of the Issuer,  the Paying
Agent, the Indenture  Trustee and the Noteholders.  The Notes are subject to all
terms of the Indenture.

     The Notes are and will be equally  and  ratably  secured by the  collateral
pledged as security therefor as provided in the Indenture.

     This Note is entitled to the benefits of an irrevocable  and  unconditional
financial  guaranty  insurance  policy  issued by Financial  Guaranty  Insurance
Company.

     Principal  of and  interest  on this Note will be payable  on each  Payment
Date, commencing on July 25, 2003, as described in the Indenture. "Payment Date"
means the twenty-fifth day of each month, or, if any such date is not a Business
Day, then the next succeeding Business Day.

     The entire unpaid principal amount of this Note shall be due and payable in
full on the Payment Date in June 2033 pursuant to the  Indenture,  to the extent
not previously paid on a prior Payment Date.  Notwithstanding the foregoing,  if
an Event of Default  shall have occurred and be  continuing,  then the Indenture
Trustee,  the  Enhancer  or the  holders of Notes  representing  not less than a
majority of the Note Balance of the Notes, with the consent of the Enhancer, may
declare the Notes to be  immediately  due and payable in the manner  provided in
Section 5.02 of the Indenture. All principal payments on the Notes shall be made
pro rata to the Noteholders entitled thereto.

     Any installment of interest or principal,  if any, payable on any Note that
is punctually paid or duly provided for by the Issuer on the applicable  Payment
Date shall be paid to the related  Noteholder on the  preceding  Record Date, by
wire transfer to an account  specified in

                                     A-3-2
<PAGE>

writing by such Noteholder reasonably satisfactory to the Paying Agent as of the
preceding  Record Date or, if no such  instructions  have been  delivered to the
Paying  Agent,  by check  or  money  order  to such  Noteholder  mailed  to such
Noteholder's address as it appears in the Note Register,  the amount required to
be  distributed  to  such  Noteholder  on such  Payment  Date  pursuant  to such
Noteholder's Notes;  provided,  however,  that the Paying Agent shall not pay to
such  Noteholder  any  amount  required  to be  withheld  from a payment to such
Noteholder by the Code.  Any reduction in the principal  amount of this Note (or
any one or more predecessor  Notes) effected by any payments made on any Payment
Date  shall be  binding  upon all  future  holders  of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof,  whether or not noted hereon. If funds are expected to be available,  as
provided  in the  Indenture,  for payment in full of the then  remaining  unpaid
principal  amount of this Note on a Payment Date,  then the Paying Agent, in the
name  of and on  behalf  of the  Issuer,  will  notify  the  Person  who was the
registered  Noteholder  hereof as of the Record Date preceding such Payment Date
by notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount  then due and  payable  shall  be  payable  only  upon  presentation  and
surrender of this Note at the address specified in such notice of final payment.

     As provided in the Indenture and subject to certain  limitations  set forth
therein,  the transfer of this Note may be  registered on the Note Register upon
surrender  of this Note for  registration  of  transfer at the  Corporate  Trust
Office of the  Paying  Agent,  duly  endorsed  by, or  accompanied  by a written
instrument  of transfer in form  satisfactory  to the Paying Agent duly executed
by, the  Noteholder  hereof or such  Noteholder's  attorney  duly  authorized in
writing,  with such signature guaranteed by an "eligible guarantor  institution"
meeting the  requirements  of the Note  Registrar,  which  requirements  include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other  "signature  guarantee  program" as may be determined by
the Note  Registrar  in  addition  to, or in  substitution  for,  STAMP,  all in
accordance  with the  Exchange  Act,  and  thereupon  one or more  new  Notes in
authorized  denominations  and in the same  aggregate  principal  amount will be
issued to the designated  transferee or  transferees.  No service charge will be
charged for any  registration of transfer or exchange of this Note, but the Note
Registrar  shall  require  payment  of a sum  sufficient  to  cover  any  tax or
governmental  charge that may be imposed in connection with any  registration of
transfer or exchange of this Note.

            Each Noteholder or Beneficial Owner of a Note, by its acceptance of
a Note, or, in the case of a Beneficial Owner of a Note, a beneficial interest
in a Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee,
the Seller, the Servicer, the Depositor or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee, the Note Registrar, the Paying
Agent or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee, the Note
Registrar, the Paying Agent or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee, the Note
Registrar, the Paying Agent or the Indenture Trustee or of any successor or
assign of the Indenture Trustee, the Note Registrar, the Paying Agent or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent

                                     A-3-3
<PAGE>

provided  by  applicable  law for any unpaid  consideration  for  stock,  unpaid
capital  contribution  or failure to pay any  installment  or call owing to such
entity.

     Each Noteholder or Beneficial  Owner of a Note, by its acceptance of a Note
or, in the case of a  Beneficial  Owner of a Note,  a  beneficial  interest in a
Note,  covenants and agrees by accepting the benefits of the Indenture that such
Noteholder  or  Beneficial  Owner  will not at any time  institute  against  the
Depositor,  the Seller,  the Servicer or the Issuer,  or join in any institution
against  the  Depositor,  the  Seller,  the  Servicer  or  the  Issuer  of,  any
bankruptcy,  reorganization,  arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in connection
with any  obligations  relating to the Notes,  the  Indenture or the other Basic
Documents.

            The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the
Issuer. Each Noteholder by its acceptance of a Note (and each Beneficial Owner
of a Note by its acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.

     Prior to the due presentment for registration of transfer of this Note, the
Issuer,  the Indenture  Trustee,  the Note  Registrar,  the Paying Agent and any
agent of the Issuer,  the Indenture  Trustee,  the Note  Registrar or the Paying
Agent may treat the Person in the name of which this Note is  registered  (as of
the day of  determination  or as of such other date as may be  specified  in the
Indenture)  as the owner  hereof for all  purposes,  whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar,  the
Paying Agent or any such agent shall be affected by notice to the contrary.

     The  Indenture  permits,  with certain  exceptions  therein  provided,  the
amendment  thereof and the  modification  of the rights and  obligations  of the
Issuer,  the  Paying  Agent  and the  Indenture  Trustee  and the  rights of the
Noteholders under the Indenture at any time by the Issuer,  the Paying Agent and
the Indenture  Trustee with the consent of the Enhancer and the holders of Notes
representing  a majority of the Note Balance of the Notes then  Outstanding  and
with prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the holders of Notes representing  specified  percentages of the Note
Balance,  on behalf of the  Noteholders,  to waive compliance by the Issuer with
certain  provisions  of the  Indenture  and  certain  past  defaults  under  the
Indenture and their  consequences.  Any such consent or waiver by the Noteholder
of this Note (or any one of more  predecessor  Notes)  shall be  conclusive  and
binding upon such Noteholder and upon all future holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof  whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Issuer,  the Paying Agent and the Indenture
Trustee  to  amend  or waive  certain  terms  and  conditions  set  forth in the
Indenture without the consent of Noteholders but with prior notice to the Rating
Agencies and the Enhancer.

     The term "Issuer" as used in this Note includes any successor or the Issuer
under the Indenture.

                                     A-3-4
<PAGE>

     The Issuer is permitted by the Indenture,  under certain circumstances,  to
merge or  consolidate,  subject to the rights of the  Indenture  Trustee and the
Noteholders under the Indenture.

     The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.

