Document:

EXECUTION COPY

                                                                   Exhibit 10.01

                       ADELPHIA COMMUNICATIONS CORPORATION

                                 $1,000,000,000

                          10 1/4% Senior Notes due 2011

                             UNDERWRITING AGREEMENT

                                                                    June 7, 2001
SALOMON SMITH BARNEY INC.
BANC OF AMERICA SECURITIES LLC as Representatives of the several Underwriters
named on Schedule 1 hereto
     c/o Salomon Smith Barney Inc.
         388 Greenwich Street
         New York, New York  10013

         CIBC WORLD MARKETS CORP.
         as Independent Underwriter
         425 Lexington Avenue
         5th Floor
         New York, New York 10017

Ladies and Gentlemen:

                  Adelphia Communications Corporation, a Delaware corporation
(the "Company"), proposes to sell $1,000,000,000 in aggregate principal amount
of its 10 1/4% Senior Notes due 2011 (collectively, the "Securities") to the
several underwriters named in Schedule 1 hereto (the "Underwriters"), for whom
Salomon Smith Barney Inc. and Banc of America Securities LLC are acting as
representatives (in such capacity, the "Representatives"). The Securities will
be issued pursuant to an Indenture, dated as of April 28, 1999 (the "Base
Indenture"), as supplemented by the Fourth Supplemental Indenture thereto, to be
dated as of the Closing Date (as defined herein) (the "Supplemental Indenture"
and, together with the Base Indenture, the "Indenture"), between the Company and
The Bank of New York, as trustee (the "Trustee"). The form of the Supplemental
Indenture will be filed on Form 8-K and incorporated by reference as an exhibit
to the registration statement referred to below. If the Representatives are the
only Underwriters named on Schedule 1 hereto, the term "Representatives" shall
be deemed to refer to the Underwriters.

                  The Company and the Underwriters, in accordance with the
requirements of Rule 2710(c)(8) and Rule 2720 ("Rule 2720") of the National
Association of Securities Dealers, Inc. (the "NASD") and subject to the terms
<PAGE>

and conditions stated herein, also hereby confirm the engagement of the services
of CIBC World Markets Corp. (the "Independent Underwriter") as a "qualified
independent underwriter" within the meaning of Section (b)(15) of Rule 2720 in
connection with the offering and sale of the Securities.

                  1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the several
Underwriters and the Independent Underwriter on and as of the date hereof and
the Closing Date (as defined in Section 3) that:

                  (a) A Registration Statement on Form S-3 (Registration No.
         333-78027), including a prospectus, with respect to the Securities have
         been prepared by the Company in conformity with the requirements of the
         Securities Act of 1933, as amended (the "Securities Act"), and the
         rules and regulations (the "Rules and Regulations") of the Securities
         and Exchange Commission (the "Commission") thereunder and have become
         effective. Copies of such registration statement have been delivered by
         the Company to you as the Underwriters. As used in this Agreement, (i)
         "Registration Statement" means each such registration statement, as
         amended and supplemented to the date hereof; (ii) "Basic Prospectus"
         means the prospectus included in the Registration Statement; and (iii)
         "Prospectus" means the Basic Prospectus, together with any prospectus
         amendment or supplement (including in each case all documents
         incorporated therein by reference (the "Incorporated Documents"))
         specifically relating to the Securities, as filed with the Commission
         pursuant to paragraph (b) of Rule 424 of the Rules and Regulations. The
         Commission has not issued any order preventing or suspending the use of
         any Prospectus, and no proceedings for such purposes have been
         instituted or are pending or, to the knowledge of the Company, are
         contemplated by the Commission, and any request on the part of the
         Commission for additional information has been complied with;

                  (b) The Registration Statement and the Prospectus contain, and
         (in the case of any amendment or supplement to any such document, or
         any material incorporated by reference in any such document, filed with
         the Commission after the date as of which this representation is being
         made) will contain at all times during the period specified in
         paragraph 4(c) hereof, all statements which are required by the
         Securities Act, the Securities Exchange Act of 1934, as amended (the
         "Exchange Act"), the Trust Indenture Act of 1939, as amended (the
         "Trust Indenture Act"), and the rules and regulations of the Commission
         under such Acts; the Indenture, with any amendments and supplements
         thereto will conform, with the requirements of the Trust Indenture Act
         and the rules and regulations of the Commission thereunder; and the
         Registration Statement, the Prospectus and the Incorporated Documents
         do not, and (in the case of any amendment or supplement to any such
         document, or any material incorporated by reference in any such
         document, filed with the Commission after the date as of which this
         representation is being made) will not, at any time during the period
         specified in paragraph 4(c) hereof, contain any untrue statement of a
         material fact or omit to state any material fact required to be stated
         therein or necessary to make the statements therein not misleading;
         provided that the Company makes no representation or warranty as to
         information contained in or omitted from any Registration Statement or
         any Prospectus in reliance and based upon information furnished to the
         Company by or on behalf of any Underwriter or the Independent
         Underwriter, it being understood and agreed that the only such
         information is that described as such in Section 9(b) hereof, or as to
<PAGE>

         any statements in or omissions from the Statement of Eligibility of the
         Trustee under the Indenture;

                  (c) Neither the Company nor any of its material subsidiaries
         (the "Subsidiaries") has sustained since December 31, 2000 any material
         loss or interference with its business from fire, explosion, flood or
         other calamity, whether or not covered by insurance, or from any labor
         dispute or court or governmental action, order or decree, otherwise
         than as set forth or contemplated in the Prospectus; and, since the
         respective dates as of which information is given in the Prospectus,
         there has not been any reduction in the consolidated stockholders'
         equity or change in the capital stock, as applicable (other than
         reductions in the ordinary course of business consistent with prior
         periods), material increase in the total amount of short-term debt
         (excluding trade payables) or long-term debt of the Company or any of
         its Subsidiaries, or any material adverse change, or any development
         involving a prospective material adverse change, in or affecting the
         general affairs, management, financial position, partners' equity,
         shareholders' equity or results of operations of the Company and its
         Subsidiaries or any of the Acquired Companies (as defined below) and
         their subsidiaries, otherwise than as set forth or contemplated in the
         Prospectus;

                  (d) Each of the Company and its Subsidiaries has good and
         marketable title in fee simple to all real property and good and
         marketable title to all personal property owned by them, in each case
         free and clear of all liens, encumbrances and defects except such as
         are described in the Prospectus or such as do not affect the value of
         such property and do not interfere with the use made and proposed to be
         made of such property by the Company and its Subsidiaries; and any real
         property and buildings held under lease by the Company and its
         Subsidiaries are held by them under valid, subsisting and enforceable
         leases with such exceptions as are not material and do not interfere
         with the use made and proposed to be made of such property and
         buildings by the Company and its Subsidiaries; except in any case that
         would not have a material adverse effect on the business, general
         affairs, management, financial position, partners equity or
         shareholders' equity (other than reductions in the ordinary course of
         business consistent with prior periods), results of operations or
         prospects of the Company and its Subsidiaries, taken as a whole (a
         "Material Adverse Effect");

                  (e) (i) Each of the Subsidiaries that is a partnership or
         limited liability company has been duly formed or organized and is
         validly existing as a partnership or limited liability company in good
         standing under the laws of its state of formation, with full power and
         authority (partnership, limited liability company and other) to own its
         properties and conduct its business as described in the Prospectus, and
         has been duly qualified as a foreign partnership or foreign limited
         liability company for the transaction of business and is in good
         standing under the laws of each other jurisdiction in which it owns or
         leases properties or conducts any business so as to require such
         qualification, or is subject to no material liability or disability by
         reason of the failure to be so qualified in any such jurisdiction
         except where the failure to so qualify would not have a Material
         Adverse Effect; and (ii) each of the Company and the Subsidiaries that
         are corporations has been duly incorporated and is validly existing as
         a corporation in good standing under the laws of its state of
         incorporation, with full power and authority (corporate and other) to
         own its properties and conduct its business as described in the
         Prospectus, and has been duly qualified as a foreign corporation for
         the transaction of business and is in good standing under the laws of
<PAGE>

         each other jurisdiction in which it owns or leases properties or
         conducts any business so as to require such qualification, or is
         subject to no material liability or disability by reason of the failure
         to be so qualified in any such jurisdiction except where the failure to
         so qualify would not have a Material Adverse Effect;

                  (f) Each of the Company and its Subsidiaries has the ownership
         or authorized capitalizations, as the case may be, as set forth in the
         Prospectus, and all of the partnership interests of the Subsidiaries
         that are partnerships, all of the limited liability company interests
         of the Subsidiaries that are limited liability companies and all of the
         issued shares of capital stock of its Subsidiaries that are
         corporations have been duly and validly authorized and issued and with
         respect to shares of capital stock are fully paid and non-assessable;
         and all of the partnership interests of the Subsidiaries disclosed in
         the Prospectus as being owned directly or indirectly by the Company,
         all of the limited liability company interests of the Subsidiaries
         disclosed in the Prospectus as being owned directly or indirectly by
         the Company and all of the issued shares of capital stock of the
         Subsidiaries that are corporations disclosed in the Prospectus as being
         owned directly or indirectly by the Company have been duly and validly
         authorized and issued are fully paid and non-assessable and are owned
         directly or indirectly by the Company free and clear of all liens,
         encumbrances, equities or claims (other than liens to secure
         indebtedness under credit facilities disclosed in the Prospectus); and
         ownership of the various interests and shares of the Company and its
         Subsidiaries is as described in the Prospectus;

                  (g) The Securities have been duly authorized and, when issued
         and delivered pursuant to this Agreement, will have been duly executed,
         authenticated, issued and delivered and will constitute valid and
         legally binding obligations of the Company entitled to the benefits
         provided by the Indenture under which they are to be issued; the Base
         Indenture has been authorized, executed and delivered by the Company,
         and assuming the due authorization, execution and delivery thereof by
         the Trustee, constitutes the valid and legally binding obligation of
         the Company; the Supplemental Indenture has been duly authorized by the
         Company and, when executed and delivered by the Company and the
         Trustee, the Indenture will constitute a valid and legally binding
         instrument, enforceable in accordance with its terms against the
         Company, subject, as to enforcement, to bankruptcy, insolvency,
         reorganization and other laws of general applicability relating to or
         affecting creditors' rights and to general equity principles; and the
         Securities and the Indenture will conform to the descriptions thereof
         in the Prospectus and will be in substantially the form previously
         delivered to the Underwriters and the Independent Underwriter;

                  (h) The Company has all requisite corporate power and
         authority to execute, deliver and perform its obligations under this
         Agreement and the Company has all requisite corporate power and
         authority to consummate the transactions contemplated by this
         Agreement;

                  (i) Prior to the date hereof, none of the Company or any of
         its affiliates (other than the Underwriters and the Independent
         Underwriter or any person acting on their behalf as to which the
         Company makes no representation) has taken, directly or indirectly, any
         action which is designed to or which has constituted or which might
         have been expected to cause or result in stabilization or manipulation
         of the price of any security of the Company in connection with the
         offering of the Securities;
<PAGE>

                  (j) The issuance and sale of the Securities, the compliance by
         the Company with all of the provisions of the Securities, the Indenture
         and this Agreement, and the consummation of the transactions herein and
         therein contemplated will not conflict with or result in a breach or
         violation of any of the terms or provisions of, or constitute a default
         under, any material indenture, mortgage, deed of trust, sale/leaseback
         agreement, loan agreement or other similar financing agreement or
         instrument or other agreement or instrument (including, without
         limitation, any license or franchise granted to the Company or one of
         its Subsidiaries by a local franchising governmental body) to which the
         Company or any of its Subsidiaries is a party or by which the Company
         or any of its Subsidiaries is bound or has rights under or to which any
         of the property or assets of the Company or any of its Subsidiaries is
         subject, nor will such action result in any violation of the provisions
         of the certificate of incorporation or bylaws of the Company or its
         Subsidiaries that are corporations or the certificates of formation or
         limited liability company operating agreements of its Subsidiaries that
         are limited liability companies or the certificates of limited
         partnership or the partnership agreements of its Subsidiaries that are
         partnerships or any statute or any order, rule or regulation of any
         court or governmental agency or body having jurisdiction over the
         Company or any of its Subsidiaries or any of their properties; and no
         consent, approval, authorization, order, registration or qualification
         of or with any such court or governmental agency or body is required
         for the issue and sale of the Securities or the consummation by the
         Company of the transactions contemplated by this Agreement or the
         Indenture, other than such consents, approvals, authorizations,
         registrations or qualifications as may be required under state
         securities or Blue Sky laws in connection with the purchase and
         distribution of the Securities by the Underwriters;

                  (k) None of the Company or its Subsidiaries is in violation of
         its certificate of incorporation, partnership agreement, certificate of
         formation, limited liability company operating agreement or bylaws, as
         the case may be, or in default in the performance or observance of any
         material obligation, agreement, covenant or condition contained in any
         indenture, mortgage, deed of trust, sale/leaseback agreement, loan
         agreement or other similar financing agreement or instrument or other
         agreement or instrument (including, without limitation, any license or
         franchise granted to the Company or a subsidiary by a local franchising
         governmental body) to which the Company or a subsidiary is a party or
         by which it or any of its properties may be bound, except for such
         defaults as would not have individually or in the aggregate a Material
         Adverse Effect;

                  (l) The statements set forth in the Prospectus under the
         caption "Description of Notes," insofar as they purport to constitute a
         summary of the terms of the Securities, and incorporated by reference
         in the Prospectus from the Company's Annual Report on Form 10-K for the
         year ended December 31, 2000 under the captions "Business" and
         "Management's Discussion and Analysis of Financial Condition and
         Results of Operations," as applicable, insofar as they purport to
         describe the provisions of the laws and documents referred to therein,
         are accurate, complete and fair in all material respects;

                  (m) None of the Company or its Subsidiaries is or, after
         giving effect to the offering and sale of the Securities, will be an
         "investment company," or an entity "controlled" by an "investment
         company," as such terms are defined in the United States Investment
         Company Act of 1940, as amended (the "Investment Company Act");
<PAGE>

                  (n) None of the Company, its Subsidiaries or any of their
         affiliates does business with the government of Cuba or with any person
         or affiliate located in Cuba within the meaning of Section 517.075,
         Florida Statutes;

                  (o) None of the transactions contemplated by this Agreement
         (including, without limitation, the use of the proceeds from the sale
         of the Securities) will violate or result in a violation of Section 7
         of the Exchange Act, or any regulation promulgated thereunder,
         including, without limitation, Regulations T, U and X of the Board of
         Governors of the Federal Reserve System;

                  (p) Other than as set forth in the Prospectus (including those
         matters referred to therein relating to general rulemakings and similar
         matters relating generally to the cable television industry), there are
         no legal or governmental proceedings pending to which the Company or
         any of its Subsidiaries is a party or of which any property of the
         Company or any of its Subsidiaries is the subject which, if determined
         adversely to the Company or any of its Subsidiaries, would individually
         or in the aggregate have a Material Adverse Effect and, to the best of
         the Company's knowledge, no such proceedings are threatened or
         contemplated by governmental authorities or by others; and except with
         respect to general rulemakings and similar matters relating generally
         to the cable television industry, during the time the Systems (as
         defined below) have been owned by the Company or a subsidiary (i) there
         has been no adverse judgment, order, or decree issued by the United
         States Federal Communications Commission (the "FCC") relating to any of
         the Systems that has not been disclosed in the Prospectus that would be
         required to be disclosed in a public offering registered under the
         Securities Act; (ii) there are no actions, suits, proceedings,
         inquiries or investigations by the FCC pending or threatened in writing
         against or affecting the Company, any of its Subsidiaries or any
         System; and (iii) to the Company's knowledge, after due inquiry, there
         is no reasonable basis for any such action, suit, proceeding or
         investigation;

                  (q) Each of Deloitte & Touche LLP, who has reported on the
         financial statements of the Company and one of the Acquired Companies
         (as defined below), and KPMG LLP, who has reported on the financial
         statements of one of the Acquired Companies, is an independent public
         accountant as required by the Securities Act and the Rules and
         Regulations;

                  (r) This Agreement has been duly and validly authorized,
         executed and delivered by the Company and is the legal, valid and
         binding agreement of the Company, enforceable against the Company in
         accordance with its terms, except insofar as indemnification and
         contribution provisions may be limited by applicable law or public
         policy or equitable principles and subject to applicable bankruptcy,
         insolvency, fraudulent conveyance, reorganization or similar laws
         affecting the rights of creditors generally and subject to general
         principles of equity;

                  (s) Except for matters covered by paragraph (w) below or with
         respect to matters that would not individually or in the aggregate have
         a Material Adverse Effect, (i) the Company and its Subsidiaries have
         made all filings, recordings and registrations with, and possess all
         validations or exemptions, approvals, orders, authorizations, consents,
         licenses, certificates and permits from, the FCC, applicable public
         utilities and other federal, state and local regulatory or governmental
         bodies and authorities or any subdivision thereof, including, without
         limitation, cable television franchises, pole attachment agreements,
<PAGE>

         and cable antenna relay service, broadcast auxiliary, earth station,
         business radio, microwave or special safety radio service licenses
         issued by the FCC (collectively, the "Authorizations") necessary or
         appropriate to own, operate and construct the cable communication
         systems owned by them (the "Systems") or otherwise for the operation of
         their businesses and are not in violation thereof; (ii) all such
         Authorizations are in full force and effect, and no event has occurred
         that permits, or after notice or lapse of time could permit, the
         revocation, termination or modification of any Authorization which is
         necessary or appropriate to own, operate and construct the Systems or
         otherwise for the operation of any such business; (iii) none of the
         Company or any of its Subsidiaries is in violation of any duty or
         obligation required by the United States Communications Act of 1934, as
         amended (the "Communications Act"), or any FCC rule or regulation
         applicable to the operation of any portion of any of the Systems; (iv)
         none of the Company or any of its Subsidiaries is in violation of any
         duty or obligation required by state or local laws, or local rules or
         regulations applicable to the operation of any portion of any of the
         Systems; (v) there is not pending or, to the best knowledge of the
         Company or any of its Subsidiaries, threatened, any action by the FCC
         or state or local regulatory authority to modify, revoke, cancel,
         suspend or refuse to renew any Authorization; (vi) other than as
         described in the Prospectus, there is not now issued or outstanding or,
         to the best knowledge of the Company or any of its Subsidiaries,
         threatened, any notice of any hearing, material violation or material
         complaint against the Company or any of its Subsidiaries with respect
         to the operation of any portion of the Systems and none of the Company
         or its Subsidiaries has any knowledge that any person intends to
         contest renewal of any material Authorization;

                  (t) (i)(A) The Company and its Subsidiaries have entered into,
         or have rights under, all required programming agreements (including,
         without limitation, all non-broadcast affiliation agreements under
         which the Company and its Subsidiaries are accorded retransmission
         rights relating to programming that the Systems provide to their
         customers) that are material to the conduct of their business as
         described in the Prospectus; and (B) all such material agreements are
         in full force and effect and none of the Company, any of its
         Subsidiaries or any of its affiliates has received any written notice
         of revocation or material modifications of such material agreements;
         and (ii)(A) either the Company or its Subsidiaries has entered into
         agreements with the television stations that have notified the Company
         or its Subsidiaries that such station's respective consent is required
         to carry such stations on the Systems or has ceased carrying such
         stations; (B) all such agreements grant the Company or one of its
         Subsidiaries retransmission consent in exchange for various non-cash
         consideration; and (C) all such agreements are in full force and effect
         and are not subject to revocation (except in the case of material
         breach by the Company or its Subsidiaries) or material modifications,
         and no event has occurred that permits, or after notice or lapse of
         time could permit, the revocation, termination or material modification
         of any such agreement, except where the failure of such agreements to
         be in full force and effect or such revocation would not, in either
         case, individually or in the aggregate have a Material Adverse Effect;

                  (u) Except for matters that would not individually or in the
         aggregate have a Material Adverse Effect, (i) all registration
         statements and all other documents (including but not limited to annual
         reports) required by the FCC in connection with the operation of the
         Systems have been filed with the FCC; (ii) all frequencies within the
         restricted aeronautical and navigational bands (i.e., 108-136 MHz and
<PAGE>

         225-400 MHz) which are currently being used in connection with the
         operation of the Systems have been authorized for such use by the FCC;
         (iii) each of the Systems subject to Equal Employment Opportunity
         Commission ("EEOC") compliance certification by the FCC has been
         certified by the FCC for annual EEOC compliance during the time such
         Systems have been owned by the Company or its Subsidiaries; and (iv)
         all towers associated with the Systems are in compliance with the rules
         and regulations of the United States Federal Aviation Administration;

                  (v) Except for matters that would not individually or in the
         aggregate have a Material Adverse Effect, none of the Company or any of
         its Subsidiaries is in breach or violation of, or in default under, any
         of the terms, conditions or provisions of the Communications Act or the
         rules, regulations or policies of the FCC thereunder;

                  (w) (i) Except for matters that would not individually or in
         the aggregate have a Material Adverse Effect, all statements of
         accounts and any other filings that are required under Section 111 of
         the United States Copyright Act of 1976, as amended, in connection with
         the retransmission of any broadcast television and radio signals on the
         Systems have been timely filed with the United States Copyright Office
         and indicated royalty payments have been made for each System for each
         accounting period during which such Systems have been owned by the
         Company or its Subsidiaries; (ii) none of the Company, any of its
         Subsidiaries or any System has received any inquiry or request from the
         United States Copyright Office or from any other party challenging or
         questioning any such statements of account or royalty payments; and
         (iii) no claim of copyright infringement has been made or threatened in
         writing against the Company, any of its Subsidiaries or any System;

                  (x) Neither the execution and delivery of this Agreement, the
         Securities or the Indenture, nor the consummation of the transactions
         contemplated hereby and thereby or by the Prospectus under "Use of
         Proceeds," nor compliance with the terms, conditions and provisions
         thereof by the Company, will conflict with the Communications Act or
         the rules, regulations or policies of the FCC thereunder, or will cause
         any suspension, revocation, impairment, forfeiture, nonrenewal or
         termination of any material license, permit, franchise, certificate,
         consent, authorization, designation, declaration, filing, registration
         or qualification;

                  (y) Neither the execution and delivery of this Agreement, the
         Securities or the Indenture, nor the execution, delivery, offer,
         issuance and sale of the Securities, nor compliance with the terms,
         conditions and provisions thereof by the Company, requires any license,
         permit, franchise, certificate, consent, authorization, designation,
         declaration, filing, registration or qualification by or with the FCC;

                  (z) On October 1, 1999, the Company consummated its previously
         announced acquisition of Century Communication Corp. and FrontierVision
         Partners, L.P. (collectively, the "Acquired Companies");

                  (aa) There are no contracts or documents which are required to
         be described in the Registration Statement, the Prospectus or the
         documents incorporated by reference therein or to be filed as exhibits
         thereto which have not been so described and filed as required;
<PAGE>

                  (bb) The historical financial statements and financial
         statement schedules of the Company and its consolidated subsidiaries
         included or incorporated by reference in the Registration Statement and
         Prospectus comply as to form in all material respects with the
         requirements applicable to registration statements on Form S-3 under
         the Securities Act and the Rules and Regulations and present fairly in
         all material respects the financial position, results of operations and
         statements of cash flows of the Company and its consolidated
         subsidiaries, at the respective dates and for the respective periods
         indicated; such financial statements have been prepared in accordance
         with generally accepted accounting principles applied on a consistent
         basis throughout the periods presented, the other financial information
         and data included or incorporated by reference in the Registration
         Statement and Prospectus, historical and pro forma, are accurately
         presented in all material respects and prepared on a basis consistent
         with the financial statements, historical and pro forma, included in
         the Prospectus and the books and records of the Company and its
         subsidiaries, and the statistical information and data included in the
         Prospectus are accurately presented in all material respects; and

                  (cc) Except pursuant to this Agreement, there are no
         contracts, agreements or understandings between the Company, any of its
         Subsidiaries or any of their joint ventures and any other person that
         would give rise to a valid claim against the Company or any of the
         Underwriters for a brokerage commission, finder's fee or like payment
         in connection with the issuance, purchase and sale of the Securities.

                  2. Purchase of the Securities. On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Underwriters, severally and not jointly, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company,
the principal amount of Securities set forth opposite the name of such
Underwriter on Schedule 1 hereto at a purchase price equal to 98% of the
principal amount thereof (the "purchase price").

                  The Company shall not be obligated to deliver any of the
Securities except upon payment for all of the Securities to be purchased as
provided herein. The Company acknowledges and agrees that the Underwriters may
sell Securities to any affiliate of an Underwriter and that any such affiliate
may sell Securities purchased by it to an Underwriter.

                  3. Delivery of and Payment for the Securities. (a) Delivery of
and payment for the Securities shall be made at the offices of Latham & Watkins,
885 Third Avenue, New York, New York 10022, or at such other place as shall be
agreed upon by the Representatives and the Company, at 10:00 A.M., New York City
time, on June 12, 2001, or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Representatives and the
Company (such date and time of payment and delivery being referred to herein as
the "Closing Date").

                  (b) On the Closing Date, payment of the purchase price for the
         Securities shall be made to the Company by wire transfer of immediately
         available funds to an account at a bank acceptable to Salomon Smith
         Barney Inc. ("SSB"), or by such other means as the parties hereto shall
         agree prior to the Closing Date, against delivery to the Underwriters
         of the certificates evidencing the Securities to be purchased. Time
         shall be of the essence, and delivery at the time and place specified
<PAGE>

         pursuant to this Agreement is a further condition of the obligations of
         the Underwriters hereunder. Upon delivery, the Securities shall be in
         global form, registered in such names and in such denominations as SSB
         on behalf of the Representatives on behalf of the Underwriters shall
         have requested in writing not less than two full business days prior to
         the Closing Date. The Company agrees to make one or more global
         certificates evidencing the Securities available for inspection by SSB
         on behalf of the Representatives on behalf of the Underwriters in New
         York, New York at least 24 hours prior to the Closing Date.