     This Note and the Indenture  shall be construed in accordance with the laws
of the State of New York,  without reference to its conflicts of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.

     No reference  herein to the  Indenture  and no provision of this Note or of
the  Indenture  shall alter or impair the  obligation  of the  Issuer,  which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.

     Anything  herein  to the  contrary  notwithstanding,  except  as  expressly
provided  in the  Basic  Documents,  none of  Wilmington  Trust  Company  in its
individual capacity,  U.S. Bank National Association in its individual capacity,
any owner of a  beneficial  interest in the Issuer,  or any of their  respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Note or the performance of,
or the failure to perform, any of the covenants, obligations or indemnifications
contained in the  Indenture.  The  Noteholder  of this Note,  by its  acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in the
case of an Event of Default under the Indenture,  such Noteholder  shall have no
claim against any of the foregoing for any deficiency,  loss or claim therefrom;
provided,  however,  that  nothing  contained  herein  shall be taken to prevent
recourse to, and enforcement  against,  the assets of the Issuer for any and all
liabilities,  obligations and undertakings contained in the Indenture or in this
Note.

     The  Servicer  shall have the right to purchase  from the Issuer all of the
Mortgage  Loans and related REO  Property if the Note Balance of the Notes as of
any  Payment  Date is less than 10% of the Note  Balance  of the Notes as of the
Closing Date, (provided that a draw on the Policy would not occur as a result of
such  purchase,  and  provided  further  that the  purchase  price will  provide
sufficient  funds to pay the  outstanding  Note  Balance  and accrued and unpaid
interest  on the  Notes to the  Payment  Date on which  such  amounts  are to be
distributed to the  Securityholders),  at a price equal to 100% of the aggregate
unpaid Principal Balance of all such remaining  Mortgage Loans, plus accrued and
unpaid interest  thereon at the weighted average of the Loan Rates thereon up to
the date  preceding the Payment Date on which such amounts are to be distributed
to the Securityholders  (and in the case of REO Property,  the fair market value
of the REO  Property),  plus any amounts due and owing to the Enhancer under the
Insurance  Agreement  related to the Mortgage Loans or the Notes (and any unpaid
Servicing  Fee relating to the Mortgage  Loans shall be deemed to have been paid
at such time),  plus any Interest  Shortfall  and  interest  owed thereon to the
Noteholders.  The purchase price paid by the Servicer shall also

                                     A-3-5
<PAGE>

include certain  amounts owed by the Seller  pursuant to the Purchase  Agreement
that remain unpaid on the date of such purchase.

     Unless the  certificate of  authentication  hereon has been executed by the
Indenture Trustee whose name appears below by manual signature,  this Note shall
not be entitled to any benefit  under the  Indenture  referred to on the reverse
hereof, or be valid or obligatory for any purpose.

                                     A-3-6
<PAGE>

     IN WITNESS WHEREOF,  the Owner Trustee,  on behalf of the Issuer and not in
its individual capacity, has caused this Note to be duly executed.

                                             WACHOVIA ASSET SECURITIZATION, INC.
                                             2003-HE2 TRUST

                                             By:  WILMINGTON  TRUST COMPANY,
                                                  not in its  individual
                                                  capacity but solely as
                                                  Owner Trustee

Dated:  __________, 20__

                                             By:
                                                  ------------------------------
                                                       Authorized Signatory

                          CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in the within-mentioned Indenture.

                                             U.S. BANK NATIONAL ASSOCIATION, not
                                             in  its  individual   capacity  but
                                             solely as Indenture Trustee

Dated:  __________, 20__

                                             By:
                                                  ------------------------------
                                                       Authorized Signatory

                                     A-3-7
<PAGE>

                                   ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:

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

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto

 ------------------------------
 (name and address of assignee)

the within Note and all rights thereunder,  and hereby  irrevocably  constitutes
and appoints __________________________________________________________________,
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.

Dated:
        --------------------------------         -----------------------------*/
                                                 Signature Guaranteed:

                                                 -----------------------------*/

------------------------
*    NOTICE:  The signature to this  assignment must correspond with the name of
the registered  owner as it appears on the face of the within Term Note in every
particular,  without  alteration,  enlargement  or  any  change  whatever.  Such
signature must be guaranteed by an "eligible guarantor  institution" meeting the
requirements of the Note Registrar,  which  requirements  include  membership or
participation  in STAMP or such other  "signature  guarantee  program" as may be
determined by the Note Registrar in addition to, or in substitution  for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.

                                     A-3-8
<PAGE>EXECUTION COPY

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

                        U.S. BANK NATIONAL ASSOCIATION,

                             as Indenture Trustee,

                         WACHOVIA CAPITAL MARKETS, LLC,

                                as Auction Agent

                                      and

                      WACHOVIA ASSET SECURITIZATION, INC.,

                         as Holder of the Certificates

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

                            AUCTION AGENT AGREEMENT

                            Dated as of July 2, 2003

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

                      Wachovia Asset Securitization, Inc.
                             Series 2003-HE2 Trust
                      Asset-Backed Notes, Series 2003-HE2

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

<PAGE>

                               TABLE OF CONTENTS
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Section 1.  Definitions and Rules of Construction..............................1

        1.1.  Terms Defined by Reference to Indenture..........................1

        1.2.  Terms Defined Herein.............................................1

        1.3.  Rules of Construction............................................2

Section 2.  The Auction........................................................3

        2.1.  Incorporation by Reference of Auction Procedures and Settlement
              Procedures.......................................................3

        2.2.  Preparation of Each Auction; Maintenance of Existing Noteholder
              Registry.........................................................3

        2.3.  All Hold Rates, Maximum Auction Rates, Class A-II-2 Net WAC Rate
              and LIBOR........................................................5

        2.4.  Auction Schedule.................................................5

        2.5.  Changes in Auction Date..........................................6

        2.6.  Notices to Existing Noteholder...................................6

        2.7.  Broker-Dealers...................................................6

        2.8.  Access to and Maintenance of Auction Records.....................7

Section 3.  Representations and Warranties of the Auction Agent................7

Section 4.  The Auction Agent..................................................8

        4.1.  Duties and Responsibilities......................................8

        4.2.  Rights of the Auction Agent......................................8

        4.3.  Auction Agent's Disclaimer.......................................9

        4.4.  Compensation and Indemnification.................................9

Section 5.  Miscellaneous......................................................9

        5.1.  Term of Agreement................................................9

        5.2.  Communications..................................................10

        5.3. Entire Agreement.................................................11

        5.4.  Benefits........................................................11

        5.5. Amendment, Waiver................................................11

        5.6. Successor and Assign.............................................12

        5.7.  Severability....................................................12

        5.8. Execution in Counterparts........................................12

        5.9. Governing Law....................................................12

        5.10. Indenture Trustee...............................................12

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EXHIBIT A LIST OF INITIAL BROKER-DEALERS.....................................A-1

EXHIBIT B FORM OF BROKER-DEALER AGREEMENT....................................B-1

EXHIBIT C NOTICE OF NOTES OUTSTANDING........................................C-1

EXHIBIT D SETTLEMENT PROCEDURES..............................................D-1

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                            AUCTION AGENT AGREEMENT

          THIS AUCTION AGENT  AGREEMENT,  dated as of July 2, 2003 (the "Auction
Agent  Agreement"),   is  being  entered  into  among  (i)  U.S.  Bank  National
Association,  acting not in its  individual  capacity  but  solely as  Indenture
Trustee (together with any successors or assigns, the "Indenture Trustee") under
the Indenture (as defined  herein),  (ii) Wachovia Asset  Securitization,  Inc.,
solely  as Holder  of the  Certificates  ("WASI")  and  (iii)  Wachovia  Capital
Markets,  LLC (together with its successors and assigns,  the "Auction  Agent'),
acting not in its  individual  capacity  but  solely as agent for the  Indenture
Trustee.

          Pursuant to the Indenture, dated as of July 2, 2003 (the "Indenture"),
by and among Wachovia Asset  Securitization,  Inc. 2003-HE2 Trust, as the issuer
(the "Issuer"),  the Indenture Trustee and Wachovia Bank, National  Association,
as paying  agent  (the  "Paying  Agent"),  the Issuer  will cause the  Indenture
Trustee to authenticate  and deliver up to  $1,250,000,000  aggregate  principal
amount  of  Wachovia  Asset  Securitization,  Inc.  Asset-Backed  Notes,  Series
2003-HE2 (the  "Notes").  The Note Rate for the Class A-II-2 Notes (the "Auction
Notes") will be based on the Auction  Procedures.  Pursuant to Section  2.1.5 of
Annex I to the  Indenture,  the Auction  Agent has been  appointed to act in the
capacities set forth in this Auction Agent Agreement with respect to the Auction
Notes.

          The Indenture Trustee is entering into this Auction Agent Agreement at
the direction of the Seller pursuant to the terms of the Indenture.

          NOW,  THEREFORE,  in  consideration  of the  premises  and the  mutual
covenants  contained  herein,  the parties  listed on the signature page hereto,
agree as follows:

     Section 1. Definitions and Rules of Construction.

          1.1. Terms Defined by Reference to Indenture.  Capitalized  terms used
herein and not otherwise defined herein shall have the meanings given such terms
in  the  Indenture  and if  not  defined  therein,  then  in  the  Broker-Dealer
Agreement.

          1.2.  Terms  Defined  Herein.  As used  herein  and in the  Settlement
Procedures (as defined below), the following terms have the following  meanings,
unless the context otherwise requires:

          "Auction" shall have the meaning specified in Section 2.1 hereof.

          "Auction Agent Fee" shall have the meaning specified in Section 4.4(a)
hereof.

          "Auction  Date"  shall have the  meaning  specified  in Annex I to the
Indenture.

          "Auction  Procedures"  shall mean,  with respect to the Auction Notes,
the provisions that are set forth in Sections 2.1.1 through 2.1.7, inclusive, of
Annex I to the Indenture.

          "Broker-Dealer"  shall mean a person  listed on  Exhibit A hereto,  as
such Exhibit A may be amended from time to time.

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          "Broker-Dealer  Agreement" shall mean each agreement among the Auction
Agent, the Holder of the  Certificates and a Broker-Dealer  substantially in the
form attached hereto as Exhibit B.

          "Depository" shall mean the Depository Trust Company, or any successor
thereto.

          "Existing  Noteholder  Registry" shall mean the register maintained by
the Auction Agent pursuant to Section 2.2(c) hereof.

          "Holder  of the  Certificates"  shall  mean the  Holders of at least a
majority Percentage Interest in the Certificates.

          "Market  Agent"  shall mean  Wachovia  Capital  Markets,  LLC,  or any
successor thereto.

          "Notice of Notes Outstanding" shall mean a notice substantially in the
form of Exhibit C hereto.

          "Notice of Failure  to  Deliver or Make  Payment"  shall mean a notice
substantially in the form of Exhibit D to the Broker-Dealer

Agreement.

          "Notice of Transfer" shall mean a notice  substantially in the form of
Exhibit C to the Broker-Dealer Agreement.

          "Participant"   shall  mean  a  member  of,  or  participant  in,  the
Depository.

          "Responsible  Auction Agent Officer"  shall mean,  with respect to the
Auction Agent, each Managing Director, Vice President, Assistant Vice President,
Assistant Secretary and Assistant Treasurer of the Auction Agent assigned to its
Corporate  Trust and Agency  Group and every  other  officer or  employee of the
Auction Agent  designated as a "Responsible  Auction Agent Officer" for purposes
hereof in a communication to the Indenture Trustee.

          "Settlement  Procedures" shall mean the Settlement Procedures attached
as Exhibit D hereto.

          1.3.  Rules of  Construction.  Unless  the  context  or use  indicates
another or different  meaning or intent,  the following rules shall apply to the
construction of this Auction Agent Agreement:

               (a) Words  importing the singular number shall include the plural
number and vice versa.

               (b) The captions and headings  herein are solely for  convenience
of reference and shall not constitute a part of this Auction Agent Agreement nor
shall they affect its meaning, construction or effect.

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               (c) The words  "hereof,"  "herein,"  "hereto"  and other words of
similar import refer to this Auction Agent Agreement as a whole.

               (d) All references herein to a particular time of day shall be to
New York City time.

     Section 2. The Auction.

          2.1.  Incorporation by Reference of Auction  Procedures and Settlement
Procedures.

               (a)  Pursuant  to  Section  2.1.5  of  Annex I to the  Indenture,
Wachovia  Capital  Markets,  LLC has been appointed as the initial Auction Agent
for purposes of the Auction Procedures and to perform such other obligations and
duties as are herein set forth.  Wachovia  Capital  Markets,  LLC hereby accepts
such  appointment  and agrees that,  on each Auction  Date,  it shall follow the
procedures  set  forth in this  Section  2 and the  Auction  Procedures  for the
purpose of, among other  things,  determining  for the Auction Notes the Auction
Rate,  and the Note Rate for the Auction  Notes for each Interest  Period.  Each
periodic  operation  of  such  procedures  is  hereinafter  referred  to  as  an
"Auction."

               (b) All of the provisions contained in the Auction Procedures and
the Settlement Procedures are incorporated herein by reference in their entirety
and shall be deemed to be a part hereof to the same extent as if such provisions
were fully set forth herein.

          2.2.  Preparation of Each Auction;  Maintenance of Existing Noteholder
Registry.

               (a) A list of  Broker-Dealers  (showing Wachovia Capital Markets,
LLC as the initial  Broker-Dealer)  is  attached as Exhibit A hereto.  Not later
than seven days prior to any  Auction  Date for which any change in such list of
Broker-Dealers is to be effective, WASI will notify the Auction Agent in writing
of such change and, if any such  change is the  addition of a  Broker-Dealer  to
such list, shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a  Broker-Dealer  Agreement  manually  signed and duly executed by
such Broker  Dealer.  The Auction Agent shall have entered into a  Broker-Dealer
Agreement  with  each  Broker-Dealer  prior  to the  participation  of any  such
Broker-Dealer in any Auction.

               (b) In the event that any day that is  scheduled to be an Auction
Date shall be changed  after the  Auction  Agent  shall have given the notice of
such Auction Date  pursuant to clause (vii) of paragraph  (a) of the  Settlement
Procedures,  the  Auction  Agent,  by such  means  as the  Auction  Agent  deems
practicable,  shall give notice of such change to the  Broker-Dealers  not later
than the earlier of 9:15 A.M.  on the new Auction  Date and 9:15 A.M. on the old
Auction Date.