                  4. Further Agreements of the Company. The Company agrees with
each of the several Underwriters and the Independent Underwriter:

                  (a) To furnish promptly to the Underwriters, the Independent
         Underwriter and counsel for the Underwriters a conformed copy of each
         Registration Statement as originally filed and each amendment or
         supplement thereto filed prior to the date hereof or relating to or
         covering the Securities, and a copy of each Prospectus filed with the
         Commission, including all documents incorporated therein by reference
         and all consents and exhibits filed therewith and to file with the
         Commission pursuant to Rule 424 a prospectus supplement, in form and
         substance satisfactory to the Representatives and their counsel,
         relating to the offering contemplated hereby no later than the close of
         business on June 8, 2001;

                  (b) To deliver promptly to the Underwriters and the
         Independent Underwriter such reasonable number of the following
         documents as the Underwriters and the Independent Underwriter may
         request: (i) conformed copies of the Registration Statement (excluding
         exhibits other than the computation of the ratio of earnings to fixed
         charges, the Indenture and this Agreement), (ii) the Prospectus and
         (iii) any documents incorporated by reference in the Prospectus;

                  (c) During such period following the date hereof as, in the
         opinion of counsel for the Underwriters, the Prospectus is required by
         law to be delivered, to comply with the Securities Act, the Exchange
         Act, the Trust Indenture Act and the rules and regulations under each
         thereof, so as to permit the completion of the distribution of the
         Securities as contemplated in this Agreement and in the Prospectus. If
         at any time when a prospectus is required by the Securities Act to be
         delivered in connection with sales of the Securities, any event shall
         occur or condition shall exist as a result of which it is necessary, in
         the reasonable opinion of counsel for the Underwriters or for the
         Company, to amend the Registration Statement or amend or supplement the
         Prospectus in order that the Prospectus will not include any untrue
         statements of a material fact or omit to state a material fact
         necessary in order to make the statements therein not misleading in the
         light of the circumstances existing at the time it is delivered to a
         purchaser, or if it shall be necessary, in the opinion of such counsel,
         at any such time to amend the Registration Statement or amend or
         supplement the Prospectus in order to comply with the requirements of
         the Securities Act or the Rules and Regulations, the Company will
         promptly prepare and file with the Commission, subject to paragraph (d)
         below, such amendment or supplement as may be necessary to correct such
         statement or omission or to make the Registration Statement or the
         Prospectus comply with such requirements, and the Company will furnish
         to the Underwriters and the Independent Underwriter such number of
         copies of such amendment or supplement as the Underwriters and the
<PAGE>

         Independent Underwriter may reasonably request;

                  (d) Prior to filing with the Commission during the period
         referred to in (c) above (i) any amendment to the Registration
         Statement, (ii) the Prospectus or any amendment thereto, (iii) the
         prospectus supplement utilized in connection with this offering or any
         amendment or supplement thereto, or (iv) any document incorporated by
         reference in any of the foregoing or any amendment or supplement to
         such incorporated document, to furnish a copy thereof to the
         Underwriters, the Independent Underwriter and counsel for the
         Underwriters and not to file any document that shall have been
         disapproved by the Underwriters or the Independent Underwriter,
         provided that neither the Representatives' nor the Independent
         Underwriter's consent to, nor the Underwriters delivery of, any such
         amendments or supplement shall constitute a waiver of any of the
         conditions set forth in Section 6 hereof;

                  (e) To advise the Underwriters and the Independent Underwriter
         promptly (i) when any post-effective amendment to the Registration
         Statement relating to or covering the Securities becomes effective or
         any supplement to the Prospectus shall have been filed, (ii) of any
         comments from the Commission or any request or proposed request by the
         Commission for an amendment or supplement to the Registration Statement
         (insofar as the amendment or supplement relates to or covers the
         Securities), to the Prospectus, to any document incorporated by
         reference in any of the foregoing or for any additional information,
         (iii) of the issuance by the Commission of any stop order suspending
         the effectiveness of the Registration Statement or any order directed
         to the Prospectus or any document incorporated therein by reference or
         the initiation or threat of any stop order proceeding or of any
         challenge to the accuracy or adequacy of any document incorporated by
         reference in any Prospectus, (iv) of receipt by the Company of any
         notification with respect to the suspension of the qualification of the
         Securities for sale in any jurisdiction or the initiation or threat of
         any proceeding for that purpose and (v) of the happening of any event
         which makes untrue any statement of a material fact made in the
         Registration Statement or the Prospectus or which requires the making
         of a change in the Registration Statement or the Prospectus in order to
         make any material statement therein not misleading;

                  (f) If, during the period referred to in (c) above, the
         Commission shall issue a stop order suspending the effectiveness of the
         Registration Statement, to make every reasonable effort to obtain the
         lifting of that order at the earliest possible time;

                  (g) To file promptly all reports and any definitive proxy or
         information statements required to be filed by the Company with the
         Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
         Exchange Act subsequent to the date of the Prospectus and for so long
         as the delivery of a Prospectus is required in connection with the
         offering and sale of the Securities;

                  (h) To make generally available to the Company's security
         holders and to deliver to the Underwriters and the Independent
         Underwriter an earnings statement of the Company and its Subsidiaries
         (which need not be audited) complying with Section 11(a) of the
         Securities Act and the Rules and Regulations (including, at the option
         of the Company, Rule 158), as soon as practicable;
<PAGE>

                  (i) For so long as the Securities are outstanding, to furnish
         to the Underwriters and the Independent Underwriter, promptly upon
         written request, copies of any annual reports, quarterly reports and
         current reports filed by the Company with the Commission on Forms 10-K,
         10-Q and 8-K, or such other similar forms as may be designated by the
         Commission, and such other documents, reports and information as shall
         be furnished by the Company to the Trustee or to the holders of the
         Securities pursuant to the Indenture or the Exchange Act or any rule or
         regulation of the Commission thereunder;

                  (j) To promptly take from time to time such actions as the
         Underwriters may reasonably request to qualify the Securities for
         offering and sale under the securities or Blue Sky laws of such
         jurisdictions as the Underwriters may designate and to continue such
         qualifications in effect for so long as required for the resale of the
         Securities; and to arrange for the determination of the eligibility for
         investment of the Securities under the laws of such jurisdictions as
         the Underwriters may reasonably request; provided that the Company and
         its Subsidiaries shall not be obligated to qualify as foreign
         corporations in any jurisdiction in which they are not so qualified or
         to file a general consent to service of process in any jurisdiction;

                  (k) Not to, for so long as the Securities are outstanding, be
         or become, or be or become owned by, an open-end investment company,
         unit investment trust or face-amount certificate company that is or is
         required to be registered under Section 8 of the Investment Company
         Act, and to not be or become, or be or become owned by, a closed-end
         investment company required to be registered, but not registered
         thereunder;

                  (l) In connection with the offering of the Securities, until
         SSB on behalf of the Representatives on behalf of the Underwriters
         shall have notified the Company of the completion of the distribution
         of the Securities, not to, and to cause its affiliated purchasers (as
         defined in Regulation M under the Exchange Act) not to, either alone or
         with one or more other persons, bid for or purchase, for any account in
         which it or any of its affiliated purchasers has a beneficial interest,
         any Securities, or attempt to induce any person to purchase any
         Securities; and not to, and to cause its affiliated purchasers not to,
         make bids or purchase for the purpose of creating actual, or apparent,
         active trading in or of raising the price of the Securities;

                  (m) In connection with the offering of the Securities, to make
         its officers, employees, independent accountants and legal counsel
         reasonably available upon request by the Independent Underwriter or the
         Underwriters and to cooperate with the Independent Underwriter, the
         Underwriters and Underwriters' counsel with their due diligence review
         through the Closing Date;

                  (n) To furnish to each of the Underwriters and the Independent
         Underwriter on the date hereof a copy of each of the independent
         accountants' reports included in the Registration Statement signed by
         the accountants rendering such reports;

                  (o) To do and perform all things required to be done and
         performed by it under this Agreement that are within its control prior
         to or after the Closing Date, and to use its best efforts to satisfy
         all conditions precedent on its part to the delivery of the Securities;
<PAGE>

                  (p) To not take any action prior to the execution and delivery
         of the Indenture which, if taken after such execution and delivery,
         would have violated any of the covenants contained in the Indenture;

                  (q) To not take any action prior to the Closing Date which
         would require the Prospectus to be amended or supplemented pursuant to
         Section 4(c); and

                  (r) To apply the net proceeds from the sale of the Securities
         as set forth in the Prospectus under the heading "Use of Proceeds".

                  5. Conditions of Underwriters' Obligations. The respective
obligations of the several Underwriters and the Independent Underwriter
hereunder are subject to the accuracy, on and as of the date hereof and the
Closing Date, of the representations and warranties of the Company contained
herein, to the accuracy of the statements of the Company and its officers made
in any certificates delivered pursuant hereto, to the performance by the Company
of its obligations hereunder, to the condition (in the case of the Underwriters)
that the Independent Underwriter shall have furnished to the Underwriters the
letter referred to in clause (v) of Section 20(b) hereof and to each of the
following additional terms and conditions:

                  (a) The Prospectus and supplement referred to in Section 4(a)
         of this Agreement shall have been timely filed with the Commission in
         accordance with Section 4(a) of this Agreement. Prior to the Closing
         Date, no stop order suspending the effectiveness of the Registration
         Statement or any part thereof shall have been issued and no proceeding
         for that purpose shall have been initiated or threatened by the
         Commission; and any request of the Commission for inclusion of
         additional information in the Registration Statement or the Prospectus
         or otherwise shall have been complied with to the reasonable
         satisfaction of the Underwriters.

                  (b) The Prospectus (and any amendments or supplements thereto)
         shall have been printed and copies distributed to the Underwriters as
         promptly as practicable on or following the date of this Agreement or
         at such other date and time as to which the Underwriters may agree.

                  (c) None of the Underwriters shall have discovered and
         disclosed to the Company on or prior to the Closing Date that the
         Prospectus or any amendment or supplement thereto contains an untrue
         statement of a fact which, in the opinion of counsel for the
         Underwriters, is material or omits to state any fact which, in the
         opinion of such counsel, is material and is required to be stated
         therein or is necessary to make the statements therein not misleading.

                  (d) All corporate proceedings and other legal matters incident
         to the authorization, form and validity of each of this Agreement, the
         Indenture and the Securities (collectively, the "Transaction
         Documents") and the Prospectus, and all other legal matters relating to
         the Transaction Documents and the transactions contemplated thereby,
         shall be satisfactory in all material respects to the Underwriters, and
         the Company shall have furnished to the Underwriters all documents and
         information that they or their counsel may reasonably request to enable
         them to pass upon such matters.
<PAGE>

                  (e) The Underwriters shall have received on the Closing Date
         an opinion of Buchanan Ingersoll Professional Corporation, counsel for
         the Company, dated the Closing Date and addressed to the Underwriters,
         to the effect that:

                                    (i) The Company has been duly incorporated
                  and is validly existing as a corporation in good standing
                  under the laws of the state of its formation with full
                  corporate power and authority to own its properties and
                  conduct its business as described in the Prospectus;

                                    (ii) This Agreement has been duly
                  authorized, executed and delivered by the Company;

                                    (iii) The Securities have been duly
                  authorized and, when issued and delivered pursuant to this
                  Agreement, will have been duly executed, authenticated, issued
                  and delivered and will constitute valid and legally binding
                  obligations of the Company entitled to the benefits provided
                  by the Indenture and enforceable against the Company in
                  accordance with its terms, subject, as to enforcement, to
                  bankruptcy, insolvency, reorganization, moratorium and other
                  laws of general applicability relating to or affecting
                  creditors' rights and to general equity principles and further
                  except that (a) rights to contribution or indemnification may
                  be limited by the laws, rules or regulations of any
                  governmental authority or agency thereof or by public policy,
                  and (b) waivers as to usury, stay or extension laws may be
                  unenforceable; and the Securities and the Indenture conform in
                  all material respects to the descriptions thereof in the
                  Prospectus;

                                    (iv) The Indenture has been duly authorized,
                  executed and delivered by the Company and duly qualified under
                  the Trust Indenture Act, and assuming that the Indenture is a
                  valid and binding agreement of the Trustee, constitutes a
                  valid and legally binding instrument, enforceable in
                  accordance with its terms against the Company, subject, as to
                  enforcement, to bankruptcy, insolvency, reorganization,
                  moratorium and other laws of general applicability relating to
                  or affecting creditors' rights and to general equity
                  principles and further except that (a) rights to contribution
                  or indemnification may be limited by the laws, rules or
                  regulations of any governmental authority or agency thereof or
                  by public policy, and (b) waivers as to usury, stay or
                  extension laws may be unenforceable;

                                    (v) The Registration Statement has become
                  effective under the Securities Act and the Prospectus
                  (including the prospectus supplement contemplated by Section
                  4(a) hereof) was filed pursuant to Rule 424(b) of the Rules
                  and Regulations and, to our knowledge, no stop order
                  suspending the effectiveness of the Registration Statement has
                  been issued or proceeding for that purpose has been instituted
                  or threatened by the Commission;

                                    (vi) The Company has the corporate power and
                  authority to enter into the Underwriting Agreement and to
                  issue, sell and deliver the Securities as provided therein,
                  and the Underwriting Agreement has been duly authorized,
                  executed and delivered by the Company and is a legal, valid
                  and binding agreement of the Company, enforceable against the
                  Company in accordance with its terms, except that (A) such
                  enforceability may be limited by bankruptcy, insolvency,
<PAGE>

                  fraudulent conveyance, reorganization, moratorium (whether
                  general or specific) or other similar laws now or hereafter in
                  effect relating to or affecting creditors' rights generally,
                  (B) such enforceability may be limited by the effects of
                  general principles of equity and by the discretion of the
                  court before which any proceeding therefor may be brought
                  (whether such proceeding is at law or in equity or in a
                  bankruptcy proceeding) and (C) rights to contribution or
                  indemnification may be limited by the laws, rules or
                  regulations of any governmental authority or agency thereof or
                  public policy and, if applicable, (D) waivers as to usury,
                  stay or extension laws may be unenforceable;

                                    (vii) The Registration Statement and the
                  Prospectus, as of their dates (except for the financial
                  statements, including the notes thereto, and supporting
                  schedules and other financial, statistical and accounting data
                  included therein or omitted therefrom, as to which no opinion
                  is expressed), and each amendment or supplement thereto, as of
                  its date, comply as to form in all material respects with the
                  Securities Act, the Rules and Regulations and Trust Indenture
                  Act;

                                    (viii) The documents incorporated by
                  reference in the Prospectus (other than the financial
                  statements (and notes thereto) and related schedules therein,
                  as to which such counsel need express no opinion), when they
                  were filed with the Commission, complied as to form in all
                  material respects with the requirements of the Exchange Act
                  and the Rules and Regulations;

                                    (ix) Neither the issuance, sale or delivery
                  of the Securities, nor the execution, delivery or performance
                  of the Underwriting Agreement, or compliance by the Company
                  with all provisions of this Underwriting Agreement, the
                  Securities and the Indenture, nor consummation by the Company
                  of the transactions contemplated hereby violates, conflicts
                  with or constitutes a breach of any of the terms or provisions
                  of, or a default under (or an event that with notice or the
                  lapse of time, or both, would constitute a default), or
                  require consent under, or result in the imposition of a lien
                  or encumbrance on any properties of the Company or any
                  subsidiary, or an acceleration of any indebtedness of the
                  Company or any subsidiary pursuant to, (i) the charter or
                  bylaws of the Company or (ii) any judgment, order or decree of
                  any court or governmental agency or authority having
                  jurisdiction over the Company or its assets or properties
                  known to such counsel, except in the case of clause (ii) for
                  such violations, conflicts, breaches, defaults, consents,
                  impositions of liens or accelerations that (x) would not,
                  singly or in the aggregate, have a Material Adverse Effect or
                  (y) are disclosed in the Prospectus;

                                    (x) The Company is not an "investment
                  company" or an entity "controlled" by an "investment company,"
                  as such terms are defined in the Investment Company Act;

                                    (xi) Except as set forth in the Prospectus,
                  there are no holders of securities of the Company who, by
                  reason of the execution by the Company of this Agreement or
                  the consummation by the Company of the transactions
                  contemplated thereby, have the right to request or demand that
<PAGE>

                  the Company register under the Securities Act securities held
                  by them;

                                    (xii) None of (A) the execution, delivery
                  and performance of this Agreement or (B) the issuance and sale
                  of the Securities and the application of the proceeds from the
                  issuance and sale of the Securities will violate Regulations
                  T, U or X promulgated by the Board of Governors of the Federal
                  Reserve System;

                                    (xiii) To the knowledge of such counsel,
                  there is (i) no action, suit, investigation or proceeding
                  before or by any court, arbitrator or governmental agency,
                  body or official, domestic or foreign, now pending, or
                  threatened or contemplated to which any of the Company or any
                  subsidiary is or may be a party or to which the business or
                  property of any of the Company or any subsidiary is or may be
                  subject, (ii) no statute, rule, regulation or order that has
                  been enacted, adopted or issued by any governmental agency, or
                  (iii) no injunction, restraining order or order of any nature
                  by a federal or state court of competent jurisdiction to which
                  any of the Company or any subsidiary is or may be subject that
                  has been issued that, in the case of clauses (i), (ii) and
                  (iii) above, (x) is required to be disclosed in the Prospectus
                  and that is not so disclosed and, (y) could reasonably be
                  expected to have, either individually or in the aggregate, a
                  Material Adverse Effect, it being understood that for purposes
                  of this opinion, such counsel need express no opinion with
                  respect to (i) actions, suits investigation or proceedings
                  before the FCC or any similar state or local regulatory
                  commission or body, (ii) statutes, rules, regulations or
                  orders by any FCC or any similar state or local regulatory
                  commission or (iii) injunctions, restraining orders or other
                  orders by the FCC or any similar state or local regulatory
                  commission or body; and

                                    (xiv) The statements set forth in the
                  Prospectus under the caption "Description of Notes," insofar
                  as they purport to constitute a summary of the terms of the
                  Securities, and under the caption "Certain United States Tax
                  Considerations," insofar as they purport to constitute a
                  summary of laws, governmental rules or regulations or
                  documents, are accurate in all material respects.

                  In addition, such counsel shall also state that such counsel
has participated in conferences with officers and representatives of the Company
and its subsidiaries, representatives of the independent public accountants for
the Company and the Underwriters at which the contents of the Registration
Statement and the Prospectus (including the Incorporated Documents) and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for and has not verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus, and has not made any independent check or
verification thereof, on the basis of the foregoing (relying as to materiality
to the extent such counsel deemed appropriate upon facts provided by officers
and other representatives of the Company), no facts have come to the attention
of such counsel that lead such counsel to believe that the Registration
Statement, as of the date it was declared effective, or the Prospectus, as of
its date or as of the Closing Date, in each case including the Incorporated
Documents, contained or contains any untrue statement of material fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief or
<PAGE>

opinion with respect to the financial statements and other financial and
statistical data included therein).

                  The opinion of such counsel may be limited to the laws of the
Commonwealth of Pennsylvania, the General Corporation Law of the State of
Delaware and the federal laws of the United States.

                  (f) The Underwriters shall have received on the Closing Date
         an opinion of Randall D. Fisher, Esq., General Counsel to the Company,
         dated the Closing Date and addressed to the Underwriters, to the effect
         that:

                                    (i) Except as set forth in the Prospectus,
                  each of the Company and its subsidiaries has all of the
                  licenses, permits, franchises and authorizations, if any,
                  required by the relevant governmental authorities of each of
                  New York, Virginia, Pennsylvania, Ohio, Massachusetts, New
                  Hampshire, Vermont, Connecticut, Wyoming, Wisconsin, Indiana,
                  Alabama, Mississippi, Puerto Rico, Georgia, Idaho, Washington,
                  California, Maryland, Illinois, West Virginia, Florida, South
                  Carolina, Oklahoma, Kansas, Kentucky, Colorado, Maine,
                  Tennessee, Arizona, North Carolina and Montana (collectively,
                  the "Adelphia Jurisdictions") and/or its political
                  subdivisions for the provision of cable television service (as
                  such counsel understands service to be provided which may be
                  based on a certificate of an officer of the Company, provided
                  that such counsel shall state that they believe that both the
                  Underwriters and he are justified in relying on such
                  certificate), where the failure to obtain or hold such
                  license, permit, franchise or authorization would have a
                  Material Adverse Effect;

                                    (ii) To the best of such counsel's knowledge
                  after due inquiry, each of the Company and its subsidiaries
                  has made all filings, reports, applications and submissions
                  required by the laws and ordinances relating to cable services
                  of each of the Adelphia Jurisdictions and the ordinances of
                  the jurisdiction's political subdivisions relating thereto,
                  and the rules and regulations promulgated therewith;

                                    (iii) Each of the Company and its
                  subsidiaries has the consents, approvals, authorizations,
                  licenses, certificates, permits, or orders of any governmental
                  authorities of each of the Adelphia Jurisdictions and its
                  political subdivisions, if any, required for the consummations
                  of the transactions contemplated in this Agreement where the
                  failure to obtain the consents, approvals, authorizations,
                  licenses, certificates, permits or orders would have a
                  Material Adverse Effect;

                                    (iv) There are no actions, suits or
                  proceedings pending or, to the best of such counsel's
                  knowledge, threatened by or before any court or governmental
                  body each of the Adelphia Jurisdictions (other than Vermont)
                  against or affecting any of the Company or its subsidiaries,
                  or the business of the Company and its subsidiaries or, with
                  respect to Vermont, which if adversely determined would have a
                  Material Adverse Effect;

                                    (v) The statements in the Prospectus under
                  the headings "Risk Factors - We are Subject to Extensive
                  Regulation" and "Risk Factors - Competition," insofar as they
                  relate to the Company and its subsidiaries operations each of
                  the Adelphia Jurisdictions and purport to describe the
<PAGE>

                  provisions of the laws and documents referred to therein, are
                  accurate, complete and fair in all material respects; and

                                    (vi) Neither the execution and delivery of
                  the Underwriting Agreement nor the offering of the Securities
                  contemplated thereby will conflict with or result in a
                  violation of any order or regulation of each of the Adelphia
                  Jurisdictions or its political subdivisions applicable to the
                  Company and its subsidiaries, the conflict with or the
                  violation of which would have a Material Adverse Effect on the
                  Company and its subsidiaries.

                  (g) The Underwriters shall have received on the Closing Date
         an opinion of Colin H. Higgin, Esq., Deputy General Counsel to the
         Company, dated the Closing Date and addressed to the Underwriters, to
         the effect that:

                                    (i) None of the Company or its subsidiaries
                  is in violation of its certificate of incorporation, by-laws,
                  certificate of formation, limited liability company operating
                  agreement, certificate of limited partnership or partnership
                  agreement, as applicable, or in default in the performance or
                  observance of any material obligation, covenant or condition
                  contained in any partnership agreement, indenture, mortgage,
                  deed of trust, loan agreement, lease or other agreement or
                  instrument to which it is a party or by which it or any of its
                  properties may be bound;

                                    (ii) Each of the Company and its
                  subsidiaries has been duly qualified as a foreign corporation
                  or partnership, as the case may be, for the transaction of
                  business and is in good standing under the laws of each other
                  jurisdiction in which it owns or leases properties or conducts
                  any business so as to require such qualification, or is
                  subject to no material liability or disability by reason of
                  the failure to be so qualified in any such jurisdiction,
                  except where the failure to so qualify would not have a
                  Material Adverse Effect (such counsel being entitled to rely
                  in respect of the opinion in this clause upon opinions of
                  local counsel and in respect of matters of fact upon
                  certificates of officers of the Company, provided that such
                  counsel shall state that he believes that both the
                  Underwriters and he are justified in relying upon such
                  opinions and certificates);

                                    (iii) Each subsidiary of the Company is
                  owned directly or indirectly by the Company, free and clear of
                  all liens, encumbrances, equities or claims (other than liens
                  to secure indebtedness under credit facilities disclosed in
                  the Prospectus) (such counsel being entitled to rely in
                  respect of the opinion in this clause upon opinions of local
                  counsel and in respect of matters of fact upon certificates of
                  officers of the Company or its subsidiaries, provided that
                  such counsel shall state that he believes that both the
                  Underwriters and he are justified in relying upon such
                  opinions and certificates);

                                    (iv) To the best of such counsel's knowledge
                  and other than as set forth in the Prospectus, there are no
                  legal or governmental proceedings pending to which the Company
                  or any of its subsidiaries is a party or of which any property
                  of the Company or any of its subsidiaries is the subject
                  which, if determined adversely to the Company or any of its
                  subsidiaries, would individually or in the aggregate have a
                  material adverse effect on the current or future consolidated
<PAGE>

                  financial position, shareholder's equity, partners' equity, or
                  results of operations of the Company and its subsidiaries;
                  and, to the best of such counsel's knowledge, no such
                  proceedings are threatened or contemplated by governmental
                  authorities or threatened by others;

                                    (v) The issue and sale of the Securities,
                  the compliance by the Company with all of the provisions of
                  the Securities, the Indenture and this Agreement, and the
                  consummation of the transactions herein and therein
                  contemplated will not, to the best of my knowledge after due
                  inquiry, conflict with or result in a breach or violation of
                  any of the terms or provisions of, or constitute a default
                  under any material indenture, mortgage, deed of trust,
                  sale/leaseback transaction, loan agreement or other similar
                  financing agreement, or instrument or other agreement or
                  instrument (including, without limitation, any license or
                  franchise granted to the Company or a subsidiary by a local
                  franchising governmental body) to which the Company or any of
                  its subsidiaries is a party or by which the Company or any of
                  its subsidiaries is bound or to which any of the property or
                  assets of the Company or any of its subsidiaries is subject,
                  nor will such actions result in any violation of the
                  provisions of the certificates of incorporation, by-laws,
                  certificates of formation, limited liability company operating
                  agreements, certificates of limited partnership or partnership
                  agreements of the Company and its subsidiaries, as
                  appropriate, or any statute or any order, rule or regulation
                  of any court or governmental agency or body having
                  jurisdiction over the Company or any of its subsidiaries or
                  any of their properties; and

                                    (vi) No consent, approval, authorization,
                  order, registration or qualification of or with any such court
                  or governmental agency or body is required for the issue and
                  sale of the Securities or the consummation by the Company of
                  the transactions contemplated by the Underwriting Agreement or
                  the Indenture, except such consents, approvals,
                  authorizations, registrations or qualifications as may be
                  required under state securities or Blue Sky laws in connection
                  with the purchase and resale of the Securities by the
                  Underwriters.

                  In addition, such counsel shall also state that such counsel
has participated in conferences with officers and representatives of the Company
and its subsidiaries, representatives of the independent public accountants for
the Company and the Underwriters at which the contents of the Registration
Statement and the Prospectus (including the Incorporated Documents) and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for and has not verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus, and has not made any independent check or
verification thereof, on the basis of the foregoing (relying as to materiality
to the extent such counsel deemed appropriate upon facts provided by officers
and other representatives of the Company), no facts have come to the attention
of such counsel that lead such counsel to believe that the Registration
Statement, as of the date it was declared effective, or the Prospectus, as of
its date or as of the Closing Date, in each case including the Incorporated
Documents, contained or contains any untrue statement of material fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief or
<PAGE>

opinion with respect to the financial statements and other financial and
statistical data included therein).

                  (h) The Underwriters shall have received on the Closing Date
         an opinion of Fleischman & Walsh, P.C., special regulatory counsel for
         the Company and its subsidiaries, dated the Closing Date, and addressed
         to the Underwriters to the effect that:

                                    (i) The communities listed in Section A of
                  Attachment 1 to the opinion have been registered with the FCC
                  in connection with the operation of the Systems. The filing of
                  a registration statement constitutes initial FCC authorization
                  for the commencement of cable television operations in the
                  community registered.

                                    (ii) The subsidiaries hold certain FCC
                  licenses, as that term is defined below ("FCC Licenses"). All
                  FCC Licenses and receive-only earth station registrations held
                  by the subsidiaries in connection with the operation of the
                  Cable Systems are listed on Attachment 1 to the Opinion. To
                  the best of our knowledge, all such FCC Licenses have been
                  validly issued or assigned to the present licensee and are
                  currently in full force and effect. We have no knowledge of
                  any event which would allow, or after notice or lapse of time
                  which would allow, revocation or termination of any FCC
                  License held by the subsidiaries or would result in any other
                  material impairment of the rights of the holder of such
                  license. To the best of our knowledge, no other FCC Licenses
                  are required in connection with the operation of the Cable
                  Systems by the subsidiaries in the manner we have advised they
                  are presently being operated. For the purposes of this
                  opinion, an FCC License is defined as an authorization, or
                  renewal thereof, issued by the FCC authorizing the
                  transmission of radio energy through the airways.

                                    (iii) Other than proceedings affecting the
                  cable television industry generally and other than rate
                  proceedings, there is no action, suit or proceeding pending
                  before or, to the best of our knowledge, threatened by the FCC
                  which is reasonably likely to have a materially adverse impact
                  upon the cable television operations of the Company and its
                  subsidiaries taken as a whole.

                                    (iv) Statements of Account required by
                  Section 111 of the Copyright Act of 1976, as amended have been
                  filed, together with royalty payments accompanying said
                  Statements of Account, with the U.S. Copyright Office for the
                  Cable Systems covering each of the accounting periods
                  beginning with July 1 through December 31, 1997 accounting
                  period and ending with the July 1 through December 31, 2000
                  accounting period during which such Cable Systems have been
                  operated by the subsidiaries. We have not reviewed the
                  information or calculations contained in these Statements, and
                  express no opinion with respect to the accuracy thereof. Based
                  solely on material in counsel's file and material
                  representations provided by the Company, to the best of such
                  counsel's knowledge, there is no pending or threatened claim
                  against the Company or any of its subsidiaries for copyright
                  infringement or for non-payment of royalty fees nor does such
                  counsel know of any basis for such a claim.
<PAGE>

                                    (v) The Company has obtained all consents,
                  approvals and authorizations of the FCC, if any, required for
                  the consummation of the transactions contemplated in the
                  Underwriting Agreement where the failure to obtain the
                  consents, approval, authorizations, licenses, certificates,
                  permits or orders would reasonably be expected to have a
                  materially adverse impact on the Company or the subsidiaries.

                                    (vi) Neither the execution and delivery of
                  the Underwriting Agreement nor the offering of the Securities
                  contemplated thereby will conflict with or result in a
                  violation of any order or regulation of the FCC applicable to
                  the Company and the subsidiaries, the conflict with or the
                  violation of which would reasonably be expected to have a
                  materially adverse impact on the Company or the subsidiaries.
                  However, we call your attention to the following:

                                    (A) Under the Communications Act as now in
                  effect, the sale or other disposition of certain pledged
                  collateral and the exercise of certain other rights and
                  remedies conferred upon you by any agreement or by applicable
                  law might constitute an assignment of an FCC license, or
                  transfer of control of an FCC licensee, requiring for its
                  consummation the prior consent of the FCC granted upon an
                  appropriate application thereof.