               (c) (i) The Auction  Agent shall  maintain a current  registry of
Persons  that are  Broker-Dealers,  compiled  initially  on the Closing  Date as
described  below,  and Persons that hold  Auction  Notes for purposes of dealing
with the Auction Agent in

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connection  with an Auction  (such  registry  being herein  called the "Existing
Noteholder Registry").  Such Persons shall constitute the "Existing Noteholders"
for purposes of dealing with the Auction  Agent in  connection  with an Auction.
The Auction Agent shall  indicate in the Existing  Noteholder  Registry for each
Existing  Noteholder the identity of the Broker-Dealer  which submitted the most
recent  Order  in  any  Auction  which  resulted  in  such  Existing  Noteholder
continuing  to hold or  purchasing  the Auction  Notes.  The  Auction  Agent may
conclusively   rely  upon,  as  evidence  of  the  identities  of  the  Existing
Noteholders,  such  list,  the  results of each  Auction  and  notices  from any
Existing Noteholder,  Participant of any Existing Noteholder or Broker-Dealer of
any Existing Noteholder.

               (ii) The Indenture Trustee shall, based solely on the information
set forth in the Servicer  Certificate with respect to the related Payment Date,
notify the Auction Agent in writing when any notice of principal  payment of the
Auction  Notes is sent to the  Depository as the owner of such Auction Notes not
later than 11:00 A.M.  on the date such  notice is sent.  Such  notice  shall be
substantially  in the form of Exhibit C hereto.  In the event the Auction  Agent
receives from the Indenture  Trustee  written notice of any payment of principal
of the Auction Notes,  the Auction Agent shall, at least two Business Days prior
to the next Auction,  request each  Participant to disclose to the Auction Agent
(upon selection by such  Participant of the Existing  Noteholders  whose Auction
Notes are to receive principal  payments) the aggregate principal amount of such
Auction Notes of each such Existing  Noteholder,  if any,  which are to be paid;
provided the Auction Agent has been furnished with the name and telephone number
of a person or department at such  Participant  from which it is to request such
information.  In the absence of receiving any such  information  with respect to
any  Existing  Noteholder  from  such  Existing   Noteholder's   Participant  or
otherwise,  the Auction Agent may continue to treat such Existing  Noteholder as
the beneficial  owner of the principal  amount of the Auction Notes shown in the
Existing Noteholder Registry.

               (iii) The  Auction  Agent  shall be  required  to register in the
Existing Noteholder
Registry a transfer of Auction Notes from an Existing Noteholder to another
Person only if such transfer is made to a Person through a Broker-Dealer and if
(A) such transfer is pursuant to an Auction or (B) the Auction Agent has been
notified in writing (1) in a notice substantially in the form of a Notice of
Transfer by such Existing Noteholder, by the Participant of such Existing
Noteholder or by the Broker-Dealer of such Existing Noteholder of such transfer
or (2) in a notice substantially in the form of a Notice of Failure to Deliver
or Make Payment by the Broker-Dealer of any Person that purchased or sold
Auction Notes in an Auction of such Auction Notes to be transferred as a result
of the Auction. The Auction Agent is not required to accept any Notice of
Transfer or Notice of Failure to Deliver or Make Payment delivered prior to an
Auction unless it is received by the Auction Agent by 3:00 P.M. on the Business
Day next preceding the applicable Auction Date.

               (d) The Auction Agent may request that the Broker-Dealers, as set
forth in the  Broker-Dealer  Agreements,  provide  the  Auction  Agent  with the
aggregate  principal  amount of Auction  Notes held by such  Broker-Dealers  for
purposes of the Existing Noteholder Registry. Except as permitted by Section 2.8
hereof, the Auction Agent shall keep confidential any such information and shall
not  disclose  any such  information  so provided  to any person  other than the
relevant  Broker-Dealer  and the  Indenture  Trustee,  provided that the Auction
Agent  reserves the right to disclose any such  information  if it is advised by
its counsel  that its  failure to do so would be  unlawful  or would  expose the
Auction  Agent to liability,  loss,  claim or damage for which the Auction Agent
has not previously received indemnity reasonably satisfactory to it.

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               (e) The  Auction  Agent  shall send by telecopy or other means as
soon as  reasonably  practicable,  but in no event later than the next  Business
Day,  a copy of any  Notice of Notes  Outstanding  received  from the  Indenture
Trustee,  to each Broker-Dealer in accordance with Section 4.3 of the applicable
Broker-Dealer Agreement.

          2.3. All Hold Rates,  Maximum Auction Rates, Class A-II-2 Net WAC Rate
and LIBOR.

               (a) On each Auction Date,  the Auction Agent shall  determine the
All Hold Rate, the Maximum Auction Rate and, as provided by the Servicer, and to
the extent so provided,  the Class A-II-2 Net WAC Rate and LIBOR. Not later than
9:30 A.M. on each Auction Date,  the Auction Agent shall notify the Servicer and
the  Broker-Dealer  of the All Hold Rate,  the Maximum  Auction Rate,  the Class
A-II-2 Net WAC Rate and LIBOR, as so determined. Pursuant to Section 3.23 of the
Servicing Agreement,  in the event that the Auction Notes are not rated "AAA" by
S&P and "Aaa" by Moody's at any time on or after the Closing Date,  the Servicer
is to give  written  notice to the Auction  Agent of any such event within three
(3) Business  Days of its receipt of notice of such  change,  but not later than
one (1) Business Day  immediately  preceding an Auction Date if the Servicer had
actual  knowledge or has received  written  notice of such change prior to 12:00
noon on such  Business  Day, and the Auction  Agent shall take into account such
change for purposes  hereof and any Auction,  so long as such notice is received
by the Auction Agent no later than the close of business on such Business Day.

               (b) (i) If,  on any  Auction  Date  for an  Interest  Period,  an
Auction is not held for any reason, then (except as provided in clauses (ii) and
(iii) below) the Note Rate on the Auction Notes for the next succeeding Interest
Period  shall,  pursuant to Annex I to the  Indenture,  and as calculated by the
Servicer,  equal the lesser of the Maximum Auction Rate and the Class A-II-2 Net
WAC Rate.

               (ii)  If  the  ownership  of  the  Auction  Notes  is  no  longer
maintained in Book-Entry  Form by the Depository,  no further  Auctions shall be
held and the Note Rate on such Auction Notes for each applicable Interest Period
commencing after the delivery of certificated  Auction Notes shall,  pursuant to
the Indenture, equal the lesser of the Class A-II-2 Net WAC Rate and the Maximum
Auction  Rate on the Business Day  immediately  preceding  the first day of each
such applicable subsequent Interest Period as provided in the Indenture.

          2.4. Auction Schedule. The Auction Agent shall conduct Auctions on the
Auction Date in accordance with the schedule set forth below.  Such schedule may
be changed by the Auction  Agent with the consent of WASI and the Market  Agent,
which consent shall not be unreasonably  withheld or delayed.  The Auction Agent
shall give  notice  pursuant  to  Section  4.3 of the  applicable  Broker-Dealer
Agreement of any such change to each  Broker-Dealer.  Such notice shall be given
prior to the first Auction Date on which any such change shall be effective.

By 9:30 A.M.                     The Auction Agent advises the Servicer and the
                                 Broker-Dealers of the Maximum Auction Rate, the
                                 All Hold Rate and, as provided by the Servicer,
                                 the Class A-II-2 Net WAC Rate with respect to
                                 the Auction Date and LIBOR, to be used in
                                 determining the Auction Rate under the Auction
                                 Procedures, the Indenture and this Auction
                                 Agent Agreement.

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9:30 A.M. - 1:00 P.M.            The Auction Agent assembles information
                                 communicated to it by Broker-Dealers as
                                 provided in Section 2.1.1(c)(i) of Annex I to
                                 the Indenture.  The Submission Deadline is
                                 1:00 P.M.

Not earlier than 1:00 P.M.       The Auction Agent makes the determination
                                 pursuant to Section 2.1.1(c)(i) of Annex I to
                                 the Indenture.

By approximately                 The Auction Agent advises the Servicer of the
3:00 P.M.* or 4:00 P.M.          results of the Auction as provided in Section
P.M.**                           2.1.1(c)(ii) of Annex I to the Indenture.
                                 Submitted Bids and Submitted Sell Orders are
                                 accepted and rejected in whole or in part and
                                 Auction Notes allocated as provided in Section
                                 2.1.1(d) of Annex I to the Indenture.

*  If the Note Rate is the Auction Rate.
** If the Note Rate is the Class A-II-2 Net WAC Rate.

          The Auction Agent shall follow the  notification  procedures set forth
in  paragraph  (a) of the  Settlement  Procedures.  In  accordance  with Section
2.1.1(c)(ii)  of Annex I to the Indenture,  the Auction Agent shall give written
notice to the Servicer of the Note Rate.

          2.5.  Changes in Auction Date. The Auction Agent shall mail any notice
delivered  to it pursuant to Section  2.1.7 of Annex I to the  Indenture  to the
Broker-Dealers within three (3) Business Days of its receipt thereof.

          2.6.  Notices to  Existing  Noteholder.  The  Auction  Agent  shall be
entitled to rely upon the address of each  Broker-Dealer  as provided in Section
4.3 of the applicable  Broker-Dealer  Agreement in connection with any notice to
each  Broker-Dealer,  as an  Existing  Noteholder,  required  to be given by the
Auction Agent.

          2.7. Broker-Dealers.

               (a)  If  the  Auction   Agent  is  provided  with  a  copy  of  a
Broker-Dealer Agreement,  which has been manually signed, with any person listed
on Exhibit A hereto to which WASI shall have consented, it shall enter into such
Broker-Dealer  Agreement  with such  person.  WASI  hereby  consents to Wachovia
Capital Markets, LLC as the initial Broker-Dealer.

               (b) The  Auction  Agent may,  with the prior  written  consent of
WASI, so long as Wachovia  Capital  Markets,  LLC is acting as a  Broker-Dealer,
enter into a  Broker-Dealer  Agreement  with any other person who requests to be
selected to act as a Broker-Dealer.  The Auction Agent shall have entered into a
Broker-Dealer  Agreement with each  Broker-Dealer  prior to the participation of
any such Broker-Dealer in any Auction.

               (c) The Auction Agent shall terminate any Broker-Dealer Agreement
as set forth therein at the written direction of WASI.

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          2.8. Access to and Maintenance of Auction  Records.  The Auction Agent
shall afford to WASI and its respective  agents,  independent public accountants
and counsel,  access at reasonable  times during normal business hours to review
and make  extracts  or copies  (at no cost to the  Auction  Agent) of all books,
records,  documents and other information  concerning the conduct and results of
Auctions, provided that any such agent, accountant, or counsel shall furnish the
Auction  Agent with a letter  from the  Indenture  Trustee  requesting  that the
Auction  Agent  afford such person  access.  The  Auction  Agent shall  maintain
records  relating to any  Auction  for a period of two years after such  Auction
(unless requested by WASI to maintain such records for such longer period not in
excess of four years,  then for such longer period),  and such records shall, in
reasonable  detail,  accurately  and fairly  reflect  the  actions  taken by the
Auction  Agent  hereunder.  At the end of such period,  the Auction  Agent shall
deliver such records to WASI if so requested in writing. WASI agrees to keep any
information regarding the conduct and results of the Auctions, including without
limitation  information regarding customers of any Broker-Dealer,  received from
the Auction Agent in connection with this Auction Agent  Agreement  confidential
and  shall not  disclose  such  information  or permit  the  disclosure  of such
information without the prior written consent of the applicable Broker-Dealer to
anyone except such agent,  accountant or counsel  engaged to audit or review the
results of Auctions as permitted by this Section 2.8, except as may otherwise be
required by applicable law or regulation. Any such agent, accountant or counsel,
before having access to such  information,  shall agree to keep such information
confidential and not to disclose such  information or permit  disclosure of such
information  without the prior written consent of the applicable  Broker-Dealer,
except as may otherwise be required by applicable law or regulation. The Auction
Agent shall not be  responsible or liable for any actions of WASI or its agents,
accountants or counsel for passing on such confidential  information as a result
of access to such records and information.

     Section 3. Representations and Warranties of the Auction Agent.

               The Auction Agent hereby represents and warrants to WASI that the
Auction Agent (i) has been duly incorporated and is validly existing and in good
standing as a  corporation  under the laws of the State of North  Carolina,  and
(ii) has all necessary authority to enter into and perform its obligations under
this Auction Agent  Agreement.  This Auction  Agent  Agreement has been duly and
validly authorized,  executed and delivered by the Auction Agent and constitutes
the legal, valid, binding and enforceable obligation of the Auction Agent.

     Section 4. The Auction Agent.

          4.1. Duties and Responsibilities.

               (a) The Auction Agent  undertakes to perform such duties and only
such duties as are specifically  set forth in this Auction Agent Agreement,  and
no  implied  covenants  or  obligations  shall be read into this  Auction  Agent
Agreement by means of the provisions of the Indenture, anything set forth in the
Prospectus or Prospectus Supplement forming a part of the Registration Statement
on Form  S-3  (No.  333-97457),  or any  other  offering  material  prepared  in
connection  with the offer and sale of the Auction Notes,  or otherwise  against
the Auction Agent.

               (b) In the absence of bad faith or  negligence  on its part,  the
Auction  Agent,  whether  acting  directly  or through  agents or  attorneys  as
provided in Section 4.2(d), shall

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not be liable for any action taken, suffered or omitted in good faith or for any
error of judgment made by it in the performance of its duties under this Auction
Agent Agreement. The Auction Agent shall not be liable for any error of judgment
made in good faith  unless  the  Auction  Agent  shall  have been  negligent  in
ascertaining the pertinent facts.

               (c) The  Auction  Agent  shall  not agree to any  amendment  to a
Broker-Dealer Agreement without the prior written consent of WASI, which consent
shall not be unreasonably withheld or delayed.

          4.2. Rights of the Auction Agent.

               (a) The Auction Agent may conclusively rely on and shall be fully
protected in acting or refraining from acting upon any communication  authorized
hereby and upon any written instruction,  notice, request,  direction,  consent,
report,  certificate,  form of bond  certificate or other  instrument,  paper or
document believed by it to be genuine. The Auction Agent shall not be liable for
acting upon any  telephone  communication  authorized  hereby  which the Auction
Agent  believes  in good  faith  to have  been  given  by the  Servicer  or by a
Broker-Dealer.  The Auction Agent may record telephone  communications  with the
Servicer and the Servicer may record  telephone  conversations  with the Auction
Agent.

               (b) The Auction Agent may consult with counsel of its choice, and
the  advice  of such  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 reliance thereon.