                                    (B) Under the Communications Act as now in
                  effect, and as now interpreted by the FCC, no valid security
                  interest may be granted in an FCC license. To the extent that
                  the Underwriting Agreement and/or related financing documents
                  purport to grant to you a security interest in any FCC
                  licenses, such security interest may not be legally
                  enforceable.

                                    (vii) In the course of our representation of
                  the Company and its subsidiaries, no matters have come to our
                  attention, other than matters affecting the cable television
                  industry generally, which would reasonably be expected to have
                  a materially adverse impact upon the cable television
                  operations of the Company and the subsidiaries taken as a
                  whole.

                                    (viii) In our opinion, the Statements in the
                  Prospectus under the headings "Risk Factors--We are Subject to
                  Extensive Regulation" and the statements incorporated in the
                  Prospectus by reference to (a) the Company's Annual Report on
                  Form 10-K for the year ended December 31, 2000, as amended by
                  Form 10-K/A under the headings "Business--Cable Television
                  Operations--Subscriber Services and Rates," "--Franchises,"
                  "--Cable Television Operations," "--Legislation and
                  Regulation," and "Management's Discussion and Analysis of
                  Financial Condition and Results of Operations--Regulatory and
                  Competitive Matters" and (b) the Company's Quarterly Report on
                  Form 10-Q for the quarter ended March 31, 2001 under the
                  heading "Management's Discussion and Analysis of Financial
                  Condition and Results of Operations - Regulatory and
                  Competitive Matters", insofar as they purport to describe the
                  provisions of the law referred to therein regarding the cable
                  television industry, are accurate, complete and fair in all
                  material respects.
<PAGE>

                  (i) The Underwriters shall have received from Latham &
         Watkins, counsel for the Underwriters, such opinion or opinions, dated
         the Closing Date, with respect to such matters as the Underwriters may
         reasonably require, and the Company shall have furnished to such
         counsel such documents and information as they request for the purpose
         of enabling them to pass upon such matters.

                  (j) The Company shall have furnished to the Underwriters a
         letter from each of Deloitte & Touche LLP and KPMG LLP, addressed to
         the Underwriters and dated as of the date of this Agreement and as of
         the Closing Date covering the matters previously requested by the
         Representatives, in form and substance satisfactory to the
         Representatives and their counsel in their sole discretion.

                  (k) The Company shall have furnished to the Underwriters a
         certificate, dated the Closing Date, of its chief executive officer and
         its chief financial officer stating that (A) such officers have
         carefully examined the Registration Statement and the Prospectus, (B)
         in their opinion, the Registration Statement and the Prospectus did not
         include any untrue statement of a material fact and did not omit to
         state a material fact required to be stated therein or necessary in
         order to make the statements therein, in the light of the circumstances
         under which they were made, not misleading, and no event has occurred
         which should have been set forth in a supplement or amendment to the
         Registration Statement and the Prospectus so that the Registration
         Statement and the Prospectus (as so amended or supplemented) would not
         include any untrue statement of a material fact and would not omit to
         state a material fact required to be stated therein or necessary in
         order to make the statements therein, in the light of the circumstances
         under which they were made, not misleading and (C) as of the Closing
         Date, the representations and warranties of the Company in this
         Agreement are true and correct in all material respects, the Company
         has complied with all agreements and satisfied all conditions on its
         part to be performed or satisfied hereunder on or prior to the Closing
         Date, no stop order suspending the effectiveness of the Registration
         Statement has been issued and no proceedings for that purpose have been
         instituted or, to the best of such officer's knowledge, are
         contemplated by the Commission, and subsequent to the date of the most
         recent financial statements contained in the Registration Statement and
         the Prospectus, there has been no material adverse change in the
         financial position or results of operation of the Company or any of its
         Subsidiaries, or any change, or any development including a prospective
         change, in or affecting the condition (financial or otherwise), results
         of operations, business or prospects of the Company and its
         Subsidiaries taken as a whole, except as set forth in the Prospectus.

                  (l) The Indenture shall have been duly executed and delivered
         by the Company and the Trustee, and the Securities shall have been duly
         executed and delivered by the Company and duly authenticated by the
         Trustee.

                  (m) If any event shall have occurred that requires the Company
         under Section 4(d) to prepare an amendment or supplement to the
         Prospectus, such amendment or supplement shall have been prepared, the
         Underwriters shall have been given a reasonable opportunity to comment
         thereon, and copies thereof shall have been delivered to the
         Underwriters reasonably in advance of the Closing Date.
<PAGE>

                  (n) Subsequent to the execution and delivery of this Agreement
         or, if earlier, the dates as of which information is given in the
         Registration Statement (exclusive of any amendment thereto) and the
         Prospectus (exclusive of any supplement thereto), there shall not have
         been any change, or any development involving a prospective change,
         that would have a Material Adverse Effect on the Company and
         Subsidiaries, taken as a whole, not contemplated by the Prospectus, the
         effect of which, is, in the judgment of a majority in interest of the
         Underwriters including the Representatives, so material and adverse as
         to make it impracticable or inadvisable to proceed with the public
         offering of the Securities on the terms and in the manner contemplated
         by this Agreement and the Prospectus (exclusive of any supplement
         thereto).

                  (o) No action shall have been taken and no statute, rule,
         regulation or order shall have been enacted, adopted or issued by any
         governmental agency or body which would, as of the Closing Date,
         prevent the issuance or sale of the Securities; and no injunction,
         restraining order or order of any other nature by any federal or state
         court of competent jurisdiction shall have been issued as of the
         Closing Date which would prevent the issuance or sale of the
         Securities.

                  (p) Subsequent to the execution and delivery of this
         Agreement, there shall not have occurred (i) any downgrading in the
         rating of any debt securities of the Company by any "nationally
         recognized statistical rating organization" (as defined for purposes of
         Rule 436(g) under the Securities Act), or any public announcement that
         any such organization has under surveillance or review its rating of
         any debt securities of the Company (other than an announcement with
         positive implications of a possible upgrading, and no implication of a
         possible downgrading, of such rating); (ii) any material suspension or
         material limitation of trading in securities generally on the New York
         Stock Exchange or the American Stock Exchange or any setting of minimum
         prices for trading on such exchange, or any suspension of trading of
         any securities of the Company on any exchange or in the
         over-the-counter market; (iii) any banking moratorium declared by U.S.
         Federal or New York authorities; or (iv) any outbreak or escalation of
         major hostilities in which the United States is involved, any
         declaration of war by Congress or any other substantial national or
         international calamity or emergency if, in the judgment of a majority
         in interest of the Underwriters including the Representatives, the
         effect of any such outbreak, escalation, declaration, calamity or
         emergency makes it impractical or inadvisable to proceed with
         completion of the public offering or the sale of and payment for the
         Securities.

                  All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.

                  6. Effectiveness and Termination. This Agreement shall become
effective upon the execution of this Agreement. The obligations of the
Underwriters and the Independent Underwriter hereunder may be terminated by the
Underwriters and the Independent Underwriter, respectively, in their absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5 shall have occurred and be continuing.
<PAGE>

                  7. Defaulting Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase the Securities hereunder on the Closing
Date and the aggregate principal amount of the Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total principal amount of the Securities that the Underwriters are obligated
to purchase on such Closing Date, the Representatives may make arrangements
satisfactory to the Company for the purchase of such Securities by other
persons, including any of the Underwriters, but if no such arrangements are made
by such Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Securities that such defaulting Underwriters agreed but failed to purchase
on such Closing Date. If any Underwriter or Underwriters so default and the
aggregate principal amount of the Securities with respect to which such default
or defaults occur exceeds 10% of the total principal amount of the Securities
that the Underwriters are obligated to purchase on such Closing Date and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Securities by other persons are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Sections 8 and
9. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter from liability for its default.

                  8. Reimbursement of Underwriters' Expenses. If (a) the Company
shall fail to tender the Securities for delivery to the Underwriters and the
Independent Underwriter for any reason permitted under this Agreement or (b) the
Underwriters and the Independent Underwriter shall decline to purchase the
Securities for any reason permitted under this Agreement, the Company shall
reimburse the Underwriters and the Independent Underwriter for such
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
as shall have been reasonably incurred by the Underwriters and the Independent
Underwriter in connection with this Agreement and the proposed public offering
and sale of the Securities, and upon demand the Company shall pay the full
amount thereof to the Underwriters. If this Agreement is terminated pursuant to
Section 7 by reason of the default of one or more of the Underwriters, the
Company shall not be obligated to reimburse any defaulting Underwriter on
account of such expenses.

                  9. Indemnification and Contribution. (a) The Company shall
indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
<PAGE>

Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below.

                    (b) Each Underwriter will severally and not jointly
         indemnify and hold harmless the Company, its directors and officers and
         each person, if any who controls the Company within the meaning of
         Section 15 of the Securities Act, against any losses, claims, damages
         or liabilities to which the Company may become subject, under the
         Securities Act or otherwise, insofar as such losses, claims, damages or
         liabilities (or actions in respect thereof) arise out of or are based
         upon any untrue statement or alleged untrue statement of any material
         fact contained in any Registration Statement, the Prospectus, or any
         amendment or supplement thereto, or any related preliminary prospectus,
         or arise out of or are based upon the omission or the alleged omission
         to state therein a material fact required to be stated therein or
         necessary to make the statements therein not misleading, in each case
         to the extent, but only to the extent, that such untrue statement or
         alleged untrue statement or omission or alleged omission was made in
         reliance upon and in conformity with written information furnished to
         the Company by such Underwriter through the Representatives
         specifically for use therein, and will reimburse any legal or other
         expenses reasonably incurred by the Company in connection with
         investigating or defending any such loss, claim, damage, liability or
         action as such expenses are incurred, it being understood and agreed
         that the only such information furnished by any Underwriter consists of
         the following information in the Prospectus furnished on behalf of each
         Underwriter: the second paragraph, the second sentence of the third
         paragraph, the fourth paragraph, the fifth paragraph and the sixth
         paragraph under the caption "Underwriting."

                    (c) The Company also agrees to indemnify and hold harmless
         CIBC World Markets Corp. ("CIBC") and each person, if any, who controls
         CIBC within the meaning of either Section 15 of the Securities Act, or
         Section 20 of the Exchange Act, from and against any and all loses,
         claims, damages, liabilities and judgments incurred as a result of
         CIBC's participation as a "qualified independent underwriter" within
         the meaning of Rule 2720 of the National Association of Securities
         Dealers' Conduct Rules in connection with the offering of the
         Securities, except for any losses, claims, damages, liabilities, and
         judgments resulting from CIBC's, or such controlling person's, willful
         misconduct.

                    (d) Promptly after receipt by an indemnified party under
         this Section of notice of the commencement of any action, such
         indemnified party will, if a claim in respect thereof is to be made
         against the indemnifying party under subsection (a), (b) or (c) above,
         notify the indemnifying party of the commencement thereof; but the
         omission so to notify the indemnifying party will not relieve it from
         any liability which it may have to any indemnified party otherwise than
         under subsection (a), (b) or (c) above. In case any such action is
         brought against any indemnified party and it notifies the indemnifying
         party of the commencement thereof, the indemnifying party will be
         entitled to participate therein and, to the extent that it may wish,
         jointly with any other indemnifying party similarly notified, to assume
         the defense thereof, with counsel satisfactory to such indemnified
         party (who shall not, except with the consent of the indemnified party,
         be counsel to the indemnifying party), and after notice from the
         indemnifying party to such indemnified party of its election so to
         assume the defense thereof, the indemnifying party will not be liable
         to such indemnified party under this Section for any legal or other
<PAGE>

         expenses subsequently incurred by such indemnified party in connection
         with the defense thereof other than reasonable costs of investigation.
         No indemnifying party shall, without the prior written consent of the
         indemnified party, effect any settlement of any pending or threatened
         action in respect of which any indemnified party is or could have been
         a party and indemnity could have been sought hereunder by such
         indemnified party unless such settlement (i) includes an unconditional
         release of such indemnified party from all liability on any claims that
         are the subject matter of such action and (ii) does not include a
         statement as to, or an admission of, fault, culpability or a failure to
         act by or on behalf of an indemnified party. The indemnifying party
         shall not be liable in any one claim or action or separate but
         substantially similar or related claims or actions in the same
         jurisdiction for the expenses of more than one separate counsel in
         additional to local counsel.

                    (e) If the indemnification provided for in this Section is
         unavailable or insufficient to hold harmless an indemnified party under
         subsection (a) or (b) above, then each indemnifying party shall
         contribute to the amount paid or payable by such indemnified party as a
         result of the losses, claims, damages or liabilities referred to in
         subsection (a), (b) or (c) above (i) in such proportion as is
         appropriate to reflect the relative benefits received by each party to
         this agreement from the offering of the Securities or (ii) if the
         allocation provided by clause (i) above is not permitted by applicable
         law, in such proportion as is appropriate to reflect not only the
         relative benefits referred to in clause (i) above but also the relative
         fault of each party to this agreement in connection with the statements
         or omissions which resulted in such losses, claims, damages or
         liabilities as well as any other relevant equitable considerations. The
         relative benefits received by the Company and the Underwriters shall be
         deemed to be in the same proportion as the total net proceeds from the
         offering (before deducting expenses) received by the Company bear to
         the total underwriting discounts and commissions received by the
         Underwriters. The relative fault shall be determined by reference to,
         among other things, whether the untrue or alleged untrue statement of a
         material fact or the omission or alleged omission to state a material
         fact relates to information supplied by the Company on one hand or the
         Underwriters on the other and the parties' relative intent, knowledge,
         access to information and opportunity to correct or prevent such untrue
         statement or omission. The amount paid by an indemnified party as a
         result of the losses, claims, damages or liabilities referred to in the
         first sentence of this subsection (d) shall be deemed to include any
         legal or other expenses reasonably incurred by such indemnified party
         in connection with investigating or defending any action or claim which
         is the subject of this subsection (d). Notwithstanding the provisions
         of this subsection (d), no Underwriter shall be required to contribute
         any amount in excess of the amount by which the total price at which
         the Securities underwritten by it and distributed to the public were
         offered to the public exceeds the amount of any damages which such
         Underwriter has otherwise been required to pay by reason of such untrue
         or alleged untrue statement or omission or alleged omission. No person
         guilty of fraudulent misrepresentation (within the meaning of Section
         11(f) of the Securities Act) shall be entitled to contribution from any
         person who was not guilty of such fraudulent misrepresentation. The
         Underwriters' obligations in this subsection (d) to contribute are
         several in proportion to their respective underwriting obligations and
         not joint.

                    (f) The obligations of the Company under this Section shall
         be in addition to any liability which the Company may otherwise have
         and shall extend, upon the same terms and conditions, to each person,
         if any, who controls any Underwriter within the meaning of the Act; and
<PAGE>

         the obligations of the Underwriters under this Section shall be in
         addition to any liability which the respective Underwriters may
         otherwise have and shall extend, upon the same terms and conditions, to
         each director of the Company, to each officer of the Company who has
         signed a Registration Statement and to each person, if any, who
         controls the Company within the meaning of the Securities Act.

                  10. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the
Independent Underwriter, the Company and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except as provided in Sections 9 and 12 with respect to
affiliates, officers, directors, employees, representatives, agents and
controlling persons of the Company, the Independent Underwriter and the
Underwriters. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 10, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.

                  11. Expenses. The Company agrees with the Underwriters and the
Independent Underwriter to pay (a) the costs incident to the authorization,
issuance, sale, preparation and delivery of the Securities and any taxes payable
in that connection; (b) the costs incident to the preparation, printing and
filing under the Securities Act of the Registration Statement and any amendments
and exhibits thereto; (c) the costs of printing and distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits) and the
Prospectus and any amendment or supplement thereto, all as provided in this
Agreement; (d) the costs of printing, reproducing and distributing the
Indenture, this Agreement and any underwriting and selling group documents; (e)
the filing fees incident to securing any required review by the National
Association of Securities Dealers, Inc. of the terms of sale of the Securities;
(f) the fees and expenses of the Company's counsel and independent accountants;
(g) the fees and expenses of preparing, printing and distributing Blue Sky
Memoranda (including related fees and expenses of counsel to the Underwriters);
(h) the transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Securities; (i) any fees charged by rating agencies for rating the
Securities; (j) all fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such parties); and (k)
all other costs and expenses incident to the performance of the obligations of
the Company under this Agreement; provided that, except as provided in this
Section 11 and Section 8, the Underwriters shall pay their own costs and
expenses.

                  12. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company, the
Independent Underwriter and the Underwriters contained in this Agreement or made
by or on behalf of the Company, the Independent Underwriter or the Underwriters
pursuant to this Agreement or any certificate delivered pursuant hereto shall
survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any of them or any of
their respective affiliates, officers, directors, employees, representatives,
agents or controlling persons.

                  13. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
<PAGE>

                  (a) if to the Underwriters, shall be delivered or sent by mail
         or telecopy transmission to Salomon Smith Barney Inc., 388 Greenwich
         Street, New York, New York 10013, Attention: Registration Department
         (telecopier no.: (212) 783-2195) and Banc of America Securities LLC,
         West 57th Street, 40th Floor, New York, New York 10019, Attention: High
         Yield Capital Markets (telecopier no.: (212) 847-5036), as
         Representatives of the Underwriters, with a copy to Latham & Watkins,
         885 Third Avenue, Suite 1000, New York, New York 10022, Attention:
         Robert A. Zuccaro (telecopier no.: (212) 751-4864);

                  (b) if to the Independent Underwriter, shall be delivered or
         sent by mail or telecopy transmission to CIBC World Markets Corp., 425
         Lexington Avenue, 5th Floor, New York, New York 10017, Attention: Neal
         Thomas (telecopier no.: (212) 885-4952); or

                  (c) if to the Company, shall be delivered or sent by mail or
         telecopy transmission to the address of the Company set forth in the
         Registration Statement, Attention: Chief Financial Officer (telecopier
         no.: (814) 274-7098).

Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Company shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the
Underwriters by the Representatives.

                  14. Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange, Inc.
is open for trading and (b) the term "subsidiary" has the meaning set forth in
Rule 405 under the Securities Act.

                  15. Representation of Underwriters. The Representatives will
act for the several Underwriters in connection with this financing, and any
action under this Agreement taken by the Representatives jointly will be binding
upon all the Underwriters.

                  16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

                  17. Counterparts. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.

                  18. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto.

                  19. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.

                  20. Independent Underwriter.

                  (a) The Company hereby confirms its engagement of the services
of the Independent Underwriter as, and the Independent Underwriter hereby
confirms its agreement with the Company to render services as, a "qualified
independent underwriter" within the meaning of Section b(15) of Rule 2720 with
respect to the offering and sale of the Securities.
<PAGE>

                  (b) The Independent Underwriter hereby represents and warrants
to, and agrees with, the Company and the Underwriters that with respect to the
offering and sale of the Securities as described in the Prospectus:

                                    (i) The Independent Underwriter constitutes
                  a "qualified independent underwriter" within the meaning of
                  Section b(15) of Rule 2720;

                                    (ii) The Independent Underwriter has
                  conducted due diligence in respect thereto;

                                    (iii) The Independent Underwriter has
                  undertaken the legal responsibilities and liabilities of an
                  underwriter under the Securities Act specifically including
                  those inherent in Section 11 thereof;

                                    (iv) The Independent Underwriter recommends,
                  as of the date of the execution and delivery of this
                  Agreement, that the yield on the Securities be not less than
                  10.25% (corresponding to an initial public offering price of
                  100.00%); and

                                    (v) Subject to the provisions of Section 5
                  hereof, the Independent Underwriter will furnish to the
                  Underwriters on the Closing Date a letter, dated the Closing
                  Date, in form and substance satisfactory to the Underwriters,
                  to the effect of clauses (i) through (iv) above.

                  (c) The Independent Underwriter hereby agrees with the Company
and the Underwriters that, as part of its services hereunder, in the event of
any amendment or supplement to the Prospectus, the Independent Underwriter will
render services as a "qualified independent underwriter" within the meaning of
Section (b)(15) of Rule 2720 with respect to the offering and sale of the
Securities as described in the Prospectus as so amended or supplemented that are
substantially the same as those services being rendered with respect to the
offering and sale of the Securities as described in the Prospectus (including
those described in subsection (b) above).

                  (d) The Company and the Independent Underwriter agree that the
Independent Underwriter will provide its services in its capacity as Independent
Underwriter hereunder without compensation other than such compensation that the
Independent Underwriter may receive as an Underwriter hereunder.

                  (e) The Independent Underwriter hereby consents to the
references to it as set forth under the caption "Underwriting" in the Prospectus
and in any amendment or supplement thereto made in accordance with Section 4
hereof.

                            [Signature Pages Follow]

<PAGE>

                  If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among each of the Company, the
Independent Underwriter and the several Underwriters in accordance with its
terms.

                                             Very truly yours,

                                             ADELPHIA COMMUNICATIONS CORPORATION

                                             By: /s/ Timothy J. Rigas
                                             Name: Timothy J. Rigas
                                             Title: Executive Vice President

<PAGE>
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written:

SALOMON SMITH BARNEY INC.
BANC OF AMERICA SECURITIES LLC
as Representatives of the Underwriters listed on
Schedule 1 hereto

By: SALOMON SMITH BARNEY INC.

By: /s/ Christopher L. Clipper
     Name: Christopher L.Clipper
     Title: Vice President

By: BANC OF AMERICA SECURITIES LLC

By: /s/ Jack Ferrell
     Name: Jack Ferrell
     Title: Vice President

The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written:

CIBC World Markets Corp.
Acting as Independent Underwriter

By /s/ Anthony Madonia
    Name: Anthony Madonia
    Title: Associate

<PAGE>
                                                                      SCHEDULE 1

     Name of Underwriter                      Principal Amount of Securities
     -------------------                      ------------------------------
Salomon Smith Barney Inc.                              $350,000,000
Banc of America Securities LLC                         $350,000,000
CIBC World Markets Corp.                                $50,000,000
BMO Nesbitt Burns Corp.                                 $50,000,000
Credit Suisse First Boston Corporation                  $50,000,000
Deutsche Banc Alex. Brown Inc.                          $50,000,000
J.P. Morgan Securities Inc.                             $50,000,000
TD Securities (USA) Inc.                                $50,000,000
TOTAL                                                $1,000,000,000SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

                                    Depositor

                             OCWEN FEDERAL BANK FSB

                                 Master Servicer

                                       and

                         U.S. BANK NATIONAL ASSOCIATION

                                     Trustee

                    _________________________________________

                         POOLING AND SERVICING AGREEMENT
                            Dated as of May 30, 2001
                    _________________________________________

               New Century Home Equity Loan Trust, Series 2001-NC1
                     Asset Backed Pass-Through Certificates

                                 Series 2001-NC1

<PAGE>

<TABLE>
<CAPTION>
                                                   TABLE OF CONTENTS
                                                   -----------------

          SECTION                                                                                                  PAGE
          -------                                                                                                  ----
<S>                                                                                                                <C>
                                                       ARTICLE I

                                                      DEFINITIONS

          1.01.    Defined Terms....................................................................................-4-
                   Accepted Servicing Practices.....................................................................-4-
                   Accrued Certificate Interest.....................................................................-4-
                   Adjustable-Rate Mortgage Loan....................................................................-4-
                   Adjustment Date..................................................................................-4-
                   Advancing Person.................................................................................-4-
                   Affiliate........................................................................................-5-
                   Aggregate Loss Severity Percentage...............................................................-5-
                   Agreement........................................................................................-5-
                   Assignment.......................................................................................-5-
                   Available Distribution Amount....................................................................-5-
                   Bankruptcy Code..................................................................................-6-
                   Bankruptcy Loss..................................................................................-6-
                   Book-Entry Certificate...........................................................................-6-
                   Book-Entry Custodian.............................................................................-6-
                   Business Day.....................................................................................-6-
                   Cash-Out Refinancing.............................................................................-6-
                   Certificate......................................................................................-6-
                   Certificate Factor...............................................................................-6-
                   Certificateholder" or "Holder....................................................................-7-
                   Certificate Owner................................................................................-7-
                   Certificate Principal Balance....................................................................-7-
                   Certificate Register.............................................................................-7-
                   Class    ........................................................................................-7-
                   Class A Certificate..............................................................................-7-
                   Class A Principal Distribution Amount............................................................-7-
                   Class CE Certificate.............................................................................-8-
                   Class A-IO Certificate...........................................................................-8-
                   Class A-IO Rate..................................................................................-8-
                   Class M-1 Certificate............................................................................-8-
                   Class M-1 Principal Distribution Amount..........................................................-8-
                   Class M-2 Certificate............................................................................-8-
                   Class M-2 Principal Distribution Amount..........................................................-8-
                   Class M-3 Certificate............................................................................-9-
                   Class M-3 Principal Distribution Amount..........................................................-9-
                   Class P Certificate..............................................................................-9-
                   Class R-I Certificate............................................................................-9-

                                      -ii-

<PAGE>

        SECTION                                                                               PAGE
        -------                                                                               ----

                   Class R-II Certificate...........................................................................-9-
                   Class R-III Certificate..........................................................................-9-
                   Closing Date.....................................................................................-9-
                   Code     ........................................................................................-9-
                   Collection Account...............................................................................-9-
                   Commission......................................................................................-10-
                   Corporate Trust Office..........................................................................-10-
                   Corresponding Certificate.......................................................................-10-
                   Credit Enhancement Percentage...................................................................-10-
                   Cumulative Loss Percentage......................................................................-10-
                   Cut-off Date....................................................................................-10-
                   Debt Service Reduction..........................................................................-10-
                   Deficient Valuation.............................................................................-10-
                   Definitive Certificates.........................................................................-10-
                   Deleted Mortgage Loan...........................................................................-11-
                   Delinquency Percentage..........................................................................-11-
                   Depositor.......................................................................................-11-
                   Depository......................................................................................-11-
                   Depository Institution..........................................................................-11-
                   Depository Participant..........................................................................-11-
                   Determination Date..............................................................................-11-
                   Directly Operate................................................................................-11-
                   Disqualified Organization.......................................................................-12-
                   Distribution Account............................................................................-12-
                   Distribution Date...............................................................................-12-
                   Due Date .......................................................................................-12-
                   Due Period......................................................................................-12-
                   Eligible Account................................................................................-12-
                   ERISA    .......................................................................................-12-
                   Estate in Real Property.........................................................................-13-
                   Excess Overcollateralized Amount................................................................-13-
                   Expense Adjusted Mortgage Rate..................................................................-13-
                   Extraordinary Trust Fund Expense................................................................-13-
                   Fannie Mae......................................................................................-13-
                   FDIC     .......................................................................................-13-
                   Final Recovery Determination....................................................................-13-
                   Fitch    .......................................................................................-13-
                   Freddie Mac.....................................................................................-13-
                   Gross Margin....................................................................................-13-
                   Independent.....................................................................................-13-
                   Independent Contractor..........................................................................-14-
                   Index    .......................................................................................-14-
                   Insurance Proceeds..............................................................................-14-
                   Interest Accrual Period.........................................................................-14-

                                      -iii-

<PAGE>

        SECTION                                                                               PAGE
        -------                                                                               ----

                   Interest Carry Forward Amount...................................................................-15-
                   Interest Determination Date.....................................................................-15-
                   Interest Distribution Amount....................................................................-15-
                   Interest Remittance Amount......................................................................-15-
                   Late Collections................................................................................-15-
                   Liquidation Event...............................................................................-15-
                   Liquidation Proceeds............................................................................-15-
                   Loan-to-Value Ratio.............................................................................-16-
                   London Business Day.............................................................................-16-
                   Loss Severity Percentage........................................................................-16-
                   Master Servicer.................................................................................-16-
                   Master Servicer Event of Default................................................................-16-
                   Master Servicer Prepayment Charge Payment Amount................................................-16-
                   Master Servicer Remittance Date.................................................................-16-
                   Master Servicer Termination Test................................................................-16-
                   Maximum II-LT6 Uncertificated Interest Deferral Amount..........................................-16-
                   Maximum Mortgage Rate...........................................................................-17-
                   Mezzanine Certificate...........................................................................-17-
                   Minimum Mortgage Rate...........................................................................-17-
                   Monthly Payment.................................................................................-17-
                   Mortgage .......................................................................................-17-
                   Mortgage File...................................................................................-17-
                   Mortgage Loan...................................................................................-17-
                   Mortgage Loan Purchase Agreement................................................................-17-
                   Mortgage Loan Schedule..........................................................................-17-
                   Mortgage Note...................................................................................-19-
                   Mortgage Pool...................................................................................-19-
                   Mortgage Rate...................................................................................-19-
                   Mortgaged Property..............................................................................-20-
                   Mortgagor.......................................................................................-20-
                   Net Monthly Excess Cashflow.....................................................................-20-
                   Net Mortgage Rate...............................................................................-20-
                   Net WAC Pass-Through Rate.......................................................................-20-
                   New Lease.......................................................................................-20-
                   Nonrecoverable P&I Advance......................................................................-20-
                   Nonrecoverable Servicing Advance................................................................-21-
                   Non-United States Person........................................................................-21-
                   Notional Amount.................................................................................-21-
                   Officers' Certificate...........................................................................-21-
                   One-Month LIBOR.................................................................................-21-
                   One-Month LIBOR Pass-Through Rate...............................................................-21-
                   Opinion of Counsel..............................................................................-22-
                   Original Mortgage Loan..........................................................................-22-
                   Overcollateralized Amount.......................................................................-22-