               (c) The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise  incur or become exposed to financial  liability
in the performance of its duties hereunder.

               (d) The Auction  Agent may perform  its duties and  exercise  its
rights  hereunder either directly or by or through agents or attorneys and shall
not be responsible  for any misconduct or negligence on the part of any agent or
attorney appointed by it with due care hereunder.

               (e) The Auction  Agent shall have no  obligation  or liability in
respect of the  registration  or exemption  therefrom of the Auction Notes under
federal or state securities laws.

          4.3.   Auction  Agent's   Disclaimer.   The  Auction  Agent  makes  no
representation  as to the  correctness,  validity,  adequacy  of accuracy of the
recitals in or the adequacy or validity of this Auction  Agent  Agreement or the
Broker-Dealer Agreement or the validity or adequacy of the Auction Notes.

          4.4. Compensation and Indemnification.

               (a) On the Closing Date, the Auction Agent shall be entitled to a
one-time  fee in the  amount  of  $17,500  (the  "Auction  Agent  Fee") for it's
services hereunder.

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               (b) To the extent funds are available pursuant to Section 3.05(a)
of the Indenture,  the Auction Agent shall be  indemnified  and held harmless by
the Trust Estate,  and to the extent funds are not available pursuant to Section
3.05(a) of the Indenture,  the Holder of the  Certificates,  shall indemnify and
hold  harmless  the  Auction  Agent  and its  directors,  officers,  agents  and
employees  for and  against  any loss,  liability  or expense  incurred  without
negligence  or bad  faith on the  part of the  Auction  Agent or its  directors,
officers,  agents  or  employees,  arising  out  of or in  connection  with  the
acceptance or  administration  of its agency under this Auction Agent  Agreement
and  the  Broker-Dealer  Agreement  or  the  transactions  contemplated  by  the
Indenture, including the reasonable costs and expenses (including the reasonable
fees and expenses of its counsel) of defending  itself against any such claim or
liability in connection  with its exercise or  performance  of any of its duties
hereunder  and  thereunder  and of  enforcing  this  indemnification  provision;
provided  that the Trust Estate or Holder of the  Certificates,  as  applicable,
shall not indemnify the Auction  Agent  pursuant to this Section  4.4(b) for any
fees and  expenses  incurred  by the  negligence  or willful  misconduct  of the
Auction  Agent  or  incurred  by the  Auction  Agent  in the  normal  course  of
performing  its duties  hereunder and under the  Broker-Dealer  Agreement  (such
normal  course fees and  expenses  being  payable as provided in Section  4.4(a)
above).

     Section 5. Miscellaneous.

          5.1. Term of Agreement.

               (a) This Auction Agent  Agreement  shall terminate on the earlier
to occur of (i) the  satisfaction and discharge of the Indenture with respect to
the Auction  Notes or this Auction  Agent  Agreement  and (ii) the date on which
this Auction Agent  Agreement is terminated in accordance with this Section 5.1.
The Indenture  Trustee may terminate this Auction Agent  Agreement in accordance
with  Section  2.1.5(a)  of Annex I to the  Indenture.  The  Auction  Agent  may
terminate  this Auction  Agent  Agreement  upon written  notice to the Indenture
Trustee, the Servicer and the Market Agent on the date specified in such notice,
which date shall be no earlier  than 90 days after the date of  delivery of such
notice.  Notwithstanding the foregoing, the provisions of Section 2 hereof shall
terminate  with  respect  to the  Auction  Notes,  upon  the  delivery  of notes
representing   Auction  Notes   pursuant  to  Section  4.08  of  the  Indenture.
Notwithstanding  the  foregoing,  the Auction Agent may terminate this Agreement
without  further  notice if,  within 25 days  after  notifying  in  writing  the
Indenture  Trustee,  the  Servicer and the Market Agent that it has not received
payment of any Auction Agent Fee due it in accordance with the terms hereof, the
Auction  Agent does not receive such  payment.  Any  resignation  of the Auction
Agent or termination of the Auction Agent Agreement  shall not become  effective
until a  successor  Auction  Agent has been  appointed  and  acceptance  of such
appointment by such successor  Auction Agent.  However,  if a successor  Auction
Agent shall not have been appointed  within 60 days from the date of such notice
of resignation,  the resigning Auction Agent may petition any court of competent
jurisdiction for the appointment of a successor Auction Agent.

               (b) Except as  otherwise  provided in this  Section  5.1(b),  the
respective  rights and duties of the  Indenture  Trustee,  WASI and the  Auction
Agent under this Auction Agent  Agreement  shall cease upon  termination of this
Auction  Agent  Agreement.  The  Auction  Agent's  representations,  warranties,
covenants  and  obligations  under  Sections 3 and 4 hereof,  shall  survive the
termination of this Auction Agent Agreement subject to Section 5.10 hereof.

                                       9

<PAGE>

Upon  termination  of this  Auction  Agent  Agreement,  the Auction  Agent shall
promptly  deliver to WASI upon  prior  written  request  copies of all books and
records  maintained by it with respect to the Auction  Notes in connection  with
its duties hereunder.

          5.2.  Communications.  Except for (i) communications  authorized to be
made by  telephone  pursuant  to this  Auction  Agent  Agreement  or the Auction
Procedures and (ii) communications in connection with Auctions (other than those
expressly  required  to  be  in  writing),  all  notices,   requests  and  other
communications to any party hereunder shall be in writing  (including  facsimile
or  similar  writing)  and shall be given to such party  addressed  to it at its
address, or facsimile number set below:

If to the Indenture Trustee,
addressed:                      U.S. Bank National Association
                                180 East Fifth Street
                                St. Paul, Minnesota
                                55101 Attention: Corporate Trust Services-
                                WASI Series 2003-HE2

If to the Auction Agent,
addressed:                      Wachovia Capital Markets, LLC
                                One Wachovia Center, 301 South College Street
                                Charlotte, North Carolina 28288
                                Attention: Robert Perret
                                Facsimile: (704) 383-8121

If to Wachovia Asset
Securitization, Inc,            Wachovia Asset Securitization, Inc.
addressed:                      8739 Research Drive, NC0121-Suite D
                                Charlotte, North Carolina 28288-0121
                                Attention: Robert J. Perret
                                Facsimile: (704) 383-8121

If to the Servicer,             Wachovia Bank, National Association
addressed:                      One Wachovia Center, 18th Floor
                                Charlotte, North Carolina 28288-0572
                                Attention: David Mason
                                Re: Wachovia Asset Securitization 2003-HE2 Trust
                                Facsimile: (704) 383-3878
If to the Market Agent,
addressed:                      Wachovia Capital Markets, LLC
                                One Wachovia Center, 301 South College Street
                                Charlotte, North Carolina 28288
                                Attention: Robert Perret
                                Facsimile: (704) 383-8121

                                       10

<PAGE>

or such other address, telephone or facsimile number as such party may hereafter
specify  for such  purpose by notice in writing  to the other  party.  Each such
notice,  request or  communication  shall be  effective  when  delivered  at the
address specified herein. Communications shall be given on behalf of the Auction
Agent by a Responsible Auction Agent Officer.

          5.3.  Entire  Agreement.  This Auction  Agent  Agreement  contains the
entire agreement between the parties relating to the subject matter hereof,  and
there  are no  other  representations,  endorsements,  promises,  agreements  or
understandings,  oral,  written or inferred  between the parties relating to the
subject matter hereof.