                                      -iv-

<PAGE>

        SECTION                                                                               PAGE
        -------                                                                               ----

                   Overcollateralization Deficiency Amount.........................................................-22-
                   Overcollateralization Increase Amount...........................................................-22-
                   Overcollateralization Reduction Amount..........................................................-23-
                   Ownership Interest..............................................................................-23-
                   Pass-Through Rate...............................................................................-23-
                   Percentage Interest.............................................................................-24-
                   Periodic Rate Cap...............................................................................-24-
                   Permitted Investments...........................................................................-24-
                   Permitted Transferee............................................................................-25-
                   Person   .......................................................................................-25-
                   P&I Advance.....................................................................................-25-
                   Plan     .......................................................................................-25-
                   Prepayment Assumption...........................................................................-26-
                   Prepayment Charge...............................................................................-26-
                   Prepayment Charge Schedule......................................................................-26-
                   Prepayment Interest Shortfall...................................................................-27-
                   Prepayment Period...............................................................................-27-
                   Principal Distribution Amount...................................................................-27-
                   Principal Prepayment............................................................................-28-
                   Purchase Price..................................................................................-28-
                   Qualified Substitute Mortgage Loan..............................................................-28-
                   Rate/Term Refinancing...........................................................................-29-
                   Rating Agency or Rating Agencies................................................................-29-
                   Realized Loss...................................................................................-29-
                   Record Date.....................................................................................-30-
                   Reference Banks.................................................................................-31-
                   Refinanced Mortgage Loan........................................................................-31-
                   Regular Certificate.............................................................................-31-
                   Regular Interest................................................................................-31-
                   Relief Act......................................................................................-31-
                   Relief Act Interest Shortfall...................................................................-31-
                   REMIC    .......................................................................................-31-
                   REMIC I  .......................................................................................-31-
                   REMIC I Regular Interest........................................................................-31-
                   REMIC I Regular Interest I-LT1..................................................................-32-
                   REMIC I Regular Interest I-LT2..................................................................-32-
                   REMIC I Regular Interest I-LTP..................................................................-32-
                   REMIC I Remittance Rate.........................................................................-32-
                   REMIC II .......................................................................................-32-
                   REMIC II Interest Loss Allocation Amount........................................................-32-
                   REMIC II Overcollateralized Amount..............................................................-32-
                   REMIC II Principal Loss Allocation Amount.......................................................-33-
                   REMIC II Regular Interest.......................................................................-33-
                   REMIC II Regular Interest II-LT1................................................................-33-

                                       -v-

<PAGE>

        SECTION                                                                               PAGE
        -------                                                                               ----

                   REMIC II Regular Interest II-LT2................................................................-33-
                   REMIC II Regular Interest II-LT3................................................................-33-
                   REMIC II Regular Interest II-LT4................................................................-33-
                   REMIC II Regular Interest II-LT5................................................................-34-
                   REMIC II Regular Interest II-LT6................................................................-34-
                   REMIC II Regular Interest II-LTIO...............................................................-34-
                   REMIC II Regular Interest II-LTP................................................................-34-
                   REMIC II Remittance Rate........................................................................-34-
                   REMIC II Required Overcollateralized Amount.....................................................-34-
                   REMIC III.......................................................................................-34-
                   REMIC III Certificate...........................................................................-34-
                   REMIC III Certificateholder.....................................................................-35-
                   Remittance Report...............................................................................-35-
                   Rents from Real Property........................................................................-35-
                   REO Account.....................................................................................-35-
                   REO Disposition.................................................................................-35-
                   REO Imputed Interest............................................................................-35-
                   REO Principal Amortization......................................................................-35-
                   REO Property....................................................................................-35-
                   Request for Release.............................................................................-35-
                   Required Overcollateralized Amount..............................................................-36-
                   Reserve Fund....................................................................................-36-
                   Reserve Interest Rate...........................................................................-36-
                   Residential Dwelling............................................................................-36-
                   Residual Certificate............................................................................-36-
                   Residual Interest...............................................................................-36-
                   Responsible Officer.............................................................................-36-
                   S&P.............................................................................................-36-
                   Scheduled Principal Balance.....................................................................-36-
                   Senior Interest Distribution Amount.............................................................-37-
                   Servicing Account...............................................................................-37-
                   Servicing Advances..............................................................................-37-
                   Servicing Fee...................................................................................-38-
                   Servicing Fee Rate..............................................................................-38-
                   Servicing Officer...............................................................................-38-
                   Single Certificate..............................................................................-38-
                   Startup Day.....................................................................................-38-
                   Stated Principal Balance........................................................................-38-
                   Stayed Funds....................................................................................-39-
                   Stepdown Date...................................................................................-39-
                   Sub-Servicer....................................................................................-39-
                   Sub-Servicing Account...........................................................................-39-
                   Sub-Servicing Agreement.........................................................................-39-
                   Substitution Shortfall Amount...................................................................-39-

                                      -vi-

<PAGE>

        SECTION                                                                               PAGE
        -------                                                                               ----

                   Tax Returns.....................................................................................-39-
                   Telerate Page 3750..............................................................................-39-
                   Termination Price...............................................................................-39-
                   Terminator......................................................................................-40-
                   Transfer .......................................................................................-40-
                   Transferee......................................................................................-40-
                   Transferor......................................................................................-40-
                   Trigger Event...................................................................................-40-
                   Trust Fund......................................................................................-40-
                   Trustee  .......................................................................................-40-
                   Trustee Fee.....................................................................................-40-
                   Trustee Fee Rate................................................................................-40-
                   Uncertificated Balance..........................................................................-40-
                   Uncertificated Interest.........................................................................-40-
                   Uncertificated Notional Amount..................................................................-41-
                   Uninsured Cause.................................................................................-41-
                   United States Person............................................................................-41-
                   Value    .......................................................................................-41-
                   Voting Rights...................................................................................-42-
                   Yield Maintenance Agreement.....................................................................-42-
          1.02.    Allocation of Certain Interest Shortfalls.......................................................-42-

                                                      ARTICLE II

                                             CONVEYANCE OF MORTGAGE LOANS;
                                           ORIGINAL ISSUANCE OF CERTIFICATES

          2.01.    Conveyance of the Mortgage Loans................................................................-44-
          2.02.    Acceptance of REMIC I by Trustee................................................................-46-
          2.03.    Repurchase or Substitution of Mortgage Loans by the Originator or
                   the Seller......................................................................................-47-
          2.04.    Reserved........................................................................................-50-
          2.05.    Representations, Warranties and Covenants of the Master Servicer................................-50-
          2.06.    Issuance of the REMIC I Regular Interests and the Class R-I Certificates........................-52-
          2.07.    Conveyance of the REMIC I Regular Interests; Acceptance of REMIC II by
                   the Trustee.....................................................................................-52-
          2.08.    Issuance of Class R-II Certificates.............................................................-53-
          2.09.    Conveyance of the REMIC II Regular Interests; Acceptance of REMIC III by
                   the Trustee.....................................................................................-53-
          2.10.    Issuance of Class R-III Certificates............................................................-53-

                                      -vii-

<PAGE>

        SECTION                                                                               PAGE
        -------                                                                               ----

                                                      ARTICLE III

                                             ADMINISTRATION AND SERVICING
                                                 OF THE MORTGAGE LOANS

          3.01.    Master Servicer to Act as Master Servicer.......................................................-54-
          3.02.    Sub-Servicing Agreements Between Master Servicer and Sub-Servicers..............................-56-
          3.03.    Successor Sub-Servicers.........................................................................-57-
          3.04.    Liability of the Master Servicer................................................................-57-
          3.05.    No Contractual Relationship Between Sub-Servicers and the Trustee or
                   Certificateholders..............................................................................-58-
          3.06.    Assumption or Termination of Sub-Servicing Agreements by Trustee................................-58-
          3.07.    Collection of Certain Mortgage Loan Payments....................................................-58-
          3.08.    Sub-Servicing Accounts..........................................................................-59-
          3.09.    Collection of Taxes, Assessments and Similar Items; Servicing Accounts..........................-59-
          3.10.    Collection Account, Distribution Account........................................................-60-
          3.11.    Withdrawals from the Collection Account and Distribution Account................................-63-
          3.12.    Investment of Funds in the Collection Account and the Distribution
                   Account.........................................................................................-65-
          3.13.    [Reserved]......................................................................................-66-
          3.14.    Maintenance of Hazard Insurance and Errors and Omissions and Fidelity
                   Coverage........................................................................................-66-
          3.15.    Enforcement of Due-On-Sale Clauses; Assumption Agreements.......................................-67-
          3.16.    Realization Upon Defaulted Mortgage Loans.......................................................-68-
          3.17.    Trustee to Cooperate; Release of Mortgage Files.................................................-70-
          3.18.    Servicing Compensation..........................................................................-71-
          3.19.    Reports to the Trustee; Collection Account Statements...........................................-72-
          3.20.    Statement as to Compliance......................................................................-72-
          3.21.    Independent Public Accountants' Servicing Report................................................-72-
          3.22.    Access to Certain Documentation.................................................................-73-
          3.23.    Title, Management and Disposition of REO Property...............................................-73-
          3.24.    Obligations of the Master Servicer in Respect of Prepayment Interest
                   Shortfall.......................................................................................-76-
          3.25.    Obligations of the Master Servicer in Respect of Mortgage Rates and
                   Monthly Payments................................................................................-77-
          3.26.    Advance Facility................................................................................-77-
          3.27.    PMI Policy; Claims Under the PMI Policy.........................................................-78-

                                                      ARTICLE IV

                                            PAYMENTS TO CERTIFICATEHOLDERS

          4.01.    Distributions...................................................................................-79-
          4.02.    Statements to Certificateholders................................................................-86-

                                     -viii-

<PAGE>

        SECTION                                                                               PAGE
        -------                                                                               ----

          4.03.    Remittance Reports; P&I Advances................................................................-89-
          4.04.    Allocation of Realized Losses...................................................................-90-
          4.05.    Compliance with Withholding Requirements........................................................-92-
          4.06.    Exchange Commission; Additional Information.....................................................-92-

                                                       ARTICLE V

                                                   THE CERTIFICATES

          5.01.    The Certificates................................................................................-93-
          5.02.    Registration of Transfer and Exchange of Certificates...........................................-95-
          5.03.    Mutilated, Destroyed, Lost or Stolen Certificates...............................................-99-
          5.04.    Persons Deemed Owners..........................................................................-100-
          5.05.    Certain Available Information..................................................................-100-

                                                      ARTICLE VI

                                         THE DEPOSITOR AND THE MASTER SERVICER

          6.01.    Liability of the Depositor and the Master Servicer.............................................-101-
          6.02.    Merger or Consolidation of the Depositor or the Master Servicer................................-101-
          6.03.    Limitation on Liability of the Depositor, the Master Servicer and Others.......................-101-
          6.04.    Limitation on Resignation of the Master Servicer...............................................-102-
          6.05.    Rights of the Depositor in Respect of the Master Servicer......................................-103-

                                                      ARTICLE VII

                                                        DEFAULT

          7.01.    Master Servicer Events of Default..............................................................-104-
          7.02.    Trustee to Act; Appointment of Successor.......................................................-106-
          7.03.    Notification to Certificateholders.............................................................-107-
          7.04.    Waiver of Master Servicer Events of Default....................................................-107-

                                                     ARTICLE VIII

                                  CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

          8.01.    Duties of Trustee..............................................................................-108-
          8.02.    Certain Matters Affecting the Trustee..........................................................-109-
          8.03.    Trustee not Liable for Certificates or Mortgage Loans..........................................-110-
          8.04.    Trustee May Own Certificates...................................................................-110-
          8.05.    Trustee's Fees and Expenses....................................................................-110-
          8.06.    Eligibility Requirements for Trustee...........................................................-111-

                                      -ix-

<PAGE>

          8.07.    Resignation and Removal of the Trustee.........................................................-111-
          8.08.    Successor Trustee..............................................................................-112-
          8.09.    Merger or Consolidation of Trustee.............................................................-113-
          8.10.    Appointment of Co-Trustee or Separate Trustee..................................................-113-
          8.11.    Appointment of Office or Agency................................................................-114-
          8.12.    Representations and Warranties.................................................................-114-

                                                      ARTICLE IX

                                                      TERMINATION

          9.01     Termination Upon Repurchase or Liquidation of All Mortgage Loans...............................-116-
          9.02     Additional Termination Requirements............................................................-118-

                                                       ARTICLE X

                                                   REMIC PROVISIONS

          10.01.   REMIC Administration...........................................................................-119-
          10.02.   Prohibited Transactions and Activities.........................................................-121-
          10.03.   Master Servicer and Trustee Indemnification....................................................-122-

                                                      ARTICLE XI

                                               MISCELLANEOUS PROVISIONS

          11.01.   Amendment......................................................................................-123-
          11.02.   Recordation of Agreement; Counterparts.........................................................-124-
          11.03.   Limitation on Rights of Certificateholders.....................................................-124-
          11.04.   Governing Law..................................................................................-125-
          11.05.   Notices........................................................................................-125-
          11.06.   Severability of Provisions.....................................................................-126-
          11.07.   Notice to Rating Agencies......................................................................-126-
          11.08.   Article and Section References.................................................................-127-
          11.09.   Grant of Security Interest.....................................................................-127-
</TABLE>

                                       -x-

<PAGE>

<TABLE>
<CAPTION>
          Exhibits
          --------
<S>                         <C>
          Exhibit A-1       Form of Class A Certificate
          Exhibit A-2       Form of Class M-1 Certificate
          Exhibit A-3       Form of Class M-2 Certificate
          Exhibit A-4       Form of Class M-3 Certificate
          Exhibit A-5       Form of Class CE Certificate
          Exhibit A-6       Form of Class P Certificate
          Exhibit A-7       Form of Class A-IO Certificate
          Exhibit A-8       Form of Class R-I Certificate
          Exhibit A-9       Form of Class R-II Certificate
          Exhibit A-10      Form of Class R-III Certificate
          Exhibit B         [Reserved]
          Exhibit C-1       Form of Trustee's Initial Certification
          Exhibit C-2       Form of Trustee's Final Certification
          Exhibit D         Form of Mortgage Loan Purchase Agreement
          Exhibit E-1       Request for Release
          Exhibit E-2       Request for Release Mortgage Loans paid in full
          Exhibit F-1       Form of Transferor Representation Letter and Form of Transferee
                            Representation Letter in Connection with Transfer of the Class CE
                            Certificates, Class P Certificates or Residual Certificates Pursuant to Rule
                            144A Under the 1933 Act
          Exhibit F-2       Form of Transfer Affidavit and Agreement and Form of Transferor Affidavit
                            in Connection with Transfer of Residual Certificates
          Exhibit G         Form of Certification with respect to ERISA and the Code
          Exhibit H         Form of Report Pursuant to Section 4.06
          Exhibit I         [Reserved]
          Exhibit J         [Reserved]
          Exhibit K         Form of Lost Note Affidavit
          Exhibit L         Form of Yield Maintenance Agreement
          Schedule 1        Mortgage Loan Schedule
          Schedule 2        Prepayment Charge Schedule
          Schedule 3        PMI Mortgage Loans
</TABLE>

                                      -xi-

<PAGE>

                   This Pooling and Servicing Agreement, is dated and effective
as of May 30, 2001, among SALOMON BROTHERS MORTGAGE SECURITIES VII, INC. as
Depositor, OCWEN FEDERAL BANK FSB as Master Servicer and U.S. BANK NATIONAL
ASSOCIATION as Trustee.

                             PRELIMINARY STATEMENT:

                   The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest in each REMIC (as defined herein) created
hereunder. The Trust Fund will consist of a segregated pool of assets comprised
of the Mortgage Loans and certain other related assets subject to this
Agreement.

                                     REMIC I
                                     -------

                   As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets (other than the Master Servicer Prepayment Charge Payment Amount,
the Reserve Fund and the Yield Maintenance Agreement) subject to this Agreement
as a REMIC for federal income tax purposes, and such segregated pool of assets
will be designated as "REMIC I." The Class R-I Certificates will be the sole
class of "residual interests" in REMIC I for purposes of the REMIC Provisions
(as defined herein). The following table irrevocably sets forth the designation,
the REMIC I Remittance Rate, the initial Uncertificated Balance and, solely for
purposes of satisfying Treasury regulation section 1.860G- 1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC I Regular Interests (as
defined herein). None of the REMIC I Regular Interests will be certificated.

<TABLE>
<CAPTION>
                                      REMIC I                           Initial                      Latest Possible
      Designation                 Remittance Rate               Uncertificated Balance               Maturity Date(1)
      -----------                 ---------------               ----------------------               ----------------
<S>                               <C>                           <C>                                  <C>
         I-LT1                      Variable(2)                    $342,217,441.73                     June 20, 2031
         I-LT2                      Variable(2)                    $ 38,024,171.00                     June 20, 2031
         I-LTP                      Variable(2)                    $        100.00                     June 20, 2031
</TABLE>

(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC I Regular Interest.

(2)  Calculated in accordance with the definition of "REMIC I Remittance Rate"
     herein.

<PAGE>

                                    REMIC II
                                    --------

               As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II". The Class R-II Certificates will be the sole class of
"residual interests" in REMIC II for purposes of the REMIC Provisions (as
defined herein). The following table irrevocably sets forth the designation, the
REMIC II Remittance Rate, the initial Uncertificated Balance and, solely for
purposes of satisfying Treasury regulation section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC II Regular Interests (as
defined herein). None of the REMIC II Regular Interests will be certificated.

<TABLE>
<CAPTION>
                                      REMIC II                          Initial                      Latest Possible
    Designation                   Remittance Rate               Uncertificated Balance               Maturity Date(1)
    -----------                   ---------------               ----------------------               ----------------
<S>                               <C>                           <C>                                  <C>
         II-LT1                     Variable(2)                     $372,636,780.48                   June 20, 2031
         II-LT2                     Variable(2)                     $  3,431,680.00                   June 20, 2031
         II-LT3                     Variable(2)                     $    161,600.00                   June 20, 2031
         II-LT4                     Variable(2)                     $     95,060.00                   June 20, 2031
         II-LT5                     Variable(2)                     $     85,550.00                   June 20, 2031
         II-LT6                     Variable(2)                     $  3,830,943.25                   June 20, 2031
         II-LTIO                    Variable(2)                           N/A(3)                      June 20, 2031
         II-LTP                     Variable(2)                     $        100.00                   June 20, 2031
</TABLE>

(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC II Regular Interest.

(2)  Calculated in accordance with the definition of "REMIC II Remittance Rate"
     herein.

(3)  REMIC II Regular Interest II-LTIO will not have an Initial Uncertificated
     Balance, but will accrue interest on its respective Uncertificated Notional
     Amount outstanding from time to time which in each case shall equal the
     Initial Uncertificated Balance of REMIC I Regular Interest I-LT2.

                                       -2-

<PAGE>

                                    REMIC III
                                    ---------

               As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III." The Class R-III Certificates will evidence the
sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions under federal income tax law. The following table irrevocably sets
forth the designation, the Pass- Through Rate, the initial aggregate Certificate
Principal Balance and, solely for purposes of satisfying Treasury regulation
section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for the
indicated Classes of Certificates.

<TABLE>
<CAPTION>
                                                                    Initial Aggregate                Latest Possible
       Designation                    Pass-through Rate       Certificate Principal Balance          Maturity Date(1)
       -----------                    -----------------       -----------------------------          ----------------
<S>                                   <C>                     <C>                                    <C>
        Class A                          Variable(2)                 $343,168,000.00                  June 20, 2031
        Class M-1                        Variable(2)                 $ 16,160,000.00                  June 20, 2031
        Class M-2                        Variable(2)                 $  9,506,000.00                  June 20, 2031
        Class M-3                        Variable(2)                 $  8,555,000.00                  June 20, 2031
        Class A-IO                       Variable(2)                         (3)                      June 20, 2031
        Class CE                         Variable(2)                 $  2,852,612.73(4)               June 20, 2031
        Class P                             (5)                      $        100.00                  June 20, 2031
</TABLE>

(1)     Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
        regulations, the Distribution Date immediately following the maturity
        date for the Mortgage Loans with the latest maturity date has been
        designated as the "latest possible maturity date" for each Class of
        Certificates.

(2)     Calculated in accordance with the definition of "Pass-Through Rate"
        herein.

(3)     The Class A-IO Certificates will not have a Certificate Principal
        Balance, but will receive all amounts distributed to REMIC II Regular
        Interest II-LTIO.

(4)     The Class CE Certificates will accrue interest at their variable
        Pass-Through Rate on the Notional Amount of the Class CE Certificates
        outstanding from time to time which shall equal the Uncertificated
        Balance of the REMIC II Regular Interests. The Class CE Certificates
        will not accrue interest on their Certificate Principal Balance.

(5)     The Class P Certificates will not accrue interest.

              As of the Cut-off Date, the Original Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $380,241,712.73.

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

                                       -3-

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

               SECTION 1.01.          Defined Terms.

               Whenever used in this Agreement, including, without limitation,
in the Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations described herein shall be made on
the basis of a 360-day year consisting of twelve 30-day months.

               "Accepted Servicing Practices": The servicing standards set forth
in Section 3.01.

               "Accrued Certificate Interest": With respect to any Class A
Certificate, Mezzanine Certificate, Class A-IO Certificate or Class CE
Certificate and each Distribution Date, interest accrued during the related
Interest Accrual Period at the Pass-Through Rate for such Certificate for such
Distribution Date on the Certificate Principal Balance, in the case of the Class
A Certificates and the Mezzanine Certificates, or on the Notional Amount, in the
case of the Class A-IO Certificates and the Class CE Certificates, of such
Certificate immediately prior to such Distribution Date. The Class P
Certificates are not entitled to distributions in respect of interest and,
accordingly, will not accrue interest. All distributions of interest on the
Class A Certificates and the Mezzanine Certificates (other than the Class M-3
Certificates) will be calculated on the basis of a 360-day year and the actual
number of days in the applicable Interest Accrual Period. All distributions of
interest on the Class A-IO Certificates, the Class M-3 Certificates and the
Class CE Certificates will be based on a 360-day year consisting of twelve
30-day months. Accrued Certificate Interest with respect to each Distribution
Date, as to any Class A Certificate, Mezzanine Certificate, Class A-IO
Certificate or Class CE Certificate, shall be reduced by an amount equal to the
portion allocable to such Certificate pursuant to Section 1.02 hereof of the sum
of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section 3.24
and (b) the aggregate amount of any Relief Act Interest Shortfall, if any, for
such Distribution Date. In addition, Accrued Certificate Interest with respect
to each Distribution Date, as to any Class CE Certificate, shall be reduced by
an amount equal to the portion allocable to such Class CE Certificate of
Realized Losses, if any, pursuant to Section 4.04 hereof. Notwithstanding the
foregoing, for federal income tax purposes and under the REMIC Provisions, the
Accrued Certificate Interest for the Class A-IO Certificates and any
Distribution Date will be deemed to be the Uncertificated Interest for REMIC II
Regular Interest II-LTIO for such Distribution Date.

               "Adjustable-Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.

               "Adjustment Date": With respect to each Adjustable-Rate Mortgage
Loan, the first day of the month in which the Mortgage Rate of such Mortgage
Loan changes pursuant to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Adjustable-Rate Mortgage Loan is set forth
in the Mortgage Loan Schedule.

               "Advancing Person":  As defined in Section 3.26 hereof.

                                       -4-

<PAGE>

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

               "Aggregate Loss Severity Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount of Realized Losses incurred on any Mortgage Loans
from the Cut-off Date to the last day of the preceding calendar month and the
denominator of which is the aggregate principal balance of such Mortgage Loans
immediately prior to the liquidation of such Mortgage Loans.

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

               "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder's office), which is
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering Mortgages secured by Mortgaged
Properties located in the same county, if permitted by law.

               "Available Distribution Amount": With respect to any Distribution
Date other than the first Distribution Date, an amount equal to (1) the sum of
(a) the aggregate of the amounts on deposit in the Collection Account and
Distribution Account as of the close of business on the related Determination
Date, (b) the aggregate of any amounts received in respect of an REO Property
withdrawn from any REO Account and deposited in the Distribution Account for
such Distribution Date pursuant to Section 3.23, (c) the aggregate of any
amounts deposited in the Distribution Account by the Master Servicer in respect
of Prepayment Interest Shortfalls for such Distribution Date pursuant to Section
3.24, (d) the aggregate of any P&I Advances made by the Master Servicer for such
Distribution Date pursuant to Section 4.03 and (e) the aggregate of any advances
made by the Trustee for such Distribution Date pursuant to Section 7.02(b)
reduced (to not less than zero), by (2) the sum of (x) the portion of the amount
described in clause (1)(a) above that represents (i) Monthly Payments on the
Mortgage Loans received from a Mortgagor on or prior to the Determination Date
but due during any Due Period subsequent to the related Due Period, (ii)
Principal Prepayments on the Mortgage Loans received after the related
Prepayment Period (together with any interest payments received with such
Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, the Master Servicer, the
Trustee, the Originator, the Seller or any Sub-Servicer pursuant to Section 3.11
or Section 3.12 or otherwise payable in respect of Extraordinary Trust Fund
Expenses, (v) Stayed Funds (vi) the PMI Insurer Fee payable from the
Distribution Account, (vii) the Trustee Fee payable from the Distribution
Account pursuant to Section 8.05, (viii) amounts

                                       -5-

<PAGE>

deposited in the Collection Account or the Distribution Account in error and
(ix) the amount of any Prepayment Charges collected by the Master Servicer in
connection with the Principal Prepayment of any of the Mortgage Loans or any
Master Servicer Prepayment Charge Payment Amount, and (y) amounts reimbursable
to the Trustee for an advance made pursuant to Section 7.02(b) which advance the
Trustee has determined to be nonrecoverable from the Stayed Funds in respect of
which it was made.

               With respect to the first Distribution Date, the Available
Distribution Amount shall only consist of funds on deposit in the Reserve Fund.

               "Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the United States Code), as amended.

               "Bankruptcy Loss": With respect to any Mortgage Loan, a Realized
Loss resulting from a Deficient Valuation or Debt Service Reduction.

               "Book-Entry Certificate": The Class A Certificates and the
Mezzanine Certificates for so long as the Certificates of such Class shall be
registered in the name of the Depository or its nominee.

               "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.

               "Business Day": Any day other than a Saturday, a Sunday or a day
on which banking or savings and loan institutions in the State of California,
the State of Florida, the State of New York or in the city in which the
Corporate Trust Office of the Trustee is located, are authorized or obligated by
law or executive order to be closed.

               "Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds
of which are more than a nominal amount in excess of the principal balance of
any existing first mortgage or subordinate mortgage on the related Mortgaged
Property and related closing costs.

               "Certificate": Any one of the Asset Backed Pass-Through
Certificates, Series 2001- NC1, Class A, Class M-1, Class M-2, Class M-3, Class
A-IO, Class CE, Class P, Class R-I, Class R-II, or Class R-III issued under this
Agreement.

               "Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (or the Notional Amount, in the case of the Class A-IO
Certificates and the Class CE Certificates) of such Class of Certificates on
such Distribution Date (after giving effect to any distributions of principal
and allocations of Realized Losses in reduction of the Certificate Principal
Balance (or the Notional Amount, in the case of the Class A-IO Certificates and
the Class CE Certificates) of such Class of Certificates to be made on such
Distribution Date), and the denominator of which is the initial aggregate
Certificate Principal Balance (or the Notional Amount, in the case of the Class
A-IO Certificates and the Class CE Certificates) of such Class of Certificates
as of the Closing Date.

                                       -6-

<PAGE>

               "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Master Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee may conclusively rely upon a
certificate of the Depositor or the Master Servicer in determining whether a
Certificate is held by an Affiliate thereof. All references herein to "Holders"
or "Certificateholders" shall reflect the rights of Certificate Owners as they
may indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee shall be required to recognize as a "Holder" or "Certificateholder"
only the Person in whose name a Certificate is registered in the Certificate
Register.

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

               "Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate or Class P Certificate as of any date of
determination, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination, minus all
distributions allocable to principal made thereon and Realized Losses allocated
thereto on such immediately prior Distribution Date (or, in the case of any date
of determination up to and including the first Distribution Date, the initial
Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of the REMIC II Regular Interests over (B) the then aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificates then outstanding.

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

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

               "Class A Certificate": Any one of the Class A Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-1 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

               "Class A Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the Certificate Principal Balance of the
Class A Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 80.50% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(B) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period minus $1,901,209.

                                       -7-

<PAGE>

               "Class CE Certificate": Any one of the Class CE Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-5 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

               "Class A-IO Certificate": Any one of the Class A-IO Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-7 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

               "Class A-IO Rate": With respect to REMIC II Regular Interest
II-LTIO and the Class A-IO Certificates:

                       (A) in the case of the Distribution Dates beginning in
               June 2001 and ending in May 2002, a per annum rate equal to the
               excess of (i) the Weighted Average Expense Adjusted Mortgage
               Rates over (ii) the excess (but not less than zero) of (x) the
               Weighted Average Expense Adjusted Mortgage Rate over (y) 6.50%
               per annum;

                       (B) in the case of the Distribution Dates beginning in
               June 2002 and ending in May 2004, a per annum rate equal to the
               excess of (i) the Weighted Average Expense Adjusted Mortgage
               Rates over (ii) the excess (but not less than zero) of (x) the
               Weighted Average Expense Adjusted Mortgage Rate over (y) 5.50%
               per annum; and

                       (C) in the case of each Distribution Date thereafter,
               0.00% per annum.

               "Class M-1 Certificate": Any one of the Class M-1 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

               "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class M-1 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
89.00% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period minus
$1,901,209.

               "Class M-2 Certificate": Any one of the Class M-2 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-3 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

               "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date) and (iii) the

                                       -8-

<PAGE>

Certificate Principal Balance of the Class M-2 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 94.00% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period and (B) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period minus
$1,901,209.

               "Class M-3 Certificate": Any one of the Class M-3 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-4 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

               "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date) and (iv) the Certificate
Principal Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 98.50% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period minus $1,901,209.

               "Class P Certificate": Any one of the Class P Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-6 and evidencing a Regular Interest in REMIC III for
purposes of the REMIC Provisions.

               "Class R-I Certificate": Any one of the Class R-I Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-8 and evidencing the Residual Interest in REMIC I
for purposes of the REMIC Provisions.

               "Class R-II Certificate": Any one of the Class R-II Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-9 and evidencing the Residual Interest in REMIC II
for purposes of the REMIC Provisions.

               "Class R-III Certificate": Any one of the Class R-III
Certificates executed, authenticated and delivered by the Trustee, substantially
in the form annexed hereto as Exhibit A-10 and evidencing the Residual Interest
in REMIC III for purposes of the REMIC Provisions.

               "Closing Date": May 30, 2001.

               "Code":  The Internal Revenue Code of 1986.

               "Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by the Master Servicer
pursuant to Section 3.10(a), which shall be entitled "Ocwen Federal Bank FSB, as
Master Servicer for U.S. Bank National Association, as Trustee, in trust for the
registered holders of Salomon Brothers Mortgage Securities VII, Inc., New

                                       -9-

<PAGE>

Century Home Equity Loan Trust, Series 2001-NC1, Asset Backed Pass-Through
Certificates." The Collection Account must be an Eligible Account.

               "Commission":  The Securities and Exchange Commission.

               "Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office, at the date
of the execution of this instrument is located at 180 East Fifth Street, St.
Paul, Minnesota 55101, or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor and the
Master Servicer.

               "Corresponding Certificate": With respect to (i) REMIC II Regular
Interest II-LT2, (ii) REMIC II Regular Interest II-LT3, (iii) REMIC II Regular
Interest II-LT4, (iv) REMIC II Regular Interest II-LT5 and (v) REMIC II Regular
Interest II-LTP, (i) the Class A Certificates, (ii)Class M-1 Certificates, (iii)
Class M-2 Certificates, (iv) Class M-3 Certificates and (v) Class P
Certificates, respectively.

               "Credit Enhancement Percentage": For any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of the
aggregate Certificate Principal Balances of the Mezzanine Certificates and the
Class CE Certificates, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans, calculated after taking into account
distributions of principal on the Mortgage Loans and distribution of the
Principal Distribution Amount to the Certificates then entitled to distributions
of principal on such Distribution Date.

               "Cumulative Loss Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred from the Cut-off Date to the last
day of the preceding calendar month and the denominator of which is the sum of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.

               "Cut-off Date": With respect to each Original Mortgage Loan, June
1, 2001. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.

               "Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.

               "Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.

               "Definitive Certificates":  As defined in Section 5.01(b).

                                      -10-

<PAGE>

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

               "Delinquency Percentage": As of the last day of the related Due
Period, the percentage equivalent of a fraction, the numerator of which is the
aggregate Stated Principal Balance of all Mortgage Loans that, as of the last
day of the previous calendar month, are 60 or more days delinquent, are in
foreclosure, have been converted to REO Properties or have been discharged by
reason of bankruptcy, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties as of the last day of
the previous calendar month; provided, however, that any Mortgage Loan purchased
by the Master Servicer pursuant to Section 3.16(c) shall not be included in
either the numerator or the denominator for purposes of calculating the
Delinquency Percentage.

               "Depositor": Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation, or its successor in interest.

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

               "Depository Institution": Any depository institution or trust
company, including the Trustee that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations (or,
in the case of a depository institution that is the principal subsidiary of a
holding company, such holding company has unsecured commercial paper or other
short-term unsecured debt obligations) that are rated F-1 by Fitch and A-1+ by
S&P (or comparable ratings if Fitch and S&P are not the Rating Agencies).

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

               "Determination Date": With respect to each Distribution Date, the
sixth Business Day preceding the related Distribution Date.

               "Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I other than
through an Independent Contractor; provided, however, that the Trustee (or the
Master Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Master Servicer on
behalf of the Trustee) establishes rental terms, chooses

                                      -11-

<PAGE>

tenants, enters into or renews leases, deals with taxes and insurance, or makes
decisions as to repairs or capital expenditures with respect to such REO
Property.

               "Disqualified Organization": Any of the following: (i) the United
States, any State or political subdivision thereof, any possession of the United
States, or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for Freddie Mac, a majority of its board of directors is not
selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other Person so designated by the Trustee based
upon an Opinion of Counsel that the holding of an Ownership Interest in a
Residual Certificate by such Person may cause any of REMIC I, REMIC II or REMIC
III or any Person having an Ownership Interest in any Class of Certificates
(other than such Person) to incur a liability for any federal tax imposed under
the Code that would not otherwise be imposed but for the Transfer of an
Ownership Interest in a Residual Certificate to such Person. The terms "United
States," "State" and "international organization" shall have the meanings set
forth in Section 7701 of the Code or successor provisions.

               "Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b), which shall be entitled
"U.S. Bank National Association, as Trustee, in trust for the registered holders
of Salomon Brothers Mortgage Securities VII, Inc., New Century Home Equity Loan
Trust, Series 2001-NC1, Asset Backed Pass-Through Certificates." The
Distribution Account must be an Eligible Account.

               "Distribution Date": The 20th day of any month, or if such 20th
day is not a Business Day, the Business Day immediately following such 20th day,
commencing in June 2001.

               "Due Date": With respect to each Distribution Date, the first day
of the calendar month in which such Distribution Date occurs, which is generally
the day of the month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.

               "Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the related Due Date.

               "Eligible Account": Any of (i) an account or accounts maintained
with a Depository Institution, (ii) an account or accounts the deposits in which
are fully insured by the FDIC or (iii) a trust account or accounts maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity. Eligible Accounts
may bear interest.

                                      -12-

<PAGE>

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

               "Estate in Real Property": A fee simple estate in a parcel of
land.

               "Excess Overcollateralized Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date
over (ii) the Required Overcollateralized Amount for such Distribution Date.

               "Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan or REO Property, the then applicable Mortgage Rate thereon minus the sum of
(i) the Trustee Fee Rate, (ii) the Servicing Fee Rate and (iii) the PMI Insurer
Fee Rate, if applicable.

               "Extraordinary Trust Fund Expense": Any amounts reimbursable to
the Trustee, or any director, officer, employee or agent of the Trustee from the
Trust Fund pursuant to Section 8.05 or Section 10.01(c) and any amounts payable
from the Distribution Account in respect of taxes pursuant to Section
10.01(g)(iii) and any costs of the Trustee for the recording of the Assignments
pursuant to Section 2.01 (to the extent the Seller is unable to pay such costs).

               "Fannie Mae": Fannie Mae, formally known as the Federal National
Mortgage Association, or any successor thereto.

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

               "Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Originator, the Seller, the Depositor or the Master Servicer
pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section
9.01), a determination made by the Master Servicer that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Master Servicer,
in its reasonable good faith judgment, expects to be finally recoverable in
respect thereof have been so recovered. The Master Servicer shall maintain
records, prepared by a Servicing Officer, of each Final Recovery Determination
made thereby.

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

               "Freddie Mac": Freddie Mac, formally known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.

               "Gross Margin": With respect to each Adjustable-Rate Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Adjustable-Rate
Mortgage Loan.

               "Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Master
Servicer, the Originator and their

                                      -13-

<PAGE>

respective Affiliates, (b) does not have any direct financial interest in or any
material indirect financial interest in the Depositor, the Originator, the
Master Servicer or any Affiliate thereof, and (c) is not connected with the
Depositor, the Originator, the Master Servicer or any Affiliate thereof as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail to
be Independent of the Depositor, the Originator, the Master Servicer or any
Affiliate thereof merely because such Person is the beneficial owner of 1% or
less of any class of securities issued by the Depositor, the Originator, the
Master Servicer or any Affiliate thereof, as the case may be.

               "Independent Contractor": Either (i) any Person (other than the
Master Servicer) that would be an "independent contractor" with respect to REMIC
I within the meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including the Master Servicer) if the Trustee has received an Opinion of
Counsel to the effect that the taking of any action in respect of any REO
Property by such Person, subject to any conditions therein specified, that is
otherwise herein contemplated to be taken by an Independent Contractor will not
cause such REO Property to cease to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.

               "Index": With respect to each Adjustable-Rate Mortgage Loan and
each related Adjustment Date, the average of the interbank offered rates for
six-month United States dollar deposits in the London market as published in THE
WALL STREET JOURNAL and as most recently available either (i) as of the first
business day 45 days prior to such Adjustment Date or (ii) as of the first
business day of the month preceding the month of such Adjustment Date, as
specified in the related Mortgage Note.

               "Insurance Proceeds": Proceeds of any title policy, hazard policy
or other insurance policy covering a Mortgage Loan (including any related PMI
Policy), to the extent such proceeds are not to be applied to the restoration of
the related Mortgaged Property or released to the Mortgagor in accordance with
the procedures that the Master Servicer would follow in servicing mortgage loans
held for its own account, subject to the terms and conditions of the related
Mortgage Note and Mortgage.

               "Interest Accrual Period": With respect to any Distribution Date
and the Class A Certificates, the Mezzanine Certificates (other than the Class
M-3 Certificates), REMIC II Regular Interest II-LT2, REMIC II Regular Interest
II-LT3, REMIC II Regular Interest II-LT4 and REMIC II Regular Interest II-LT5,
the period commencing on the Distribution Date of the month immediately
preceding the month in which such Distribution Date occurs (or, in the case of
the first Distribution Date, commencing on the Closing Date) and ending on the
day preceding such Distribution Date. With respect to any Distribution Date and
the Class A-IO Certificates, the Class M-3 Certificates, the Class CE
Certificates, the REMIC II Regular Interests and the REMIC I

                                      -14-

<PAGE>

Regular Interests, the one-month period ending on the last day of the calendar
month preceding the month in which such Distribution Date occurs.

               "Interest Carry Forward Amount": With respect to any Distribution
Date and any Class of Class A Certificates, Class A-IO Certificates or Mezzanine
Certificates, the sum of (i) the amount, if any, by which (a) the Interest
Distribution Amount for such Class of Certificates as of the immediately
preceding Distribution Date exceeded (b) the actual amount distributed on such
Class of Certificates in respect of interest on such immediately preceding
Distribution Date, (ii) the amount of any Interest Carry Forward Amount for such
Class of Certificates remaining unpaid from the previous Distribution Date and
(iii) accrued interest on the sum of (i) and (ii) above calculated at the
related Pass-Through Rate for the most recently ended Interest Accrual Period.

               "Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates (other than the Class M-3
Certificates), REMIC II Regular Interest II-LT2, REMIC II Regular Interest
II-LT3 and REMIC II Regular Interest II-LT4 and any Interest Accrual Period
therefor, the second London Business Day preceding the commencement of such
Interest Accrual Period.

               "Interest Distribution Amount": With respect to any Distribution
Date and any Class A Certificates, any Mezzanine Certificates, any Class A-IO
Certificates and any Class CE Certificates, the aggregate Accrued Certificate
Interest on the Certificates of such Class for such Distribution Date.

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

               "Late Collections": With respect to any Mortgage Loan and any Due
Period, all amounts received subsequent to the Determination Date immediately
following such Due Period, whether as late payments of Monthly Payments or as
Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent for such Due Period and not previously recovered.

               "Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01.
With respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 9.01.

               "Liquidation Proceeds": The amount (other than Insurance Proceeds
or amounts received in respect of the rental of any REO Property prior to REO
Disposition) received by the Master Servicer in connection with (i) the taking
of all or a part of a Mortgaged Property by exercise of the power of eminent
domain or condemnation, (ii) the liquidation of a defaulted Mortgage Loan

                                      -15-

<PAGE>

through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.

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

               "London Business Day": Any day on which banks in the City of
London are open and conducting transactions in United States dollars.

               "Loss Severity Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
amount of Realized Losses incurred on a Mortgage Loan and the denominator of
which is the principal balance of such Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.

               "Marker Rate": With respect to the Class CE Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the REMIC II Remittance Rate for each of the REMIC II Regular Interests, with
the rate on each REMIC II Regular Interest (other than REMIC II Regular Interest
II-LT5 and REMIC II Regular Interest II-LT6) subject to a cap equal to with
respect to the Distribution Date in June 2001, 4.45661%, and with respect to
each Distribution Date thereafter, the lesser of (i) the related One-Month LIBOR
Pass-Through Rate and (ii) the Net WAC Pass-Through Rate for the purpose of this
calculation for such Distribution Date, with the rate on REMIC II Regular
Interest II-LT5 subject to a cap equal to with respect to the Distribution Date
in June 2001, 4.45661%, and with respect to each Distribution Date thereafter,
the lesser of (i) 7.00% and (ii) the Net WAC Pass-Through Rate for the purpose
of this calculation and with the rate on REMIC II Regular Interest II-LT6
subject to a cap of zero for the purpose of this calculation.

               "Master Servicer": Ocwen Federal Bank FSB or any successor master
servicer appointed as herein provided, in its capacity as Master Servicer
hereunder.

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

               "Master Servicer Prepayment Charge Payment Amount": The amounts
payable by the Master Servicer in respect of any waived Prepayment Charges
pursuant to Section 2.05 or Section 3.01.

               "Master Servicer Remittance Date": With respect to any
Distribution Date, by 3:00 p.m. New York time on the fifth Business Day
preceding the related Distribution Date.

               "Master Servicer Termination Test": With respect to any
Distribution Date, the Master Servicer Termination Test will be failed if the
Cumulative Loss Percentage exceeds 7.10%.

               "Maximum II-LT6 Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC II Remittance Rate applicable to

                                      -16-

<PAGE>

REMIC II Regular Interest II-LT6 for such Distribution Date on a balance equal
to the Uncertificated Balance of REMIC II Regular Interest II-LT6 minus the
REMIC II Overcollateralization Amount, in each case for such Distribution Date,
over (ii) Uncertificated Interest on REMIC II Regular Interest II-LT2, REMIC II
Regular Interest II-LT3, REMIC II Regular Interest II-LT4 and REMIC II Regular
Interest II-LT5 for such Distribution Date, with the rate on each of REMIC II
Regular Interest II-LT2, REMIC II Regular Interest II-LT3 and REMIC II Regular
Interest II-LT4 subject ot a cap equal to with respect to the Distribution Date
in June 2001, 4.45661%, and with respect to each Distribution Date thereafter,
the lesser of (i) the related One-Month LIBOR Pass-Through Rate and (ii) the Net
Wac Pass-Through Rate and with the rate on REMIC II Regular Interest II-LT5
subject to a cap equal to the lesser of (i) 7.00% per annum and (ii) the Net WAC
Pass-Through Rate for the purpose of this calculation for such Distribution
Date.

               "Maximum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.

               "Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate or Class M-3 Certificate.

               "Minimum Mortgage Rate": With respect to each Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.

               "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Section 3.07 and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.

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

               "Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on, or first priority security interest in, a Mortgaged
Property securing a Mortgage Note.

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

               "Mortgage Loan": Each mortgage loan transferred and assigned to
the Trustee and delivered to the Trustee pursuant to Section 2.01 or Section
2.03(b) of this Agreement, as held from time to time as a part of the Trust
Fund, the Mortgage Loans so held being identified in the Mortgage Loan Schedule.

                                      -17-

<PAGE>

               "Mortgage Loan Purchase Agreement": The agreement among the
Seller, the Originator and the Depositor, regarding the sale of the Mortgage
Loans by the Seller to the Depositor, substantially in the form of Exhibit D
annexed hereto.

               "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, attached hereto as Schedule 1. The
Mortgage Loan Schedule shall set forth the following information with respect to
each Mortgage Loan:

          (i)      the Mortgage Loan identifying number;

         (ii)      the Mortgagor's name;

        (iii)      the street address of the Mortgaged Property including the
                   state and zip code;

         (iv)      a code indicating whether the Mortgaged Property is
                   owner-occupied;

          (v)      the type of Residential Dwelling constituting the Mortgaged
                   Property;

         (vi)      the original months to maturity;

        (vii)      the stated remaining months to maturity from the Cut-off Date
                   based on the original amortization schedule;

        (viii)     the Loan-to-Value Ratio at origination;

         (ix)      the Mortgage Rate in effect immediately following the Cut-off
                   Date;

          (x)      (A) the date on which the first Monthly Payment was due on
                   the Mortgage Loan and, (B) if such date is not consistent
                   with the Due Date currently in effect, such Due Date;

         (xi)      the stated maturity date;

        (xii)      the amount of the Monthly Payment at origination;

        (xiii)     the amount of the Monthly Payment due on the first Due Date
                   after the Cut-off Date;

        (xiv)      the last Due Date on which a Monthly Payment was actually
                   applied to the unpaid Stated Principal Balance;

         (xv)      the original principal amount of the Mortgage Loan;

        (xvi)      the Scheduled Principal Balance of the Mortgage Loan as of
                   the close of business on the Cut-off Date;

                                      -18-

<PAGE>

        (xvii)     with respect to each Adjustable-Rate Mortgage Loan, the
                   Adjustment Dates;

        (xviii)    with respect to each Adjustable-Rate Mortgage Loan, the Gross
                   Margin;

        (xix)      a code indicating the purpose of the Mortgage Loan (I.E.,
                   purchase financing, Rate/Term Refinancing, Cash-Out
                   Refinancing);

         (xx)      with respect to each Adjustable-Rate Mortgage Loan, the
                   Maximum Mortgage Rate;

        (xxi)      with respect to each Adjustable-Rate Mortgage Loan, the
                   Minimum Mortgage Rate;

        (xxii)     the Mortgage Rate at origination;

        (xxiii)    with respect to each Adjustable-Rate Mortgage Loan, the
                   Periodic Rate Cap and the maximum first Adjustment Date
                   Mortgage Rate adjustment;

        (xxiv)     a code indicating the documentation program (I.E., Full
                   Documentation, Limited Documentation, Stated Income
                   Documentation);

        (xxv)      the first Adjustment Date immediately following the Cut-off
                   Date;

        (xxvi)     the risk grade;

        (xxvii)    the Value of the Mortgaged Property;

        (xxviii)   the sale price of the Mortgaged Property, if applicable;

        (xxix)     the actual unpaid principal balance of the Mortgage Loan as
                   of the Cut-off Date;

        (xxx)      the type and term of the related Prepayment Charge;

        (xxxi)     the rounding code (I.E., nearest 0.125%, next highest
                   0.125%);

        (xxxii)    whether such Mortgage Loan is covered under the PMI Policy;

        (xxxiii)   the program code.

               The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans in the aggregate as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current principal
balance of the Mortgage Loans; (3) the weighted average Mortgage Rate of the
Mortgage Loans and (4) the weighted average maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With respect to any Qualified
Substitute Mortgage Loan, the Cut-off

                                      -19-

<PAGE>

Date shall refer to the related Cut-off Date for such Mortgage Loan, determined
in accordance with the definition of Cut-off Date herein.

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

               "Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 and existing from time to time thereafter, and any REO Properties
acquired in respect thereof.

               "Mortgage Rate": With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate with
respect to the Adjustable-Rate Mortgage Loans, (A) as of any date of
determination until the first Adjustment Date following the Cut-off Date shall
be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate in
effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date equal to the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, as most recently available as of a date prior
to the Adjustment Date as set forth in the related Mortgage Note, plus the
related Gross Margin; provided that the Mortgage Rate on such Adjustable-Rate
Mortgage Loan on any Adjustment Date shall never be more than the lesser of (i)
the sum of the Mortgage Rate in effect immediately prior to the Adjustment Date
plus the related Periodic Rate Cap, if any, and (ii) the related Maximum
Mortgage Rate, and shall never be less than the greater of (i) the Mortgage Rate
in effect immediately prior to the Adjustment Date less the Periodic Rate Cap,
if any, and (ii) the related Minimum Mortgage Rate. With respect to each
Mortgage Loan that becomes an REO Property, as of any date of determination, the
annual rate determined in accordance with the immediately preceding sentence as
of the date such Mortgage Loan became an REO Property.

               "Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property
improved by a Residential Dwelling.

               "Mortgagor":  The obligor on a Mortgage Note.

               "Net Monthly Excess Cashflow": With respect to any Distribution
Date, the sum of (i) any Overcollateralization Reduction Amount for such
Distribution Date and (ii) the excess of (x) the Available Distribution Amount
for such Distribution Date over (y) the sum for such Distribution Date of (A)
the Senior Interest Distribution Amount payable to the holders of the Class A
Certificates and the Interest Distribution Amount payable to the holders of the
Mezzanine Certificates and (B) the sum of the amounts described in clauses
(b)(i) through (iii) of the definition of Principal Distribution Amount.

               "Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the Servicing Fee Rate.

               "Net WAC Pass-Through Rate": The Net WAC Pass-Through Rate for
any Distribution Date is a rate per annum equal to the weighted average of (x)
the REMIC I Remittance

                                      -20-

<PAGE>

Rate with respect to REMIC I Regular Interest I-LT1 for such Distribution Date
and (y) the excess, if any, of (i) the REMIC I Remittance Rate with respect to
REMIC I Regular Interest I-LT2 for such Distribution Date over (ii) the Class
A-IO Rate, weighted, in the case of clause (x), on the basis of the aggregate
Uncertificated Balance of REMIC I Regular Interest I-LT1, and in the case of
clause (y), on the basis of the Uncertificated Balance of REMIC I Regular
Interest I-LT2, respectively.

               "New Lease": Any lease of REO Property entered into on behalf of
REMIC I, including any lease renewed or extended on behalf of REMIC I, if REMIC
I has the right to renegotiate the terms of such lease.

               "Nonrecoverable P&I Advance": Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Master Servicer, will not or, in the case of
a proposed P&I Advance, would not be ultimately recoverable from related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.

               "Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Master Servicer, will
not or, in the case of a proposed Servicing Advance, would not be ultimately
recoverable from related Late Collections, Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein.

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

               "Notional Amount": With respect to the Class CE Certificates and
any Distribution Date, the Uncertificated Balance of the REMIC II Regular
Interests for such Distribution Date. With respect to the Class A-IO
Certificates and any Distribution Date, an amount equal to the Uncertificated
Notional Amount for the REMIC II Regular Interest II-LTIO.

               "Officers' Certificate": A certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the
Originator, the Seller or the Depositor, as applicable.

               "One-Month LIBOR": With respect to the Class A Certificates, the
Mezzanine Certificates (other than the Class M-3 Certificates), REMIC II Regular
Interest II-LT2, REMIC II Regular Interest II-LT3 and REMIC II Regular Interest
II-LT4 and any Interest Accrual Period therefor, the rate determined by the
Trustee on the related Interest Determination Date on the basis of the offered
rate for one-month U.S. dollar deposits, as such rate appears on Telerate Page
3750 as of 11:00 a.m. (London time) on such Interest Determination Date;
provided that if such rate does not appear on Telerate Page 3750, the rate for
such date will be determined on the basis of the offered rates of the Reference
Banks for one-month U.S. dollar deposits, as of 11:00 a.m. (London time) on such
Interest Determination Date. In such event, the Trustee will request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If on such Interest Determination Date, two or more Reference Banks
provide such offered quotations, One-Month LIBOR for the related Interest
Accrual Period shall be the arithmetic mean of such offered quotations

                                      -21-

<PAGE>

(rounded upwards if necessary to the nearest whole multiple of 1/16%). If on
such Interest Determination Date, fewer than two Reference Banks provide such
offered quotations, One-Month LIBOR for the related Interest Accrual Period
shall be the higher of (i) LIBOR as determined on the previous Interest
Determination Date and (ii) the Reserve Interest Rate. Notwithstanding the
foregoing, if, under the priorities described above, LIBOR for an Interest
Determination Date would be based on LIBOR for the previous Interest
Determination Date for the third consecutive Interest Determination Date, the
Trustee shall select an alternative comparable index (over which the Trustee has
no control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent party.

               "One-Month LIBOR Pass-Through Rate": With respect to the Class A
Certificates and REMIC II Regular Interest II-LT2, a per annum rate equal to
One-Month LIBOR plus 0.29%, in the case of each Distribution Date through and
including the Distribution Date on which the aggregate Stated Principal Balance
of the Mortgage Loans and REO Properties remaining in the Trust Fund is reduced
to less than 10% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date, or One-Month LIBOR plus 0.58%, in the case of any
Distribution Date thereafter.

               With respect to the Class M-1 Certificates and REMIC II Regular
Interest II-LT3, a per annum rate equal to One-Month LIBOR plus 0.70%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties remaining in the Trust Fund is reduced to less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
or One-Month LIBOR plus 1.05%, in the case of any Distribution Date thereafter.

               With respect to the Class M-2 Certificates and REMIC II Regular
Interest II-LT4, a per annum rate equal to One-Month LIBOR plus 1.10%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties remaining in the Trust Fund is reduced to less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
or One-Month LIBOR plus 1.65%, in the case of any Distribution Date thereafter.

               "Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or the Master
Servicer, acceptable to the Trustee, except that any opinion of counsel relating
to (a) the qualification of any of REMIC I, REMIC II or REMIC III as a REMIC or
(b) compliance with the REMIC Provisions must be an opinion of Independent
counsel.

               "Original Mortgage Loan": Any of the Mortgage Loans included in
REMIC I as of the Closing Date.

               "Originator": New Century Mortgage Corporation, or its successor
in interest, in its capacity as originator under the Mortgage Loan Purchase
Agreement.

               "Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties

                                      -22-

<PAGE>

immediately following such Distribution Date over (b) the sum of the aggregate
Certificate Principal Balances of the Class A Certificates, the Mezzanine
Certificates and the Class P Certificates as of such Distribution Date (after
taking into account the payment of the amounts described in clauses (b)(i)
through (iv) of the definition of Principal Distribution Amount on such
Distribution Date).

               "Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Required Overcollateralized
Amount applicable to such Distribution Date over (b) the Overcollateralized
Amount applicable to such Distribution Date prior to taking into account the
payment of any Overcollateralization Increase Amount on such Distribution Date.

               "Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency Amount
as of such Distribution Date (after taking into account the payment of the
Principal Distribution Amount on such Distribution Date, exclusive of the
payment of any Overcollateralization Increase Amount) and (b) the amount of
Accrued Certificate Interest for the Class CE Certificates for such Distribution
Date as reduced by Realized Losses allocated thereto with respect to such
Distribution Date pursuant to Section 4.04.