          5.4. Benefits.  Nothing herein,  express or implied, shall give to any
person, other than the Indenture Trustee,  the Auction Agent, the Servicer,  the
Market Agent and their  respective  successors  and assigns,  any benefit of any
legal or equitable right,  remedy or claim hereunder.  The Market Agent shall be
designated as a third-party beneficiary under this Auction Agent Agreement.

          5.5. Amendment, Waiver.

               (a) This Auction Agent Agreement shall not be deemed or construed
to be modified,  amended,  rescinded,  canceled or waived,  in whole or in part,
except by a written instrument signed by duly authorized  representatives of the
parties hereto.

               (b) The  Indenture  Trustee  shall not enter into or approve  any
amendment of or supplement to the Indenture which materially affects the Auction
Agent's duties or obligations  under the Indenture  without  obtaining the prior
written  consent of the Auction  Agent.  The Indenture  Trustee  shall  promptly
notify the Auction  Agent of any amendment of or supplement to the Indenture and
shall provide a copy thereof to the Auction Agent upon request.

               (c)  Failure of a party  hereto to  exercise  any right or remedy
hereunder  in the  event  of a  breach  hereof  by any  other  party  shall  not
constitute a waiver of any such right or remedy with  respect to any  subsequent
breach.

          5.6.  Successor  and Assign.  This Auction  Agent  Agreement  shall be
binding upon,  inure to the benefit of, and be  enforceable  by, the  respective
successors  and  assigns  of each of the  Indenture  Trustee,  the Holder of the
Certificates  and the Auction  Agent.  This Auction  Agent  Agreement may not be
assigned  by any party  hereto  absent  the prior  written  consent of the other
parties hereto, which consents shall not be unreasonably  withheld. In addition,
the Holder of the  Certificates  may not assign its interest in the Certificates
without the prior written consent of the Auction Agent,  which consent shall not
be unreasonably withheld.

          5.7. Severability. If any clause, provision or section hereof shall be
ruled  invalid or  unenforceable  by any court of  competent  jurisdiction,  the
invalidity or  unenforceability  of such clause,  provision or section shall not
affect any of the remaining clauses, provisions or sections hereof.

          5.8.  Execution in  Counterparts.  This Auction Agent Agreement may be
executed in several counterparts,  each of which shall be an original and all of
which shall constitute but one and the same instrument.

                                       11

<PAGE>

          5.9.  Governing Law. This Auction Agent Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in such state, it being understood that U.S.
Bank National Association is entering into this Agreement solely in its capacity
as Indenture  Trustee and none of such  obligations  shall be the obligations of
U.S. Bank National Association in its individual capacity.

          5.10 Indenture Trustee. All privileges, rights and immunities given to
the Indenture  Trustee in the Indenture are  herebyextended to and applicable to
the Indenture Trustee's obligations hereunder.

                                       12

<PAGE>

          IN WITNESS WHEREOF,  the parties hereto have caused this Auction Agent
Agreement to be duly executed and delivered by their proper and duly  authorized
officers as of the date first above written.

                                          U.S. BANK NATIONAL ASSOCIATION,
                                          not in its individual capacity but
                                          solely as Indenture Trustee

                                          By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                          WACHOVIA CAPITAL MARKETS, LLC,
                                          as Auction Agent

                                          By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                          WACHOVIA ASSET SECURITIZATION, INC.,
                                          not in its individual capacity but
                                          solely as Holder of the Certificates

                                          By:
                                             -----------------------------------
                                             Name:
                                             Title:
<PAGE>

                                   EXHIBIT A

                         LIST OF INITIAL BROKER-DEALERS
                         ------------------------------

                         Wachovia Capital Markets, LLC

                                      A-1

<PAGE>

                                   EXHIBIT B

                       FORM OF BROKER - DEALER AGREEMENT
                       ---------------------------------

                                 (See attached)

                                      B-1

<PAGE>

                                   EXHIBIT C

                          NOTICE OF NOTES OUTSTANDING

                      WACHOVIA ASSET SECURITIZATION, INC.

                                 2003-HE2 TRUST

                      ASSET-BACKED NOTES, SERIES 2003-HE2

          NOTICE  IS  HEREBY  GIVEN  that $                 aggregate  principal
                                           ----------------
amounts of Class A-II-2 Notes were  Outstanding  at the close of business on the
immediately  preceding  Record Date.  Such aggregate  principal  amount of Class
A-II-2 Notes, less $            aggregate principal amount of Class A-II-2 Notes
                    -----------
to be repaid pursuant to the Indenture,  for a net aggregate principal amount of
Class  A-II-2  Notes of  $               will be  available  on the next Auction
                          --------------
scheduled to be held on                  .
                        ---------------

          Terms used herein have the meanings set forth in the Notes relating to
the above-referenced issue.

                                          [         ], as Indenture Trustee
                                           ---------

                                          By:
                                             -----------------------------------

                                          Name:
                                               ---------------------------------

                                          Title:
                                                --------------------------------

                                          Date:
                                               ---------------------------------

                                      C-1

<PAGE>

                                   EXHIBIT D

                             SETTLEMENT PROCEDURES

          If not otherwise  defined below,  capitalized  terms used herein shall
have the meanings given such terms in the Indenture.

          (a) Not later than (1) 3:00 P.M. if the related  Note Rate for a Class
A-II-2 Note is the Auction  Rate or (2) 4:00 P.M. if the related Note Rate for a
Class  A-II-2 Note is the Class A-II-2 Net WAC Rate on each  Auction  Date,  the
Auction Agent shall notify by telephone each  Broker-Dealer that participated in
the Auction  held on such  Auction  Date and  submitted an Order on behalf of an
Existing Noteholder or Potential Noteholder of:

                (i) the related Note Rate for the Class A-II-2 Notes for the
          next Interest Period;

                (ii) whether there were Sufficient Bids in such Auction;

                (iii) if such  Broker-Dealer  (a  "Seller's  Broker-Dealer")
          submitted  Bids or Sell  Orders on behalf of an  Existing  Noteholder,
          whether such Bid or Sell Order was  accepted or rejected,  in whole or
          in part, and the principal  amount of the Class A-II-2 Notes,  if any,
          to be sold by such Existing Noteholder;

                (iv)  if  such  Broker-Dealer  (a  "Buyer's  Broker-Dealer")
          submitted a Bid on behalf of a Potential Noteholder,  whether such Bid
          was  accepted  or  rejected,  in whole or in part,  and the  principal
          amount of the Class  A-II-2  Notes,  if any, to be  purchased  by such
          Potential Noteholder;

                (v) if the aggregate  amount of the Class A-II-2 Notes to be
          sold  by all  Existing  Noteholders  on  whose  behalf  such  Seller's
          Broker-Dealer  submitted  Bids or Sell Orders  exceeds  the  aggregate
          principal  amount of the Class  A-II-2  Notes to be  purchased  by all
          Potential  Noteholders  on whose  behalf  such  Buyer's  Broker-Dealer
          submitted  a  Bid,   the  name  or  names  of  one  or  more   Buyer's
          Broker-Dealers (and the name of the Participant,  if any, of each such
          Buyer's  Broker-Dealer)  acting  for  one or more  purchasers  of such
          excess  principal  amount of the Class A-II-2 Notes and the  principal
          amount  of the Class  A-II-2  Notes to be  purchased  from one or more
          Existing Noteholders on whose behalf such Seller's Broker-Dealer acted
          by one or more  Potential  Noteholders  on whose  behalf  each of such
          Buyer's Broker-Dealers acted;