               "Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the sum of the amounts available for
distribution specified in clauses (b)(i) through (iii) of the definition of
Principal Distribution Amount.

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

               "Pass-Through Rate": With respect to the Class A Certificates and
the Mezzanine Certificates (other than the Class M-3 Certificates) and any
Distribution Date, a rate per annum equal to the lesser of (i) the related
One-Month LIBOR Pass-Through Rate for such Distribution Date and (ii) the Net
WAC Pass-Through Rate for such Distribution Date. With respect to the Class M-3
Certificates, for any Distribution Date, the lesser of (i) 7.000% per annum and
(ii) the Net WAC Pass-Through Rate for such Distribution Date. With respect to
the Class A-IO Certificates and any Distribution Date, a per annum rate equal to
the Class A-IO Rate. With respect to the Class CE Certificates and any
Distribution Date, a rate per annum equal to the percentage equivalent of a
fraction, the numerator of which is the sum of the amounts calculated pursuant
to clauses (A) through (G) below, and the denominator of which is the
Uncertificated Balance of the REMIC II Regular Interests. For purposes of
calculating the Pass-Through Rate for the Class CE Certificates, the numerator
is equal to the sum of the following components:

               (A) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest II-LT1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC I Regular Interest II-LT1;

               (B) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest II-LT2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest II-LT2;

                                      -23-

<PAGE>

               (C) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest II-LT3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest II-LT3;

               (D) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest II-LT4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest II-LT4;

               (E) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest II-LT4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest II-LT5;

               (F) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest II-LT6 minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC II Regular Interest II-LT6; and

               (G) 100% of the interest on REMIC II Regular Interest II-LTP.

               "Percentage Interest": With respect to any Class of Certificates
(other than the Residual Certificates), the undivided percentage ownership in
such Class evidenced by such Certificate, expressed as a percentage, the
numerator of which is the initial Certificate Principal Balance or Notional
Amount represented by such Certificate and the denominator of which is the
aggregate initial Certificate Principal Balance or Notional Amount of all of the
Certificates of such Class. The Class A Certificates and the Mezzanine
Certificates are issuable only in minimum Percentage Interests corresponding to
minimum initial Certificate Principal Balances of $10,000 and integral multiples
of $1.00 in excess thereof. The Class A-IO Certificates are issuable only in
minimum Percentage Interests corresponding to minimum initial Notional Amounts
of $10,000 and integral multiples of $1.00 in excess thereof. The Class P
Certificates are issuable only in Percentage Interests corresponding to initial
Certificate Principal Balances of $20 and integral multiples thereof. The Class
CE Certificates are issuable only in minimum Percentage Interests corresponding
to minimum initial Certificate Principal Balances of $10,000 and integral
multiples of $1.00 in excess thereof; provided, however, that a single
Certificate of each such Class of Certificates may be issued having a Percentage
Interest corresponding to the remainder of the aggregate initial Certificate
Principal Balance or Notional Amount of such Class or to an otherwise authorized
denomination for such Class plus such remainder. With respect to any Residual
Certificate, the undivided percentage ownership in such Class evidenced by such
Certificate, as set forth on the face of such Certificate. The Residual
Certificates are issuable in Percentage Interests of 20% and multiples thereof.

               "Periodic Rate Cap": With respect to each Adjustable-Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Mortgage Loan may increase or decrease (without regard to the
Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from
the Mortgage Rate in effect immediately prior to such Adjustment Date.

                                      -24-

<PAGE>

               "Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, the Master Servicer, the Trustee
or any of their respective Affiliates:

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

                       (ii) demand and time deposits in, certificates of deposit
        of, or bankers' acceptances issued by, any Depository Institution;

                       (iii) repurchase obligations with respect to any security
        described in clause (i) above entered into with a Depository Institution
        (acting as principal);

                       (iv) securities bearing interest or sold at a discount
        that are issued by any corporation incorporated under the laws of the
        United States of America or any state thereof and that are rated by each
        Rating Agency that rates such securities in its highest long-term
        unsecured rating categories at the time of such investment or
        contractual commitment providing for such investment;

                       (v) commercial paper (including both non-interest-bearing
        discount obligations and interest-bearing obligations payable on demand
        or on a specified date not more than 30 days after the date of
        acquisition thereof) that is rated by each Rating Agency that rates such
        securities in its highest short-term unsecured debt rating available at
        the time of such investment;

                       (vi) units of money market funds that have been rated
        "AAA" by Fitch (if rated by Fitch) and "AAAm" or "AAAm-G" by S&P; and

                       (viii) if previously confirmed in writing to the Trustee,
        any other demand, money market or time deposit, or any other obligation,
        security or investment, as may be acceptable to the Rating Agencies as a
        permitted investment of funds backing securities having ratings
        equivalent to its highest initial rating of the Class A Certificates;

provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.

               "Permitted Transferee": Any Transferee of a Residual Certificate
other than a Disqualified Organization or Non-United States Person.

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

                                      -25-

<PAGE>

               "P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the Master Servicer in respect of any Distribution Date pursuant
to Section 4.03.

               "Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Keogh plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the Code.

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

               "PMI Insurer Fee": The amount payable to the PMI Insurer on each
Distribution Date, which amount shall equal the product of (i) the PMI Insurer
Fee Rate, multiplied by (ii) the aggregate Scheduled Principal Balance of the
PMI Mortgage Loans and any related REO Properties as of the first day of the
related Due Period.

               "PMI Insurer Fee Rate": 1.28% per annum.

               "PMI Mortgage Loans": The list of Mortgage Loans insured by the
PMI Insurer attached hereto as Schedule 1.

               "PMI Policy": The Primary Mortgage Insurance Policy No.
22-590-4-1431 with respect to the PMI Mortgage Loans and all endorsements
thereto dated the Closing Date, issued by the PMI Insurer.

               "Prepayment Assumption": A prepayment rate for the Mortgage Loans
of 28% CPR. The Prepayment Assumption is used solely for determining the accrual
of original issue discount on the Certificates for federal income tax purposes.
A CPR (or Constant Prepayment Rate) represents an annualized constant assumed
rate of prepayment each month of a pool of mortgage loans relative to its
outstanding principal balance for the life of such pool.

               "Prepayment Charge": With respect to any Prepayment Period, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note (other than any Master Servicer Prepayment Charge Payment Amount).

               "Prepayment Charge Schedule": As of any date, the list of
Prepayment Charges on the Mortgage Loans included in REMIC I on such date,
attached hereto as Schedule 2 (including the Prepayment Charge Summary attached
thereto). The Prepayment Charge Schedule shall set forth the following
information with respect to each related Mortgage Loan:

          (i)      the Mortgage Loan identifying number;

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

                                      -26-

<PAGE>

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

         (iv)      the date on which the first monthly payment was due on the
                   related Mortgage Loan;

          (v)      the term of the related Mortgage Loan; and

         (vi)      the principal balance of the related Mortgage Loan as of the
                   Cut-off Date.

               The Prepayment Charge Schedule shall be amended from time to time
by the Depositor in accordance with the provisions of this Agreement.

               "Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in full or in part that was applied by the
Master Servicer to reduce the outstanding principal balance of such loan on a
date preceding the Due Date in the succeeding Prepayment Period, an amount equal
to interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the related Prepayment Period. The
obligations of the Master Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.

               "Prepayment Period": With respect to any Distribution Date, the
calendar month preceding the calendar month in which such Distribution Date
occurs; provided, however, that the Prepayment Period with respect to the first
Distribution Date begins on May 15, 2001.

               "Principal Distribution Amount": With respect to any Distribution
Date, the lesser of:

               (a)     the excess of the Available Distribution Amount over the
                       amount payable on the Class A Certificates, the Mezzanine
                       Certificates and the Class A-IO Certificates pursuant to
                       Section 4.01(a)(2); and

               (b)     the sum of:

                       (i) the principal portion of each Monthly Payment on the
                       Mortgage Loans due during the related Due Period, whether
                       or not received on or prior to the related Determination
                       Date;

                       (ii) the Stated Principal Balance of any Mortgage Loan
                       that was purchased during the related Prepayment Period
                       pursuant to or as contemplated by Section 2.03, Section
                       3.16(c) or Section 9.01 and the amount of any shortfall
                       deposited in the Collection Account in connection with
                       the substitution of a Deleted Mortgage Loan pursuant to
                       Section 2.03 during the related Prepayment Period;

                                      -27-

<PAGE>

                       (iii) the principal portion of all other unscheduled
                       collections (including, without limitation, Principal
                       Prepayments, Insurance Proceeds, Liquidation Proceeds and
                       REO Principal Amortization) received during the related
                       Prepayment Period, net of any portion thereof that
                       represents a recovery of principal for which an advance
                       was made by the Master Servicer pursuant to Section 4.03
                       in respect of a preceding Distribution Date;

                       (iv) the principal portion of any Realized Losses
                       incurred on the Mortgage Loans in the calendar month
                       preceding such Distribution Date; and

                       (v) the amount of any Overcollateralization Increase
                       Amount for such Distribution Date;

                       minus:

                       (vi) the amount of any Overcollateralization Reduction
                       Amount for such Distribution Date.

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

               "PTCE": A Prohibited Transaction Class Exemption issued by the
United States Department of Labor which provides that exemptive relief is
available to any party to any transaction which satisfies the conditions of the
exemption.

               "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, and as confirmed by an Officers' Certificate from the
Master Servicer and to the Trustee an amount equal to the sum of (i) 100% of the
Stated Principal Balance thereof as of the date of purchase (or such other price
as provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or an advance by the Master Servicer, which
payment or advance had as of the date of purchase been distributed pursuant to
Section 4.01, through the end of the calendar month in which the purchase is to
be effected and (y) an REO Property, the sum of (1) accrued interest on such
Stated Principal Balance at the applicable Net Mortgage Rate in effect from time
to time from the Due Date as to which interest was last covered by a payment by
the Mortgagor or an advance by the Master Servicer through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, plus (2) REO Imputed Interest for such REO Property for
each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to Section
4.01, (iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and

                                      -28-

<PAGE>

Nonrecoverable Servicing Advances) and any unpaid Servicing Fees allocable to
such Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from
the Collection Account in respect of such Mortgage Loan or REO Property pursuant
to Section 3.11(a)(ix) and Section 3.16(b), and (v) in the case of a Mortgage
Loan required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the Master Servicer or the Trustee in respect of
the breach or defect giving rise to the purchase obligation.

               "Qualified Substitute Mortgage Loan": A mortgage loan substituted
for a Deleted Mortgage Loan pursuant to the terms of this Agreement which must,
on the date of such substitution, (i) have an outstanding principal balance,
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of the Scheduled Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, (ii) have a Mortgage Rate not less than
(and not more than one percentage point in excess of) the Mortgage Rate of the
Deleted Mortgage Loan, (iii) with respect to any Adjustable- Rate Mortgage Loan,
have a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on the
Deleted Mortgage Loan, (iv) with respect to any Adjustable-Rate Mortgage Loan,
have a Minimum Mortgage Rate not less than the Minimum Mortgage Rate of the
Deleted Mortgage Loan, (v) with respect to any Adjustable-Rate Mortgage Loan,
have a Gross Margin equal to the Gross Margin of the Deleted Mortgage Loan, (vi)
with respect to any Adjustable-Rate Mortgage Loan, have a next Adjustment Date
not more than two months later than the next Adjustment Date on the Deleted
Mortgage Loan, (vii) have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Mortgage Loan, (viii) have the
same Due Date as the Due Date on the Deleted Mortgage Loan, (ix) have a
Loan-to-Value Ratio as of the date of substitution equal to or lower than the
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (x) have a
risk grading determined by the Originator at least equal to the risk grading
assigned on the Deleted Mortgage Loan, (xi) be covered by the PMI Policy if the
Deleted Mortgage Loan was covered by the PMI Policy and (xii) conform to each
representation and warranty set forth in Section 6 of the Mortgage Loan Purchase
Agreement applicable to the Deleted Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Rates described in clause (ii) hereof
shall be determined on the basis of weighted average Mortgage Rates, the terms
described in clause (vii) hereof shall be determined on the basis of weighted
average remaining term to maturity, the Loan-to-Value Ratios described in clause
(ix) hereof shall be satisfied as to each such mortgage loan, the risk gradings
described in clause (x) hereof shall be satisfied as to each such mortgage loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xi) hereof must be satisfied
as to each Qualified Substitute Mortgage Loan or in the aggregate, as the case
may be.

               "Rate/Term Refinancing": A Refinanced Mortgage Loan, the proceeds
of which are not more than a nominal amount in excess of the existing first
mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were used exclusively (except for such
nominal amount) to satisfy the then existing first mortgage loan and any
subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and
to pay related closing costs.

                                      -29-

<PAGE>

               "Rating Agency or Rating Agencies": Fitch and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Master Servicer.

               "Realized Loss": With respect to each Mortgage Loan as to which a
Final Recovery Determination has been made, an amount (not less than zero) equal
to (i) the unpaid principal balance of such Mortgage Loan as of the commencement
of the calendar month in which the Final Recovery Determination was made, plus
(ii) accrued interest from the Due Date as to which interest was last paid by
the Mortgagor through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest was
then accruing on such Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (iv) the
proceeds, if any, received in respect of such Mortgage Loan during the calendar
month in which such Final Recovery Determination was made, net of amounts that
are payable therefrom to the Master Servicer with respect to such Mortgage Loan
pursuant to Section 3.11(a)(iii).

               With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus
(v) the aggregate of all P&I Advances and Servicing Advances (in the case of
Servicing Advances, without duplication of amounts netted out of the rental
income, Insurance Proceeds and Liquidation Proceeds described in clause (vi)
below) made by the Master Servicer in respect of such REO Property or the
related Mortgage Loan for which the Master Servicer has been or, in connection
with such Final Recovery Determination, will be reimbursed pursuant to Section
3.23 out of rental income, Insurance Proceeds and Liquidation Proceeds received
in respect of such REO Property, minus (vi) the total of all net rental income,
Insurance Proceeds and Liquidation Proceeds received in respect of such REO
Property that has been, or in connection with such Final Recovery Determination,
will be transferred to the Distribution Account pursuant to Section 3.23.

               With respect to each Mortgage Loan which has become the subject
of a Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding

                                      -30-

<PAGE>

immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation.

               With respect to each Mortgage Loan which has become the subject
of a Debt Service Reduction, the portion, if any, of the reduction in each
affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.

               "Record Date": With respect to each Distribution Date and any
Book-Entry Certificate (other than the Class M-3 Certificates), the Business Day
immediately preceding such Distribution Date. With respect to each Distribution
Date and any other Certificates, including any Definitive Certificates, the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.

               "Reference Banks": Bankers Trust Company, Barclay's Bank PLC, The
Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors in
interest; provided, however, that if any of the foregoing banks are not suitable
to serve as a Reference Bank, then any leading banks selected by the Trustee
which are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
not controlling, under the control of or under common control with the Depositor
or any Affiliate thereof and (iii) which have been designated as such by the
Trustee.

               "Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which
were not used to purchase the related Mortgaged Property.

               "Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class A-IO Certificate, Class CE Certificate or Class P
Certificate.

               "Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.

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

               "Relief Act Interest Shortfall": With respect to any Distribution
Date and any Mortgage Loan, any reduction in the amount of interest collectible
on such Mortgage Loan for the most recently ended calendar month as a result of
the application of the Relief Act.

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

               "REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans and Prepayment Charges as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all scheduled payments thereon received after the Cut-off Date and any
unscheduled payments thereon received after May 15, 2001 and any other
collections thereon and proceeds thereof; (ii) any

                                      -31-

<PAGE>

REO Property, together with all collections thereon and proceeds thereof; (iii)
the Trustee's rights with respect to the Mortgage Loans under all insurance
policies, including the PMI Policy, required to be maintained pursuant to this
Agreement and any proceeds thereof; (iv) the Depositor's rights under the
Mortgage Loan Purchase Agreement (including any security interest created
thereby); (v) the Collection Account (other than any amounts representing any
Master Servicer Prepayment Charge Payment Amount), the Distribution Account
(other than any amounts representing any Master Servicer Prepayment Charge
Payment Amount) and any REO Account, and such assets that are deposited therein
from time to time and any investments thereof, together with any and all income,
proceeds and payments with respect thereto. Notwithstanding the foregoing,
however, REMIC I specifically excludes all payments and other collections of
principal and interest due on the Mortgage Loans on or before the Cut-off Date,
all Prepayment Charges payable in connection with Principal Prepayments made
before the Cut-off Date, the Reserve Fund and the Yield Maintenance Agreement.

               "REMIC I Regular Interest": Any of the three separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I. Each REMIC I Regular Interest
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC I Regular Interests are set forth in the
Preliminary Statement hereto.

               "REMIC I Regular Interest I-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Regular Interest I-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Regular Interest I-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP
shall be entitled to 50% of the Prepayment Charges collected by the Master
Servicer, shall accrue interest at the related REMIC I Remittance Rate in effect
from time to time, and shall be entitled to a distribution of principal, subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC I Remittance Rate": With respect to the REMIC I Regular
Interests and the June 2001 Distribution Date, 5.10661% per annum and with
respect to any Distribution Date

                                      -32-

<PAGE>

thereafter, a per annum rate equal to the Weighted Average Expense Adjusted
Mortgage Rate for such Distribution Dates.

               "REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit
of REMIC III, as holder of the REMIC III Regular Interests, and the Class R-III
Certificateholders pursuant to Section 2.09, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.

               "REMIC II Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount (subject to adjustment based on the actual number
of days elapsed in the respective Interest Accrual Periods for the indicated
Regular Interests for such Distribution Date) equal to (a) the product of (i)
the aggregate Stated Principal Balance of the Mortgage Loans and REO Properties
then outstanding and (ii) the REMIC II Remittance Rate for REMIC II Regular
Interest II-LT1 minus the Marker Rate, divided by (b) 12.

               "REMIC II Overcollateralized Amount": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Balances of the REMIC II
Regular Interests minus (ii) the aggregate of the Uncertificated Balances of
REMIC II Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II-LT4 and REMIC II Regular Interest II-LT5, in each case as of
such date of determination.

               "REMIC II Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties then outstanding and
(ii) 1 minus a fraction, the numerator of which is two times the aggregate of
the Uncertificated Balances of REMIC II Regular Interest II-LT2, REMIC II
Regular Interest II-LT3, REMIC II Regular Interest II-LT4 and REMIC II Regular
Interest II-LT5 and the denominator of which is the aggregate of the
Uncertificated Balances of REMIC II Regular Interest II-LT2, REMIC II Regular
Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II Regular Interest
II-LT5 and REMIC II Regular Interest II-LT6.

               "REMIC II Regular Interest": Any of the eight separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. Each REMIC II Regular Interest
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time or shall otherwise be entitled to interest as set forth herein, and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto. The designations for
the respective REMIC II Regular Interests are set forth in the Preliminary
Statement hereto.

               "REMIC II Regular Interest II-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT1
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                                      -33-

<PAGE>

               "REMIC II Regular Interest II-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC II Regular Interest II-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT3
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC II Regular Interest II-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC III issued hereunder
and designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LT4 shall accrue interest at the related REMIC II Remittance Rate in effect
from time to time, and shall be entitled to distributions of principal, subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC II Regular Interest II-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT5
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC II Regular Interest II-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT6
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

               "REMIC II Regular Interest II-LTIO": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTIO
shall be entitled to receive all interest distributed to REMIC I Regular
Interest I-LTIO. REMIC II Regular Interest II-LTIO has no principal balance and
is not entitled to distributions of principal.

               "REMIC II Regular Interest II-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTP
shall be entitled to any Prepayment Charges collected by the Master Servicer and
to a distribution of principal, subject to the terms and conditions hereof, in
an

                                      -34-

<PAGE>

aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary Statement hereto.

               "REMIC II Remittance Rate": With respect to each REMIC II Regular
Interest (other than REMIC II Regular Interest II-LTIO) and the Distribution
Date in June 2001, 4.45661% per annum and with respect to any Distribution Date,
the Net WAC Pass-Through Rate. With respect to REMIC II Regular Interest
II-LTIO, the Class A-IO Rate.

               "REMIC II Required Overcollateralized Amount": 1% of the Required
Overcollateralization Amount.

               "REMIC III": The segregated pool of assets consisting of all of
the REMIC II Regular Interests conveyed in trust to the Trustee, for the benefit
of the REMIC III Certificateholders pursuant to Section 2.13, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.

               "REMIC III Certificate": Any Regular Certificate or Class R-III
Certificate.

               "REMIC III Certificateholder": The Holder of any REMIC III
Certificate.

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

               "Remittance Report": A report in form and substance acceptable to
the Trustee on a magnetic disk or tape prepared by the Master Servicer pursuant
to Section 4.03 with such additions, deletions and modifications as agreed to by
the Trustee and the Master Servicer.

               "Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."

               "REO Account": The account or accounts maintained, or caused to
be maintained, by the Master Servicer in respect of an REO Property pursuant to
Section 3.23.

               "REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.

               "REO Imputed Interest": As to any REO Property, for any calendar
month during which such REO Property was at any time part of REMIC I, one
month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.

                                      -35-

<PAGE>

               "REO Principal Amortization": With respect to any REO Property,
for any calendar month, the excess, if any, of (a) the aggregate of all amounts
received in respect of such REO Property during such calendar month, whether in
the form of rental income, sale proceeds (including, without limitation, that
portion of the Termination Price paid in connection with a purchase of all of
the Mortgage Loans and REO Properties pursuant to Section 9.01 that is allocable
to such REO Property) or otherwise, net of any portion of such amounts (i)
payable pursuant to Section 3.23(c) in respect of the proper operation,
management and maintenance of such REO Property or (ii) payable or reimbursable
to the Master Servicer pursuant to Section 3.23(d) for unpaid Servicing Fees in
respect of the related Mortgage Loan and unreimbursed Servicing Advances and P&I
Advances in respect of such REO Property or the related Mortgage Loan, over (b)
the REO Imputed Interest in respect of such REO Property for such calendar
month.

               "REO Property": A Mortgaged Property acquired by the Master
Servicer on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.23.

               "Request for Release": A release signed by a Servicing Officer,
in the form of Exhibit E-1 or Exhibit E-2 attached hereto.

               "Required Overcollateralized Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, $2,852,612.73, (ii) on or
after the Stepdown Date provided a Trigger Event is not in effect, the greater
of (x) 1.50% of the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (y) $1,901,209, and (iii) on or
after the Stepdown Date if a Trigger Event is in effect, the Required
Overcollateralized Amount for the immediately preceding Distribution Date.

               "Reserve Fund": The Reserve Fund established in accordance with
Section 3.10(g) hereof and maintained by the Trustee, which shall be entitled
"U.S. Bank National Association, as Trustee, in trust for the registered holders
of Salomon Brothers Mortgage Securities VII, Inc., New Century Home Equity Loan
Trust, Series 2001-NC1, Asset Backed Pass-Through Certificates. The Reserve Fund
must be an Eligible Account.

               "Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which New York
City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which New
York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.

               "Residential Dwelling": Any one of the following: (i) an
attached, detached or semi- detached one-family dwelling, (ii) an attached,
detached or semi-detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a Fannie Mae eligible condominium project, or (iv) an attached,
detached or semi-detached one-family dwelling in a planned unit development,
none of which is a co-operative, mobile or manufactured home (as defined in 42
United States Code, Section 5402(6)).

                                      -36-

<PAGE>

               "Residual Certificate": Any one of the Class R-I, Class R-II or
Class R-III.

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

               "Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, the Chairman of the Committee on Trust Matters, any
vice president, any assistant vice president, the Secretary, any assistant
secretary, the Treasurer, any assistant treasurer, the Cashier, any assistant
cashier, any trust officer or assistant trust officer, the Controller and any
assistant controller or any other officer of the Trustee, customarily performing
functions similar to those performed by any of the above designated officers
and, with respect to a particular matter, to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.

               "S&P": Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc., or its successor in interest.

               "Scheduled Principal Balance": With respect to any Mortgage Loan:
(a) as of the Cut-off Date, the outstanding principal balance of such Mortgage
Loan as of such date, net of the principal portion of all unpaid Monthly
Payments, if any, due on or before such date; (b) as of any Due Date subsequent
to the Cut-off Date up to and including the Due Date in the calendar month in
which a Liquidation Event occurs with respect to such Mortgage Loan, the
Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date, minus
the sum of (i) the principal portion of each Monthly Payment due on or before
such Due Date but subsequent to the Cut-off Date, whether or not received, (ii)
all Principal Prepayments received before such Due Date but after the Cut-off
Date, (iii) the principal portion of all Liquidation Proceeds and Insurance
Proceeds received before such Due Date but after the Cut-off Date, net of any
portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of the Trust
Fund up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such REO Property, an amount (not less
than zero) equal to the Scheduled Principal Balance of the related Mortgage Loan
as of the Due Date in the calendar month in which such REO Property was
acquired, minus the aggregate amount of REO Principal Amortization, if any, in
respect of such REO Property for all previously ended calendar months; and (b)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such REO Property, zero.

               "Seller": NC Capital Corporation or its successor in interest, in
its capacity as seller under the Mortgage Loan Purchase Agreement.

                                      -37-

<PAGE>

               "Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A Certificates and the Class
A-IO Certificates and (ii) the Interest Carry Forward Amount, if any, for such
Distribution Date for the Class A Certificates and the Class A-IO Certificates.

               "Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.

               "Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Master Servicer in connection with a default,
delinquency or other unanticipated event by the Master Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including but not
limited to foreclosures, in respect of a particular Mortgage Loan, (iii) the
management (including reasonable fees in connection therewith) and liquidation
of any REO Property and (iv) the performance of its obligations under Section
3.01, Section 3.09, Section 3.14, Section 3.16 and Section 3.23. The Master
Servicer shall not be required to make any Nonrecoverable Servicing Advances.

               "Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to the Servicing Fee Rate accrued for one month
(or in the event of any payment of interest which accompanies a Principal
Prepayment in full or in part made by the Mortgagor during such calendar month,
interest for the number of days covered by such payment of interest) on the same
principal amount on which interest on such Mortgage Loan accrues for such
calendar month, calculated on the basis of a 360-day year consisting of twelve
30-day months. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.

               "Servicing Fee Rate": 0.50% per annum.

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

               "Single Certificate": With respect to any Class of Certificates
(other than the Class P Certificates and the Residual Certificates), a
hypothetical Certificate of such Class evidencing a Percentage Interest for such
Class corresponding to an initial Certificate Principal Balance (or Notional
Amount in the case of the Class A-IO Certificates) of $1,000. With respect to
the Class P Certificates and the Residual Certificates, a hypothetical
Certificate of such Class evidencing a 100% Percentage Interest in such Class.

               "Startup Day": With respect to each of REMIC I, REMIC II and
REMIC III, the day designated as such pursuant to Section 10.01(b) hereof.

               "Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the Scheduled Principal

                                      -38-

<PAGE>

Balance of such Mortgage Loan as of the Cut-off Date, as shown in the Mortgage
Loan Schedule, minus the sum of (i) the principal portion of each Monthly
Payment due on a Due Date subsequent to the Cut-off Date, to the extent received
from the Mortgagor or advanced by the Master Servicer and distributed pursuant
to Section 4.01 on or before such date of determination, (ii) all Principal
Prepayments received after the Cut-off Date, to the extent distributed pursuant
to Section 4.01 on or before such date of determination, (iii) all Liquidation
Proceeds and Insurance Proceeds applied by the Master Servicer as recoveries of
principal in accordance with the provisions of Section 3.16, to the extent
distributed pursuant to Section 4.01 on or before such date of determination,
and (iv) any Realized Loss incurred with respect thereto as a result of a
Deficient Valuation made during or prior to the Prepayment Period for the most
recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property was acquired before the
Distribution Date in any calendar month, the principal portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition, to the extent
advanced by the Master Servicer and distributed pursuant to Section 4.01 on or
before such date of determination, and (ii) the aggregate amount of REO
Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 4.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.

               "Stayed Funds": If the Master Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of a Remittance (as
defined in Section 7.02(b)) is prohibited by Section 362 of the federal
Bankruptcy Code, funds that are in the custody of the Master Servicer, a trustee
in bankruptcy or a federal bankruptcy court and should have been the subject of
such Remittance absent such prohibition.

               "Stepdown Date": The later to occur of (i) the Distribution Date
occurring in June 2004 and (ii) the first Distribution Date on which the Credit
Enhancement Percentage (calculated for this purpose only after taking into
account distributions of principal on the Mortgage Loans but prior to any
distribution of the Principal Distribution Amount to the Certificates then
entitled to distributions of principal on such Distribution Date) is equal to or
greater than 19.50%.

               "Sub-Servicer": Any Person with which the Master Servicer has
entered into a Sub- Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.

               "Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 and is otherwise
acceptable to the Master Servicer.

                                      -39-

<PAGE>

               "Sub-Servicing Agreement": The written contract between the
Master Servicer and a Sub-Servicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02.

               "Substitution Shortfall Amount":  As defined in Section 2.03(b).

               "Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to the classification of portions
thereof as REMICs under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.

               "Telerate Page 3750": The display designated as page "3750" on
the Dow Jones Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).

               "Termination Price":  As defined in Section 9.01.

               "Terminator":  As defined in Section 9.01.

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

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

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

               "Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if the Delinquency Percentage exceeds 15.00%.

               "Trust Fund": Collectively, all of the assets of REMIC I, REMIC
II and REMIC III, the Reserve Fund, the Yield Maintenance Agreement and the
other assets conveyed by the Depositor to the Trustee pursuant to Section 2.01.

               "Trustee": U.S. Bank National Association, a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.

               "Trustee Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal the Trustee Fee Rate accrued for one month on the aggregate

                                      -40-

<PAGE>

Scheduled Principal Balance of the Mortgage Loans and any REO Properties as of
the second preceding Due Date (or, in the case of the initial Distribution Date,
as of the Cut-off Date), calculated on the basis of a 360-day year consisting of
twelve 30-day months.

               "Trustee Fee Rate":  0.0135% per annum.

               "Uncertificated Balance": The amount of any REMIC I Regular
Interest or REMIC II Regular Interest (other than REMIC II Regular Interest
II-LTIO) outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest and each REMIC II
Regular Interest (other than REMIC II Regular Interest II-LTIO) shall equal the
amount set forth in the Preliminary Statement hereto as its initial
uncertificated balance. On each Distribution Date, the Uncertificated Balance of
each REMIC I Regular Interest and each REMIC II Regular Interest (other than
REMIC II Regular Interest II-LTIO) shall be reduced by all distributions of
principal made on such REMIC I Regular Interest or such REMIC II Regular
Interest, as applicable, on such Distribution Date pursuant to Section 4.01 and,
if and to the extent necessary and appropriate, shall be further reduced on such
Distribution Date by Realized Losses as provided in Section 4.04. The
Uncertificated Balance of REMIC II Regular Interest II-LT6 shall be increased by
interest deferrals as provided in Section 4.01(a)(1)(A)(i) and Section
4.01(a)(1)(B)(i), respectively. The Uncertificated Balance of each REMIC I
Regular Interest and each REMIC II Regular Interest shall never be less than
zero.

               "Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. With respect to any REMIC II Regular Interest
for any Distribution Date, one month's interest at the REMIC II Remittance Rate
applicable to such REMIC II Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance or Uncertificated Notional Amount thereof
immediately prior to such Distribution Date. Uncertificated Interest in respect
of any REMIC I Regular Interest, REMIC II Regular Interest, shall accrue on the
basis of a 360-day year consisting of twelve 30-day months. Uncertificated
Interest with respect to each Distribution Date, as to any REMIC I Regular
Interest or REMIC II Regular Interest, shall be reduced by an amount equal to
the sum of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section 3.24
and (b) the aggregate amount of any Relief Act Interest Shortfall, if any
allocated, in each case, to such REMIC I Regular Interest or REMIC II Regular
Interest pursuant to Section 1.02. In addition, Uncertificated Interest with
respect to each Distribution Date, as to any REMIC I Regular Interest or REMIC
II Regular Interest shall be reduced by Realized Losses, if any, allocated to
such REMIC I Regular Interest or REMIC II Regular Interest pursuant to Section
1.02 and Section 4.04.

               "Uncertificated Notional Amount": With respect to REMIC II
Regular Interest II- LTIO, shall equal the Uncertificated Balance of REMIC I
Regular Interest I-LT2.

               "Underwriters' Exemption": An individual exemption issued by the
United States Department of Labor, Prohibited Transaction Exemption 91-23 (56
Fed. Reg. 15936, April 19, 1991), as amended, to Salomon Smith Barney Inc.
(formerly known as Smith Barney Inc.), for specific offerings in which Salomon
Smith Barney Inc. or any person directly or indirectly, through

                                      -41-

<PAGE>

one or more intermediaries, controlling, controlled by or under common control
with Salomon Smith Barney Inc. is an underwriter, placement agent or a manager
or co-manager of the underwriting syndicate or selling group where the trust and
the offered certificates meet specified conditions. The Underwriters' Exemption,
as amended, provides a partial exemption for transactions involving certificates
representing a beneficial interest in a trust and entitling the holder to
pass-through payments of principal, interest and/or other payments with respect
to the trust's assets.

               "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.

               "United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States, any state thereof or, District of Columbia
(except, in the case of a partnership, to the extent provided in regulations)
provided that, for purposes solely of the restrictions on the transfer of Class
R Certificates, no partnership or other entity treated as a partnership for
United States federal income tax purposes shall be treated as a United States
Person unless all persons that own an interest in such partnership either
directly or through any entity that is not a corporation for United States
federal income tax purposes are required by the applicable operative agreement
to be United States Persons or an estate whose income is subject to United
States federal income tax regardless of its source, or a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, which have not yet
been issued, a trust which was in existence on August 20, 1996 (other than a
trust treated as owned by the grantor under subpart E of part I of subchapter J
of chapter 1 of the Code), and which was treated as a United States person on
August 20, 1996 may elect to continue to be treated as a United States person
notwithstanding the previous sentence. The term "United States" shall have the
meaning set forth in Section 7701 of the Code.

               "Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as determined by an appraisal made for
the Originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of Fannie Mae and Freddie
Mac and (b) the value thereof as determined by a review appraisal conducted by
the Master Servicer (in its capacity as Originator) in accordance with the
Master Servicer's underwriting guidelines, and (ii) the purchase price paid for
the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan; provided, however, (A) in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the lesser of (1) the
value determined by an appraisal made for the Originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of Fannie Mae and Freddie Mac and (2)
the value thereof as determined by a review appraisal conducted by the Master
Servicer (in its capacity as Originator) in accordance with the Master
Servicer's underwriting guidelines, and (B) in the case of a Mortgage Loan
originated in connection with a "lease-option purchase," such value of the
Mortgaged Property is based on the lower of the value determined by an appraisal
made for the Originator of such Mortgage Loan at the time of origination or the
sale price of such Mortgaged Property if the "lease option purchase price" was
set less than 12 months prior to origination, and is based on the value

                                      -42-

<PAGE>

determined by an appraisal made for the Originator of such Mortgage Loan at the
time of origination if the "lease option purchase price" was set 12 months or
more prior to origination.

               "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. With respect to any date of
determination, 97% of all Voting Rights will be allocated among the holders of
the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated to the holders of the Class A-IO Certificates in proportion to the
then outstanding Notional Amount of their Certificates, 1% of all Voting Rights
will be allocated to the holders of the Class P Certificates and 1/3 of 1% of
all Voting Rights will be allocated among the holders of each Class of Residual
Certificates. The Voting Rights allocated to each Class of Certificate shall be
allocated among Holders of each such Class in accordance with their respective
Percentage Interests as of the most recent Record Date.

               "Weighted Average Expense Adjusted Mortgage Rate": The weighted
average of the Expense Adjusted Mortgage Rates on the then outstanding Mortgage
Loans, weighted based on their Scheduled Principal Balances as of the first day
of the calendar month preceding the month in which the Distribution Date occurs.

               "Yield Maintenance Agreement": The Yield Maintenance Agreement
between the Trustee and the counterparty thereunder, a form of which is attached
hereto as Exhibit L.

               SECTION 1.02.          Allocation of Certain Interest Shortfalls.

               For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A
Certificates, the Mezzanine Certificates, the Class A-IO Certificates and the
Class CE Certificates for any Distribution Date, (1) the aggregate amount of any
Prepayment Interest Shortfalls (to the extent not covered by payments by the
Master Servicer pursuant to Section 3.24) and any Relief Act Interest Shortfall
incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated first, among the Class CE Certificates on a PRO RATA basis based on,
and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Notional Amount of each such Certificate
and, thereafter, among the Class A Certificates, the Mezzanine Certificates and
the Class A-IO Certificates on a PRO RATA basis based on, and to the extent of,
one month's interest at the then applicable respective Pass-Through Rate on the
respective Certificate Principal Balance or Notional Amount, as applicable, of
each such Certificate and (2) the aggregate amount of any Realized Losses
incurred for any Distribution Date shall be allocated among the Class CE
Certificates on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective Pass- Through Rate on the respective
Notional Amount of each such Certificate.

               For purposes of calculating the amount of Uncertificated Interest
for the REMIC I Regular Interests for any Distribution Date, the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the Master Servicer pursuant to Section 3.24) and any Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated to Uncertificated Interest payable to the
REMIC I Regular Interests (other than REMIC I Regular Interest I-LTP) PRO RATA
based on, and to the extent of, one month's interest

                                      -43-

<PAGE>

at the then applicable respective Pass-Through Rate on the respective
Uncertificated Balance of each such REMIC I Regular Interest (other than REMIC I
Regular Interest I-LTP).

               For purposes of calculating the amount of Uncertificated Interest
for the REMIC II Regular Interests for any Distribution Date, the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the Master Servicer pursuant to Section 3.24) and any Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Interest payable
to REMIC II Regular Interest II-LT1 and REMIC II Regular Interest II-LT6 up to
an aggregate amount equal to the REMIC II Interest Loss Allocation Amount, 98%
and 2%, respectively, and thereafter among REMIC II Regular Interest II-LT1,
REMIC II Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II-LT4, REMIC II Regular Interest II-LT5 and REMIC II Regular
Interest II-LT6 PRO RATA based on, and to the extent of, one month's interest at
the then applicable respective Pass- Through Rate on the respective
Uncertificated Balance of each such REMIC II Regular Interest.

                                      -44-

<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

               SECTION 2.01.          Conveyance of the Mortgage Loans.

               The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse, for the benefit of the Certificateholders, all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan Purchase Agreement, and all other assets included or to be
included in REMIC I. Such assignment includes all interest and principal
received by the Depositor or the Master Servicer on or with respect to the
Mortgage Loans (other than payments of principal and interest due on such
Mortgage Loans on or before the Cut-off Date). The Depositor herewith delivers
to the Trustee an executed copy of the Mortgage Loan Purchase Agreement and the
PMI Policy.

               In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trustee the following documents or
instruments with respect to each Mortgage Loan so transferred and assigned (a
"Mortgage File"):

                     (i) the original Mortgage Note, endorsed in blank or in the
               following form: "Pay to the order of U.S. Bank National
               Association, as Trustee under the applicable agreement, without
               recourse," with all prior and intervening endorsements showing a
               complete chain of endorsement from the originator to the Person
               so endorsing to the Trustee;

                     (ii) the original Mortgage with evidence of recording
               thereon, and the original recorded power of attorney, if the
               Mortgage was executed pursuant to a power of attorney, with
               evidence of recording thereon;

                     (iii) an original Assignment in blank;

                     (iv) the original recorded Assignment or Assignments
               showing a complete chain of assignment from the originator to the
               Person assigning the Mortgage to the Trustee as contemplated by
               the immediately preceding clause (iii);

                     (v) the original or copies of each assumption,
               modification, written assurance or substitution agreement, if
               any; and

                     (vi) the original lender's title insurance policy, together
               with all endorsements or riders that were issued with or
               subsequent to the issuance of such policy, insuring the priority
               of the Mortgage as a first lien on the Mortgaged Property
               represented therein as a fee interest vested in the Mortgagor, or
               in the event such

                                      -45-

<PAGE>

               original title policy is unavailable, a written commitment or
               uniform binder or preliminary report of title issued by the title
               insurance or escrow company.

               The Trustee, at the expense of the Seller, shall promptly (within
sixty Business Days following the later of the Closing Date and the date of
receipt by the Trustee of the recording information for a Mortgage, but in no
event later than ninety days following the Closing Date) submit or cause to be
submitted for recording, at no expense to the Trust Fund, the Trustee or the
Depositor, in the appropriate public office for real property records, each
Assignment referred to in Sections 2.01(iii) and (iv) above and the Depositor
shall execute each original Assignment in the following form: "U.S. Bank
National Association, as Trustee under the applicable agreement." In the event
that any such Assignment is lost or returned unrecorded because of a defect
therein, the Seller shall promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded. If the Seller is
unable to pay the cost of recording the Assignments, such expense will be paid
by the Trustee and shall be reimbursable to the Trustee as an Extraordinary
Trust Fund Expense.

               With respect to a maximum of approximately 2.0% of the Original
Mortgage Loans, by outstanding principal balance of the Original Mortgage Loans
as of the Cut-off Date, if any original Mortgage Note referred to in Section
2.01(i) above cannot be located, the obligations of the Depositor to deliver
such documents shall be deemed to be satisfied upon delivery to the Trustee of a
photocopy of such Mortgage Note, if available, with a lost note affidavit
substantially in the form of Exhibit I attached hereto. If any of the original
Mortgage Notes for which a lost note affidavit was delivered to the Trustee is
subsequently located, such original Mortgage Note shall be delivered to the
Trustee within three Business Days. If any of the documents referred to in
Sections 2.01(ii), (iii) or (iv) above has, as of the Closing Date, been
submitted for recording but either (x) has not been returned from the applicable
public recording office or (y) has been lost or such public recording office has
retained the original of such document, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon (1) delivery to the
Trustee of a copy of each such document certified by the Originator in the case
of (x) above or the applicable public recording office in the case of (y) above
to be a true and complete copy of the original that was submitted for recording
and (2) if such copy is certified by the Originator, delivery to the Trustee
promptly upon receipt thereof of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original. Notice shall be provided to the Trustee and the Rating
Agencies by the Originator if delivery pursuant to clause (2) above will be made
more than 180 days after the Closing Date. If the original lender's title
insurance policy was not delivered pursuant to Section 2.01(vi) above, the
Depositor shall deliver or cause to be delivered to the Trustee, promptly after
receipt thereof, the original lender's title insurance policy. The Depositor
shall deliver or cause to be delivered to the Trustee promptly upon receipt
thereof any other original documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.

               All original documents relating to the Mortgage Loans that are
not delivered to the Trustee are and shall be held by or on behalf of the
Originator, the Seller, the Depositor or the Master Servicer, as the case may
be, in trust for the benefit of the Trustee on behalf of the Certificateholders.
In the event that any such original document is required pursuant to the terms
of this Section to be

                                      -46-

<PAGE>

a part of a Mortgage File, such document shall be delivered promptly to the
Trustee. Any such original document delivered to or held by the Depositor that
is not required pursuant to the terms of this Section to be a part of a Mortgage
File, shall be delivered promptly to the Master Servicer.

               The Depositor herewith delivers to the Trustee an executed copy
of the Mortgage Loan Purchase Agreement.

               The Depositor and the Master Servicer hereby direct the Trustee
to execute the Yield Maintenance Agreement and acknowledge that the Trustee is
not responsible for verifying the accuracy of the terms of the Yield Maintenance
Agreement.

               SECTION 2.02.          Acceptance of REMIC I by Trustee.

               The Trustee acknowledges receipt, subject to the provisions of
Section 2.01 and subject to any exceptions noted on the exception report
described in the next paragraph below, the documents referred to in Section 2.01
(other than such documents described in Section 2.01(v)) above and all other
assets included in the definition of "REMIC I" under clauses (i), (iii), (iv)
and (v) (to the extent of amounts deposited into the Distribution Account) and
declares that it holds and will hold such documents and the other documents
delivered to it constituting a Mortgage File, and that it holds or will hold all
such assets and such other assets included in the definition of "REMIC I" in
trust for the exclusive use and benefit of all present and future
Certificateholders.

               The Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File on or before the Closing Date and to certify in
substantially the form attached hereto as Exhibit C-1 that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in the exception report
annexed thereto as not being covered by such certification), (i) all documents
constituting part of such Mortgage File (other than such documents described in
Section 2.01(v)) required to be delivered to it pursuant to this Agreement are
in its possession, (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan and (iii) based on its
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i) through (iii), (vi),
(x)(A), (xi), (xii), (xv), (xvii), (xviii), (xx) through (xxiii) and (xxv) of
the definition of "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. It is herein acknowledged that, in conducting such
review, the Trustee was under no duty or obligation (i) to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine whether they are genuine, enforceable, or appropriate for the
represented purpose or whether they have actually been recorded or that they are
other than what they purport to be on their face or (ii) to determine whether
any Mortgage File should include any of the documents specified in clause (v) of
Section 2.01.

               Prior to the first anniversary date of this Agreement the Trustee
shall deliver to the Depositor and the Master Servicer a final certification in
the form annexed hereto as Exhibit C-2 evidencing the completeness of the
Mortgage Files, with any applicable exceptions noted thereon, and the Master
Servicer shall forward a copy thereof to any Sub-Servicer.

                                      -47-

<PAGE>

               If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
finds any document or documents constituting a part of a Mortgage File to be
missing or defective in any material respect, at the conclusion of its review
the Trustee shall so notify the Depositor and the Master Servicer. In addition,
upon the discovery by the Depositor, the Master Servicer or the Trustee of a
breach of any of the representations and warranties made by the Originator or
the Seller in the Mortgage Loan Purchase Agreement in respect of any Mortgage
Loan which materially adversely affects such Mortgage Loan or the interests of
the related Certificateholders in such Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties.

               The Trustee shall, at the written request and expense of any
Certificateholder, provide a written report to such Certificateholder of all
Mortgage Files released to the Master Servicer for servicing purposes.

               SECTION 2.03.          Repurchase or Substitution of Mortgage
                                      Loans by the Originator or the Seller.

               (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Originator or the Seller of any representation, warranty or
covenant under the Mortgage Loan Purchase Agreement in respect of any Mortgage
Loan that materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Trustee shall promptly notify
the Originator, the Seller and the Master Servicer of such defect, missing
document or breach and request that the Originator or the Seller, as the case
may be, deliver such missing document or cure such defect or breach within 60
days from the date the Originator or the Seller, as the case may be, was
notified of such missing document, defect or breach, and if the Originator or
the Seller, as the case may be, does not deliver such missing document or cure
such defect or breach in all material respects during such period, the Master
Servicer, to the extent it is not the Originator, the Seller or an Affiliate of
the Seller, and otherwise the Trustee, in accordance with Section 3.02(b), shall
enforce the obligations of the Originator or the Seller, as the case may be,
under the Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from
REMIC I at the Purchase Price within 90 days after the date on which the
Originator or the Seller, as the case may be, was notified (subject to Section
2.03(c)) of such missing document, defect or breach, if and to the extent that
the Originator or the Seller, as the case may be, is obligated to do so under
the Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account and the Trustee, upon
receipt of written certification from the Master Servicer of such deposit, shall
release to the Originator or the Seller, as the case may be, the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Originator or the
Seller, as the case may be, shall furnish to it and as shall be necessary to
vest in the Originator or the Seller, as the case may be, any Mortgage Loan
released pursuant hereto. The Trustee shall not have any further responsibility
with regard to such Mortgage File. In lieu of repurchasing any such Mortgage
Loan as provided above, if so provided in the Mortgage Loan Purchase Agreement,
the Originator or the Seller, as the case may be, may cause such Mortgage Loan
to be removed from REMIC I (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner and subject to the limitations set forth in Section 2.03(b). It is
understood and agreed that the obligation of the

                                      -48-

<PAGE>

Originator or the Seller, as the case may be, to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a material
defect in a constituent document exists or as to which such a breach has
occurred and is continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Trustee and the Certificateholders.

               (b) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the date which is two years after the Startup Day for REMIC I.

               As to any Deleted Mortgage Loan for which the Originator or the
Seller substitutes a Qualified Substitute Mortgage Loan or Loans, such
substitution shall be effected by the Originator or the Seller, as the case may
be, delivering to the Trustee, for such Qualified Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Shortfall Amount (as described below), if any,
in connection with such substitution. The Trustee shall acknowledge receipt for
such Qualified Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, review such documents as specified in Section 2.02 and deliver to
the Depositor and the Master Servicer, with respect to such Qualified Substitute
Mortgage Loan or Loans, a certification substantially in the form attached
hereto as Exhibit C-1, with any applicable exceptions noted thereon. Within one
year of the date of substitution, the Trustee shall deliver to the Depositor and
the Master Servicer a certification substantially in the form of Exhibit C-2
hereto with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of
REMIC I and will be retained by the Originator or the Seller, as the case may
be. For the month of substitution, distributions to Certificateholders will
reflect the Monthly Payment due on such Deleted Mortgage Loan on or before the
Due Date in the month of substitution, and the Originator or the Seller, as the
case may be, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Depositor shall give or
cause to be given written notice to the Certificateholders that such
substitution has taken place, shall amend the Mortgage Loan Schedule to reflect
the removal of such Deleted Mortgage Loan from the terms of this Agreement and
the substitution of the Qualified Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, such Qualified Substitute Mortgage Loan or Loans shall constitute
part of the Mortgage Pool and shall be subject in all respects to the terms of
this Agreement and the Mortgage Loan Purchase Agreement, including, all
applicable representations and warranties thereof included in the Mortgage Loan
Purchase Agreement.

               For any month in which the Originator or the Seller substitutes
one or more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage
Loans, the Master Servicer will determine the amount (the "Substitution
Shortfall Amount"), if any, by which the aggregate Purchase Price of all such
Deleted Mortgage Loans exceeds the aggregate of, as to each such Qualified
Substitute Mortgage Loan, the Scheduled Principal Balance thereof as of the date
of substitution, together with one month's interest on such Scheduled Principal
Balance at the applicable Net Mortgage Rate, plus all outstanding P&I Advances
and Servicing Advances (including

                                      -49-

<PAGE>

Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) related
thereto. On the date of such substitution, the Originator or the Seller, as the
case may be, will deliver or cause to be delivered to the Master Servicer for
deposit in the Collection Account an amount equal to the Substitution Shortfall
Amount, if any, and the Trustee, upon receipt of the related Qualified
Substitute Mortgage Loan or Loans and certification by the Master Servicer of
such deposit, shall release to the Originator or the Seller, as the case may be,
the related Mortgage File or Files and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, the
Originator or the Seller, as the case may be, shall deliver to it and as shall
be necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.

               In addition, the Originator or the Seller, as the case may be,
shall obtain at its own expense and deliver to the Trustee an Opinion of Counsel
to the effect that such substitution will not cause (a) any federal tax to be
imposed on any of REMIC I, REMIC II or REMIC III, including without limitation,
any federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of
the Code or on "contributions after the startup date" under Section 860G(d)(1)
of the Code, or (b) any of REMIC I, REMIC II or REMIC III to fail to qualify as
a REMIC at any time that any Certificate is outstanding.

               (c) Upon discovery by the Depositor, the Originator, the Seller,
the Master Servicer or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code, the
party discovering such fact shall within two Business Days give written notice
thereof to the other parties. In connection therewith, the Originator, the
Seller or the Depositor shall repurchase or, subject to the limitations set
forth in Section 2.03(b), substitute one or more Qualified Substitute Mortgage
Loans for the affected Mortgage Loan within 90 days of the earlier of discovery
or receipt of such notice with respect to such affected Mortgage Loan. Such
repurchase or substitution shall be made by (i) the Originator or the Seller, as
the case may be, if the affected Mortgage Loan's status as a non-qualified
mortgage is or results from a breach of any representation, warranty or covenant
made by the Originator or the Seller, as the case may be, under the Mortgage
Loan Purchase Agreement, or (ii) the Depositor, if the affected Mortgage Loan's
status as a non-qualified mortgage is a breach of no representation or warranty.
Any such repurchase or substitution shall be made in the same manner as set
forth in Section 2.03(a). The Trustee shall reconvey to the Depositor, the
Originator or the Seller, as the case may be, the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty.

               SECTION 2.04.          Reserved

               SECTION 2.05.          Representations, Warranties and Covenants
                                      of the Master Servicer.

               The Master Servicer hereby represents, warrants and covenants to
the Trustee, for the benefit of the Certificateholders and to the Depositor that
as of the Closing Date or as of such date specifically provided herein:

                                      -50-

<PAGE>

                     (i) The Master Servicer is a federally chartered savings
               bank duly organized and validly existing under the laws of the
               United States and is duly authorized and qualified to transact
               any and all business contemplated by this Agreement to be
               conducted by the Master Servicer in any state in which a
               Mortgaged Property is located or is otherwise not required under
               applicable law to effect such qualification and, in any event, is
               in compliance with the doing business laws of any such State, to
               the extent necessary to ensure its ability to enforce each
               Mortgage Loan and to service the Mortgage Loans in accordance
               with the terms of this Agreement;

                    (ii) The Master Servicer has the full power and authority to
               conduct its business as presently conducted by it and to execute,
               deliver and perform, and to enter into and consummate, all
               transactions contemplated by this Agreement. The Master Servicer
               has duly authorized the execution, delivery and performance of
               this Agreement, has duly executed and delivered this Agreement,
               and this Agreement, assuming due authorization, execution and
               delivery by the Depositor and the Trustee, constitutes a legal,
               valid and binding obligation of the Master Servicer, enforceable
               against it in accordance with its terms except as the
               enforceability thereof may be limited by bankruptcy, insolvency,
               reorganization or similar laws affecting the enforcement of
               creditors' rights generally and by general principles of equity;

                   (iii) The execution and delivery of this Agreement by the
               Master Servicer, the servicing of the Mortgage Loans by the
               Master Servicer hereunder, the consummation by the Master
               Servicer of any other of the transactions herein contemplated,
               and the fulfillment of or compliance with the terms hereof are in
               the ordinary course of business of the Master Servicer and will
               not (A) result in a breach of any term or provision of the
               charter or by-laws of the Master Servicer or (B) conflict with,
               result in a breach, violation or acceleration of, or result in a
               default under, the terms of any other material agreement or
               instrument to which the Master Servicer is a party or by which it
               may be bound, or any statute, order or regulation applicable to
               the Master Servicer of any court, regulatory body, administrative
               agency or governmental body having jurisdiction over the Master
               Servicer; and the Master Servicer is not a party to, bound by, or
               in breach or violation of any indenture or other agreement or
               instrument, or subject to or in violation of any statute, order
               or regulation of any court, regulatory body, administrative
               agency or governmental body having jurisdiction over it, which
               materially and adversely affects or, to the Master Servicer's
               knowledge, would in the future materially and adversely affect,
               (x) the ability of the Master Servicer to perform its obligations
               under this Agreement or (y) the business, operations, financial
               condition, properties or assets of the Master Servicer taken as a
               whole;

                    (iv) The Master Servicer is a HUD approved servicer. No
               event has occurred, including but not limited to a change in
               insurance coverage, that would make the Master Servicer unable to
               comply with HUD eligibility requirements or that would require
               notification to HUD;

                                      -51-

<PAGE>

                     (v) The Master Servicer does not believe, nor does it have
               any reason or cause to believe, that it cannot perform each and
               every covenant made by it and contained in this Agreement;

                    (vi)      [Reserved];

                   (vii) No litigation is pending against the Master Servicer
               that would materially and adversely affect the execution,
               delivery or enforceability of this Agreement or the ability of
               the Master Servicer to service the Mortgage Loans or to perform
               any of its other obligations hereunder in accordance with the
               terms hereof;

                  (viii) There are no actions or proceedings against, or
               investigations known to it of, the Master Servicer before any
               court, administrative or other tribunal (A) that might prohibit
               its entering into this Agreement, (B) seeking to prevent the
               consummation of the transactions contemplated by this Agreement
               or (C) that might prohibit or materially and adversely affect the
               performance by the Master Servicer of its obligations under, or
               validity or enforceability of, this Agreement;

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

                     (x) The Master Servicer will not waive any Prepayment
               Charge unless it is waived in accordance with the standard set
               forth in Section 3.01; and

               It is understood and agreed that the representations, warranties
and covenants set forth in this Section 2.05 shall survive delivery of the
Mortgage Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Master Servicer or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which materially and adversely affects
the value of any Mortgage Loan or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the Trustee. Subject to Section 7.01, unless such breach shall not be
susceptible of cure within 90 days, the obligation of the Master Servicer set
forth in this Section 2.05 to cure breaches shall constitute the sole remedy
against the Master Servicer available to the Certificateholders, the Depositor
and the Trustee on behalf of the Certificateholders respecting a breach of the
representations, warranties and covenants contained in this Section 2.05.
Notwithstanding the foregoing, within 90 days of the earlier of discovery by the
Master Servicer or receipt of notice by the Master Servicer of the breach of the
representation or covenant of the Master Servicer set forth in Section 2.05(x)
above, which breach materially and adversely affects the interests of the
Holders of the Class P Certificates in any Prepayment Charge, the Master
Servicer must pay the amount of such waived Prepayment Charge, for the benefit
of the holders of the Class P Certificates, by depositing such amount into the
Collection Account.