                (vi) if the principal amount of the Class A-II-2 Notes to be
          purchased by all  Potential  Noteholders  on whose behalf such Buyer's
          Broker-Dealer  submitted a Bid exceeds the amount of the Class  A-II-2
          Notes to be sold by all  Existing  Noteholders  on whose  behalf  such
          Sellers'  Broker-Dealer  submitted a Bid or a Sell Order,  the name or
          names  of one or more  Sellers'  Broker-Dealers  (and  the name of the
          Participant,  if any, of each such Seller's  Broker-Dealer) acting for
          one or more  sellers  of such  excess  principal  amount  of the Class
          A-II-2 Notes and the principal  amount of the Class A-II-2 Notes to be
          sold to one or more Potential Noteholders on whose behalf such Buyer's
          Broker-

                                      D-1

<PAGE>

          Dealer acted by one or more Existing  Noteholders on whose behalf each
          of such Seller's Broker-Dealers acted; and

          (vii) the Auction Date for the next succeeding Auction.

          (b) On each Auction Date, each  Broker-Dealer  that submitted an Order
on behalf of any Existing Noteholder or Potential Noteholder shall:

               (i) advise each Existing Noteholder and Potential Noteholder
          on whose  behalf such  Broker-Dealer  submitted a Bid or Sell Order in
          the Auction on such  Auction  Date  whether such Bid or Sell Order was
          accepted or rejected, in whole or in part;

               (ii)  in the  case  of a  Broker-Dealer  that  is a  Buyer's
          Broker-Dealer,  advise each Potential  Noteholder on whose behalf such
          Buyer's  Broker-Dealer  submitted a Bid that was accepted, in whole or
          in part, to instruct such  Potential  Noteholder's  Participant to pay
          such Buyer's Broker-Dealer (or its Participant) through the Depository
          the amount  necessary  to purchase the  principal  amount of the Class
          A-II-2 Notes to be purchased  pursuant to such Bid against  receipt of
          such Class A-II-2 Notes, together with accrued interest;

                (iii)  in the  case of a  Broker-Dealer  that is a  Seller's
          Broker-Dealer,  instruct each Existing Noteholder on whose behalf such
          Seller's  Broker-Dealer  submitted a Sell Order that was accepted,  in
          whole or in part, or a Bid that was accepted,  in whole or in part, to
          instruct such  Existing  Noteholder's  Participant  to deliver to such
          Seller's Broker-Dealer (or its Participant) through the Depository the
          principal amount of the Class A-II-2 Notes to be sold pursuant to such
          Order against payment therefor;

                (iv) advise each  Existing  Noteholder  on whose behalf such
          Broker-Dealer  submitted  an Order and each  Potential  Noteholder  on
          whose behalf such  Broker-Dealer  submitted a Bid of the Note Rate for
          the next Interest Period;

                (v) advise each  Existing  Noteholder  on whose  behalf such
          Broker-Dealer submitted an Order of the next Auction Date; and

                (vi) advise each  Potential  Noteholder on whose behalf such
          Broker-Dealer  submitted a Bid that was accepted, in whole or in part,
          of the next Auction Date.

          (c) On the  basis  of  the  information  provided  to it  pursuant  to
paragraph (a) above, each Broker-Dealer that submitted a Bid or Sell Order in an
Auction is required to allocate any funds received by it in connection with such
Auction pursuant to paragraph (b)(ii) above, and any Class A-II-2 Notes received
by it in  connection  with such Auction  pursuant to paragraph  (b)(iii)  above,
among the  Potential  Noteholders,  if any, on whose  behalf such  Broker-Dealer
submitted  Bids,  the  Existing  Noteholders,  if  any,  on  whose  behalf  such
Broker-Dealer   submitted  Bids  or  Sell  Orders  in  such  Auction,   and  any
Broker-Dealers  identified  to it by the Auction  Agent  following  such Auction
pursuant to paragraph (a)(v) or (a)(vi) above.

          (d) On each Auction Date:

                                      D-2

<PAGE>

                (i) each Potential  Noteholder and Existing  Noteholder with
          an Order in the  Auction  on such  Auction  Date  shall  instruct  its
          Participant as provided in (b)(ii) or (b)(iii)  above, as the case may
          be;

                (ii) each Seller's  Broker-Dealer  that is not a Participant
          of the Depository shall instruct its Participant to deliver such Class
          A-II-2 Notes through the Depository to a Buyer's Broker-Dealer (or its
          Participant)  identified  to such Seller's  Broker-Dealer  pursuant to
          (a)(v) above against payment therefor; and

                 (iii) each Buyer's  Broker-Dealer  that is not a Participant
          in the Depository  shall  instruct its  Participant to pay through the
          Depository to Seller's  Broker-Dealer (or its Participant)  identified
          following such Auction  pursuant to (a)(vi) above the amount necessary
          to purchase  Class A-II-2  Notes to be  purchased  pursuant to (b)(ii)
          above against receipt of such Notes.

          (e) On the Business Day following each Auction Date:

              (i) each  Participant  for a Bidder in the  Auction  on such
          Auction Date referred to in (d)(i) above shall instruct the Depository
          to execute the transactions  described under (b)(ii) or (b)(iii) above
          for such Auction, and the Depository shall execute such transactions;

              (ii) each Seller's  Broker-Dealer  or its Participant  shall
          instruct  the  Depository  to execute the  transactions  described  in
          (d)(ii) above for such Auction,  and the Depository shall execute such
          transactions; and

              (iii) each Buyer's  Broker-Dealer  or its Participant  shall
          instruct  the  Depository  to execute the  transactions  described  in
          (d)(iii) above for such Auction, and the Depository shall execute such
          transactions.

          (f) If an Existing Noteholder selling Class A-II-2 Notes in an Auction
fails to deliver such Notes (by  authorized  book-entry),  a  Broker-Dealer  may
deliver to the  Potential  Noteholder on behalf of which it submitted a Bid that
was accepted a principal  amount of the Class A-II-2 Notes that is less than the
principal  amount of such Class A-II-2 Notes that  otherwise was to be purchased
by such Potential  Noteholder.  In such event, the principal amount of the Class
A-II-2 Notes to be so delivered shall be determined solely by such Broker-Dealer
(but only in Authorized Denominations). Delivery of such lesser principal amount
of the Class A-II-2 Notes shall  constitute good delivery.  Notwithstanding  the
foregoing  terms of this  paragraph  (f), any delivery or  nondelivery  of Class
A-II-2 Notes which shall represent any departure from the results of an Auction,
as determined by the Auction  Agent,  shall be of no effect unless and until the
Auction  Agent shall have been  notified  of such  delivery  or  nondelivery  in
accordance   with  the  provisions  of  the  Auction  Agent  Agreement  and  the
Broker-Dealer Agreements. None of the Indenture Trustee, the Paying Agent or the
Auction  Agent will have any  responsibility  or  liability  with respect to the
failure of a  Potential  Noteholder,  Existing  Noteholder  or their  respective
Broker-Dealer or Participant to take delivery of or deliver, as the case may be,
the  principal  amount of Class  A-II-2 Notes  purchased or sold  pursuant to an
Auction or otherwise.

                                      D-3
<PAGE>

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