                                      -52-

<PAGE>

               SECTION 2.06.          Issuance of the REMIC I Regular Interests
                                      and the Class R-I Certificates.

               The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it of the Mortgage Files, subject to the provisions of
Section 2.01 and Section 2.02, together with the assignment to it of all other
assets included in REMIC I, the receipt of which is hereby acknowledged.
Concurrently with such assignment and delivery and in exchange therefor, the
Trustee, pursuant to the written request of the Depositor executed by an officer
of the Depositor, has executed, authenticated and delivered to or upon the order
of the Depositor, the Class R-I Certificates in authorized denominations. The
interests evidenced by the Class R-I Certificates, together with the REMIC I
Regular Interests, constitute the entire beneficial ownership interest in REMIC
I. The rights of the Class R-I Certificateholders and REMIC II (as holder of the
REMIC I Regular Interests) to receive distributions from the proceeds of REMIC I
in respect of the Class R-I Certificates and the REMIC I Regular Interests,
respectively, and all ownership interests evidenced or constituted by the Class
R-I Certificates and the REMIC I Regular Interests, shall be as set forth in
this Agreement.

               SECTION 2.07.          Conveyance of the REMIC I Regular
                                      Interests; Acceptance of REMIC II by the
                                      Trustee.

               The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II
Certificateholders and REMIC II (as holder of the REMIC I Regular Interests).
The Trustee acknowledges receipt of the REMIC I Regular Interests and declares
that it holds and will hold the same in trust for the exclusive use and benefit
of all present and future Class R-II Certificateholders and REMIC II (as holder
of the REMIC I Regular Interests). The rights of the Class R-II
Certificateholders and REMIC II (as holder of the REMIC I Regular Interests) to
receive distributions from the proceeds of REMIC II in respect of the Class R-II
Certificates and REMIC II Regular Interests, respectively, and all ownership
interests evidenced or constituted by the Class R-II Certificates and the REMIC
II Regular Interests, shall be as set forth in this Agreement.

               SECTION 2.08.          Issuance of Class R-II Certificates.

               The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the Class R-II Certificates in authorized denominations. The
interests evidenced by the Class R-II Certificates, together with the REMIC II
Regular Interests, constitute the entire beneficial ownership interest in REMIC
II.

               SECTION 2.09.          Conveyance of the REMIC II Regular
                                      Interests; Acceptance of REMIC III by the
                                      Trustee.

                                      -53-

<PAGE>

               The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests for the benefit of the Class R-III
Certificateholders and REMIC III (as holder of the REMIC II Regular Interests).
The Trustee acknowledges receipt of the REMIC II Regular Interests and declares
that it holds and will hold the same in trust for the exclusive use and benefit
of all present and future Class R-III Certificateholders and REMIC III (as
holder of the REMIC II Regular Interests). The rights of the Class R-III
Certificateholders and REMIC III (as holder of the REMIC II Regular Interests)
to receive distributions from the proceeds of REMIC III in respect of the Class
R-III Certificates and REMIC III Regular Interests, respectively, and all
ownership interests evidenced or constituted by the Class R-III Certificates and
the REMIC III Regular Interests, shall be as set forth in this Agreement.

               SECTION 2.10.          Issuance of Class R-III Certificates.

               The Trustee acknowledges the assignment to it of the REMIC II
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the Class R-III Certificates in authorized denominations. The
interests evidenced by the Class R-III Certificates, together with the REMIC III
Regular Interests, constitute the entire beneficial ownership interest in REMIC
III.

                                      -54-

<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                              OF THE MORTGAGE LOANS

               SECTION 3.01.          Master Servicer to Act as Master Servicer.

               The Master Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and in the best interests of and for the benefit
of the Certificateholders (as determined by the Master Servicer in its
reasonable judgment) in accordance with the terms of this Agreement and the
respective Mortgage Loans and, to the extent consistent with such terms, in the
same manner in which it services and administers similar mortgage loans for its
own portfolio, giving due consideration to customary and usual standards of
practice of mortgage lenders and loan servicers administering similar mortgage
loans but without regard to:

                     (i) any relationship that the Master Servicer, any
               Sub-Servicer or any Affiliate of the Master Servicer or any
               Sub-Servicer may have with the related Mortgagor;

                     (ii) the ownership or non-ownership of any Certificate by
               the Master Servicer or any Affiliate of the Master Servicer;

                     (iii) the Master Servicer's obligation to make P&I Advances
               or Servicing Advances; or

                    (iv) the Master Servicer's or any Sub-Servicer's right to
               receive compensation for its services hereunder or with respect
               to any particular transaction.

               To the extent consistent with the foregoing, the Master Servicer
(a) shall seek to maximize the timely and complete recovery of principal and
interest on the Mortgage Notes and (b) shall waive (or permit a subservicer to
waive) a Prepayment Charge only under the following circumstances: (i) such
waiver is standard and customary in servicing similar Mortgage Loans and (ii)
either (A) such waiver would, in the reasonable judgement of the Master
Servicer, maximize recovery of total proceeds taking into account the value of
such Prepayment Charge and the related Mortgage Loan and, if such waiver is made
in connection with a refinancing of the related Mortgage Loan, such refinancing
is related to a default or a reasonably foreseeable default or (B) such waiver
is made in connection with a refinancing of the related Mortgage Loan unrelated
to a default or a reasonably foreseeable default where (x) the related mortgagor
has stated to the Master Servicer or an applicable subservicer an intention to
refinance the related Mortgage Loan and (y) the Master Servicer has concluded in
its reasonable judgement that the waiver of such Prepayment Charge would induce
such mortgagor to refinance with the Master Servicer or (iii) collection of the
related Prepayment Charge would violate applicable law. If a Prepayment Charge
is waived as permitted by meeting both of the standards described in clauses (i)
and (ii)(B) above, then the Master Servicer is required to pay the amount of
such waived Prepayment Charge, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account together
with and at the time that the amount prepaid on the related Mortgage Loan is
required to be deposited into the

                                      -55-

<PAGE>

Collection Account. Notwithstanding any other provisions of this Agreement, any
payments made by the Master Servicer in respect of any waived Prepayment Charges
pursuant to clauses (i) and (ii)(B) shall be deemed to be paid outside of the
Trust Fund. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Master
Servicer shall have full power and authority, acting alone or through
Sub-Servicers as provided in Section 3.02, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Master Servicer in its own name or in the name of a Sub-Servicer is hereby
authorized and empowered by the Trustee when the Master Servicer believes it
appropriate in its best judgment in accordance with the servicing standards set
forth above, to execute and deliver, on behalf of the Certificateholders and the
Trustee, and upon notice to the Trustee any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans and the Mortgaged
Properties and to institute foreclosure proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and to hold or
cause to be held title to such properties, on behalf of the Trustee and
Certificateholders. The Master Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Master Servicer shall also comply in the performance of this Agreement with
all reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.17, the Trustee shall execute, at the
written request of the Master Servicer, and furnish to the Master Servicer and
any Sub-Servicer any special or limited powers of attorney and other documents
necessary or appropriate to enable the Master Servicer or any Sub-Servicer to
carry out their servicing and administrative duties hereunder and the Trustee
shall not be liable for the actions of the Master Servicer or any Sub-Servicers
under such powers of attorney.

               Subject to Section 3.09 hereof, in accordance with the standards
of the preceding paragraph, the Master Servicer shall advance or cause to be
advanced funds as necessary for the purpose of effecting the timely payment of
taxes and assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.09, and further as provided in Section
3.11. Any cost incurred by the Master Servicer or by Sub-Servicers in effecting
the timely payment of taxes and assessments on a Mortgaged Property shall not,
for the purpose of calculating distributions to Certificateholders, be added to
the unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.

               Notwithstanding anything in this Agreement to the contrary, the
Master Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.03) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or Treasury regulations promulgated thereunder) and (B) cause any of REMIC I,
REMIC II or REMIC III to fail

                                      -56-

<PAGE>

to qualify as a REMIC under the Code or the imposition of any tax on "prohibited
transactions" or "contributions after the startup date" under the REMIC
Provisions.

               The Master Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Master
Servicer from the responsibilities or liabilities arising under this Agreement.

               SECTION 3.02.          Sub-Servicing Agreements Between Master
                                      Servicer and Sub- Servicers.

               (a) The Master Servicer may enter into Sub-Servicing Agreements
with Sub- Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the rating on any Class of Certificates. The
Trustee is hereby authorized to acknowledge, at the request of the Master
Servicer, any Sub-Servicing Agreement that meets the requirements applicable to
Sub- Servicing Agreements set forth in this Agreement and that is otherwise
permitted under this Agreement.

               Each Sub-Servicer shall be (i) authorized to transact business in
the state or states where the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub- Servicing
Agreement and (ii) a Freddie Mac or Fannie Mae approved mortgage servicer. Each
Sub- Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Master Servicer
will examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Master Servicer and the
Sub-Servicers may enter into and make amendments to the Sub-Servicing Agreements
or enter into different forms of Sub- Servicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Certificateholders without the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights; provided, further, that the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights shall not be required (i) to cure
any ambiguity or defect in a Sub-Servicing Agreement, (ii) to correct, modify or
supplement any provisions of a Sub-Servicing Agreement, or (iii) to make any
other provisions with respect to matters or questions arising under a
Sub-Servicing Agreement, which, in each case, shall not be inconsistent with the
provisions of this Agreement. Any variation without the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights from the
provisions set forth in Section 3.08 relating to insurance or priority
requirements of Sub-Servicing Accounts, or credits and charges to the
Sub-Servicing Accounts or the timing and amount of remittances by the
Sub-Servicers to the Master Servicer, are conclusively deemed to be inconsistent
with this Agreement and therefore prohibited. The Master Servicer shall deliver
to the Trustee copies of all Sub-Servicing Agreements, and any amendments or
modifications thereof, promptly upon the Master Servicer's execution and
delivery of such instruments.

                                      -57-

<PAGE>

               (b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement and of the Originator and the Seller under the Mortgage Loan Purchase
Agreement, including, without limitation, any obligation of a Sub-Servicer to
make advances in respect of delinquent payments as required by a Sub-Servicing
Agreement, or any obligation of the Originator or the Seller to purchase a
Mortgage Loan on account of missing or defective documentation or on account of
a breach of a representation, warranty or covenant, as described in Section
2.03(a). Such enforcement, including, without limitation, the legal prosecution
of claims, termination of Sub-Servicing Agreements, and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent
and at such time as the Master Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Master
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans, or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Enforcement of the Mortgage Loan Purchase Agreement
against the Seller and the Originator shall be effected by the Master Servicer
to the extent it is not the Originator, the Seller or an Affiliate of the
Seller, and otherwise by the Trustee in accordance with the foregoing provisions
of this paragraph.

               SECTION 3.03.          Successor Sub-Servicers.

               The Master Servicer shall be entitled to terminate any
Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer
pursuant to any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement. In the event of termination of any
Sub-Servicer, all servicing obligations of such Sub-Servicer shall be assumed
simultaneously by the Master Servicer without any act or deed on the part of
such Sub-Servicer or the Master Servicer, and the Master Servicer either shall
service directly the related Mortgage Loans or shall enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02.

               Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee (if the Trustee is acting
as Master Servicer) without fee, in accordance with the terms of this Agreement,
in the event that the Master Servicer (or the Trustee, if it is then acting as
Master Servicer) shall, for any reason, no longer be the Master Servicer
(including termination due to a Master Servicer Event of Default).

               SECTION 3.04.          Liability of the Master Servicer.

               Notwithstanding any Sub-Servicing Agreement or the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub-Servicer or reference to actions taken through a Sub-Servicer
or otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Sub-Servicing
Agreements or arrangements or by virtue of indemnification from the Sub-Servicer
and to the same extent and under the same terms and

                                      -58-

<PAGE>

conditions as if the Master Servicer alone were servicing and administering the
Mortgage Loans. The Master Servicer shall be entitled to enter into any
agreement with a Sub-Servicer for indemnification of the Master Servicer by such
Sub-Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.

               SECTION 3.05.          No Contractual Relationship Between
                                      Sub-Servicers and the Trustee or
                                      Certificateholders.

               Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Master Servicer alone, and the Trustee or the Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer except as set forth in Section
3.06. The Master Servicer shall be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Master Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.

               SECTION 3.06.          Assumption or Termination of Sub-Servicing
                                      Agreements by Trustee.

               In the event the Master Servicer shall for any reason no longer
be the master servicer (including by reason of the occurrence of a Master
Servicer Event of Default), the Trustee or its designee shall thereupon assume
all of the rights and obligations of the Master Servicer under each
Sub-Servicing Agreement that the Master Servicer may have entered into, unless
the Trustee elects to terminate any Sub-Servicing Agreement in accordance with
its terms as provided in Section 3.03. Upon such assumption, the Trustee, its
designee or the successor servicer for the Trustee appointed pursuant to Section
7.02 shall be deemed, subject to Section 3.03, to have assumed all of the Master
Servicer's interest therein and to have replaced the Master Servicer as a party
to each Sub-Servicing Agreement to the same extent as if each Sub-Servicing
Agreement had been assigned to the assuming party, except that (i) the Master
Servicer shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Master Servicer
and (ii) none of the Trustee, its designee or any successor Master Servicer
shall be deemed to have assumed any liability or obligation of the Master
Servicer that arose before it ceased to be the Master Servicer.

               The Master Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the Sub-
Servicing Agreements to the assuming party.

               SECTION 3.07.          Collection of Certain Mortgage Loan
                                      Payments.

               The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to

                                      -59-

<PAGE>

the Mortgage Loans and held for its own account. Consistent with the foregoing,
the Master Servicer may in its discretion (i) waive any late payment charge or,
if applicable, any penalty interest, or (ii) extend the due dates for the
Monthly Payments due on a Mortgage Note for a period of not greater than 180
days; provided, however, that any extension pursuant to clause (ii) above shall
not affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Master Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.03
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangement. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Master Servicer, such default is reasonably foreseeable, the Master
Servicer, consistent with the standards set forth in Section 3.01, may also
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan (such payment, a "Short Pay-
off"), or consent to the postponement of strict compliance with any such term or
otherwise grant indulgence to any Mortgagor.

               SECTION 3.08.          Sub-Servicing Accounts.

               In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub- Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Master Servicer for deposit in the Collection Account not later
than two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Master Servicer shall be deemed to
have received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.

               SECTION 3.09.          Collection of Taxes, Assessments and
                                      Similar Items; Servicing Accounts.

               The Master Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts"),
into which all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments") shall
be deposited and retained. Servicing Accounts shall be Eligible Accounts. The
Master Servicer shall deposit in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily

                                      -60-

<PAGE>

basis, and in no event more than one Business Day after the Master Servicer's
receipt thereof, all Escrow Payments collected on account of the Mortgage Loans
and shall thereafter deposit such Escrow Payments in the Servicing Accounts, in
no event more than two Business Days after the receipt of such Escrow Payments,
all Escrow Payments collected on account of the Mortgage Loans for the purpose
of effecting the timely payment of any such items as required under the terms of
this Agreement. Withdrawals of amounts from a Servicing Account may be made only
to (i) effect timely payment of taxes, assessments, hazard insurance premiums,
and comparable items; (ii) reimburse the Master Servicer (or a Sub-Servicer to
the extent provided in the related Sub-Servicing Agreement) out of related
collections for any advances made pursuant to Section 3.01 (with respect to
taxes and assessments) and Section 3.14 (with respect to hazard insurance);
(iii) refund to Mortgagors any sums as may be determined to be overages; (iv)
pay interest, if required and as described below, to Mortgagors on balances in
the Servicing Account; or (v) clear and terminate the Servicing Account at the
termination of the Master Servicer's obligations and responsibilities in respect
of the Mortgage Loans under this Agreement in accordance with Article IX. As
part of its servicing duties, the Master Servicer or Sub-Servicers shall pay to
the Mortgagors interest on funds in the Servicing Accounts, to the extent
required by law and, to the extent that interest earned on funds in the
Servicing Accounts is insufficient, to pay such interest from its or their own
funds, without any reimbursement therefor.

               SECTION 3.10.          Collection Account, Distribution Account
                                      and Reserve Fund.

               (a) On behalf of the Trust Fund, the Master Servicer shall
establish and maintain, or cause to be established and maintained, one or more
accounts (such account or accounts, the "Collection Account"), held in trust for
the benefit of the Trustee and the Certificateholders. On behalf of the Trust
Fund, the Master Servicer shall deposit or cause to be deposited in the clearing
account in which it customarily deposits payments and collections on mortgage
loans in connection with its mortgage loan servicing activities on a daily
basis, and in no event more than one Business Day after the Master Servicer's
receipt thereof, and shall thereafter deposit in the Collection Account, in no
event more than two Business Days after the Master Servicer's receipt thereof,
as and when received or as otherwise required hereunder, the following payments
and collections received or made by it subsequent to the Cut-off Date (other
than in respect of principal or interest on the related Mortgage Loans due on or
before the Cut-off Date), or payments (other than Principal Prepayments)
received by it on or prior to the Cut-off Date but allocable to a Due Period
subsequent thereto:

                     (i) all payments on account of principal, including
               Principal Prepayments, on the Mortgage Loans;

                     (ii) all payments on account of interest (net of the
               related Servicing Fee) on each Mortgage Loan;

                     (iii) all Insurance Proceeds and Liquidation Proceeds
               (other than proceeds collected in respect of any particular REO
               Property and amounts paid in connection with a purchase of
               Mortgage Loans and REO Properties pursuant to Section 9.01);

                                      -61-

<PAGE>

                    (iv) any amounts required to be deposited pursuant to
               Section 3.12 in connection with any losses realized on Permitted
               Investments with respect to funds held in the Collection Account;

                     (v) any amounts required to be deposited by the Master
               Servicer pursuant to the second paragraph of Section 3.14(a) in
               respect of any blanket policy deductibles;

                     (vi) all proceeds of any Mortgage Loan repurchased or
               purchased in accordance with Section 2.03 or Section 9.01;

                     (vii) all amounts required to be deposited in connection
               with shortfalls in principal amount of Qualified Substitute
               Mortgage Loans pursuant to Section 2.03;

                     (viii) all Prepayment Charges collected by the Master
               Servicer in connection with the Principal Prepayment of any of
               the Mortgage Loans; and

                     (ix) without duplication, all payments of claims received
               by the Master Servicer under the PMI Policy.

               The foregoing requirements for deposit in the Collection Accounts
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
modification or assumption fees, or insufficient funds charges need not be
deposited by the Master Servicer in the Collection Account and may be retained
by the Master Servicer as additional compensation. In the event the Master
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.

               (b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Trustee and the
Certificateholders. On behalf of the Trust Fund, the Master Servicer shall
deliver to the Trustee in immediately available funds for deposit in the
Distribution Account by 3:00 p.m. New York time (i) on the Master Servicer
Remittance Date, that portion of the Available Distribution Amount (calculated
without regard to the references in clause (2) of the definition thereof to
amounts that may be withdrawn from the Distribution Account) for the related
Distribution Date then on deposit in the Collection Account and the amount of
all Prepayment Charges collected by the Master Servicer in connection with the
Principal Prepayment of any of the Mortgage Loans then on deposit in the
Collection Account and the amount of any funds reimbursable to an Advancing
Person pursuant to Section 3.26 and (ii) on each Business Day as of the
commencement of which the balance on deposit in the Collection Account exceeds
$75,000 following any withdrawals pursuant to the next succeeding sentence, the
amount of such excess, but only if the Collection Account constitutes an
Eligible Account solely pursuant to clause (ii) of the definition of "Eligible
Account." If the balance on deposit in the Collection Account exceeds $75,000 as
of the commencement of business on any Business Day and the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account," the Master Servicer shall, by 3:00 p.m. New York time on
such Business Day, withdraw from the

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Collection Account any and all amounts payable or reimbursable to the Depositor,
the Master Servicer, the Trustee, the Originator, the Seller or any Sub-Servicer
pursuant to Section 3.11 and shall pay such amounts to the Persons entitled
thereto.

               (c) Funds in the Collection Account, the Distribution Account and
the Reserve Fund may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.12. The Master Servicer shall give notice to
the Trustee of the location of the Collection Account maintained by it when
established and prior to any change thereof. The Trustee shall give notice to
the Master Servicer and the Depositor of the location of the Distribution
Account and the Reserve Fund when established and prior to any change thereof.

               (d) Funds held in the Collection Account at any time may be
delivered by the Master Servicer to the Trustee for deposit in an account (which
may be the Distribution Account and must satisfy the standards for the
Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection
Account; provided, however, that the Trustee shall have the sole authority to
withdraw any funds held pursuant to this subsection (d). In the event the Master
Servicer shall deliver to the Trustee for deposit in the Distribution Account
any amount not required to be deposited therein, it may at any time request that
the Trustee withdraw such amount from the Distribution Account and remit to it
any such amount, any provision herein to the contrary notwithstanding. In
addition, the Master Servicer shall deliver to the Trustee from time to time for
deposit, and the Trustee shall so deposit, in the Distribution Account:

                     (i) any P&I Advances, as required pursuant to Section 4.03;

                     (ii) any amounts required to be deposited pursuant to
               Section 3.23(d) or (f) in connection with any REO Property;

                     (iii) any amounts to be paid in connection with a purchase
               of Mortgage Loans and REO Properties pursuant to Section 9.01;

                     (iv) any amounts required to be deposited pursuant to
               Section 3.24 in connection with any Prepayment Interest
               Shortfall; and

                     (v) any Stayed Funds, as soon as permitted by the federal
               bankruptcy court having jurisdiction in such matters.

               (e) Promptly upon receipt of any Stayed Funds, whether from the
Master Servicer, a trustee in bankruptcy, federal bankruptcy court or other
source, the Trustee shall deposit such funds in the Distribution Account,
subject to withdrawal thereof pursuant to Section 7.02(b) or as otherwise
permitted hereunder.

               (f) The Master Servicer shall deposit in the Collection Account
or Distribution Account, as the case may be, any amounts required to be
deposited pursuant to Section 3.12(b) in connection with losses realized on
Permitted Investments with respect to funds held in the Collection Account or
Distribution Account, respectively.

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<PAGE>

               (g) On behalf of the Trust Fund, the Trustee shall establish and
maintain the Reserve Fund, held in trust for the benefit of Certificateholders.
On the Closing Date, the Depositor shall remit or cause to be remitted to the
Trustee, for deposit in the Reserve Fund, and the Trustee shall deposit
$1,200,948.04, to the extent received by it, into the Reserve Fund. The Reserve
Fund shall be treated as an "outside reserve fund" under applicable Treasury
regulations and shall not be part of any REMIC. Any investment earnings on funds
in the Reserve Fund shall be treated as owned by the Master Servicer and will be
taxable to the Master Servicer. The Trustee shall be required to withdraw such
earnings from the Reserve Fund and remit the same to the Master Servicer on the
first Distribution Date (or as soon as received if such funds are not available
on such Distribution Date), and shall thereupon terminate such account.

               SECTION 3.11.          Withdrawals from the Collection Account
                                      and Distribution Account.

               (a) The Master Servicer shall, from time to time, make
withdrawals from the Collection Account for any of the following purposes or as
described in Section 4.03:

                     (i) to remit to the Trustee for deposit in the Distribution
               Account the amounts required to be so remitted pursuant to
               Section 3.10(b) or permitted to be so remitted pursuant to the
               first sentence of Section 3.10(d);

                    (ii) subject to Section 3.16(d), to reimburse the Master
               Servicer for P&I Advances, but only to the extent of amounts
               received which represent Late Collections (net of the related
               Servicing Fees) of Monthly Payments on Mortgage Loans with
               respect to which such P&I Advances were made in accordance with
               the provisions of Section 4.03;

                   (iii) subject to Section 3.16(d), to pay the Master Servicer
               or any Sub- Servicer (a) any unpaid Servicing Fees, (b) any
               unreimbursed Servicing Advances with respect to each Mortgage
               Loan, but only to the extent of any Late Collections, Liquidation
               Proceeds and Insurance Proceeds received with respect to such
               Mortgage Loan and (c) any Nonrecoverable Servicing Advances with
               respect to the final liquidation of a Mortgage Loan, but only to
               the extent that Late Collections, Liquidation Proceeds and
               Insurance Proceeds received with respect to such Mortgage Loan
               are insufficient to reimburse the Master Servicer or any
               Sub-Servicer for Servicing Advances;

                    (iv) to pay to the Master Servicer as servicing compensation
               (in addition to the Servicing Fee) on the Master Servicer
               Remittance Date any interest or investment income earned on funds
               deposited in the Collection Account;

                     (v) to pay to the Master Servicer, the Depositor, the
               Originator or the Seller, as the case may be, with respect to
               each Mortgage Loan that has previously been purchased or replaced
               pursuant to Section 2.03 or Section 3.16(c) all amounts received
               thereon subsequent to the date of purchase or substitution, as
               the case may be;

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<PAGE>

                    (vi) to reimburse the Master Servicer for any P&I Advance
               previously made which the Master Servicer has determined to be a
               Nonrecoverable P&I Advance in accordance with the provisions of
               Section 4.03;

                     (vii) to reimburse the Master Servicer or the Depositor for
               expenses incurred by or reimbursable to the Master Servicer or
               the Depositor, as the case may be, pursuant to Section 6.03;

                     (viii) to reimburse the Master Servicer or the Trustee, as
               the case may be, for expenses reasonably incurred in connection
               with any breach or defect giving rise to the purchase obligation
               under Section 2.03 of this Agreement, including any expenses
               arising out of the enforcement of the purchase obligation;

                    (ix) to pay, or to reimburse the Master Servicer for
               Servicing Advances in respect of, expenses incurred in connection
               with any Mortgage Loan pursuant to Section 3.16(b); and

                     (x) to clear and terminate the Collection Account pursuant
               to Section 9.01.

        The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi), (viii) and (ix) above.
The Master Servicer shall provide written notification to the Trustee on or
prior to the next succeeding Master Servicer Remittance Date, upon making any
withdrawals from the Collection Account pursuant to subclauses (vi) and (vii)
above; provided that an Officer's Certificate in the form described under
Section 4.03(d) shall suffice for such written notification to the Trustee
respect of clause (vi) hereof.

               (b) The Trustee shall, from time to time, make withdrawals from
the Distribution Account, for any of the following purposes, without priority:

                     (i) to make distributions to Certificateholders in
               accordance with Section 4.01;

                     (ii) to pay to itself amounts to which each is entitled
               pursuant to Section 8.05 or for Extraordinary Trust Fund
               Expenses;

                     (iii) to pay to the Master Servicer on each Distribution
               Date as servicing compensation any interest or investment income
               earned on funds deposited in the Distribution Account pursuant to
               Section 3.12(b);

                     (iv) to reimburse itself pursuant to Section 7.02;

                     (v) to pay any amounts in respect of taxes pursuant to
               Section 10.01(g)(iii);

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<PAGE>

                     (vi) to pay to an Advancing Person reimbursements for P&I
               Advances and/or Servicing Advances pursuant to Section 3.26;

                     (vii) to clear and terminate the Distribution Account
               pursuant to Section 9.01; and

                     (vii) to pay the PMI Insurer the PMI Insurer Fee based on
               information received from the Master Servicer.

               SECTION 3.12.          Investment of Funds in the Collection
                                      Account and the Distribution Account.

               (a) The Master Servicer may direct any depository institution
maintaining the Collection Account, the Distribution Account and the Reserve
Fund (each, for purposes of this Section 3.12, an "Investment Account") to
invest the funds in such Investment Account in one or more Permitted Investments
bearing interest or sold at a discount, and maturing, unless payable on demand,
(i) no later than the Business Day immediately preceding the date on which such
funds are required to be withdrawn from such account pursuant to this Agreement,
if a Person other than the Trustee is the obligor thereon, and (ii) no later
than the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement, if the Trustee is the obligor thereon. All such
Permitted Investments shall be held to maturity, unless payable on demand. Any
investment of funds in an Investment Account shall be made in the name of the
Trustee for the benefit of the Certificateholders. The Trustee shall be entitled
to sole possession (except with respect to investment direction of funds held in
the Collection Account, the Distribution Account and the Reserve Fund and any
income and gain realized thereon) over each such investment, and any certificate
or other instrument evidencing any such investment shall be delivered directly
to the Trustee or its agent, together with any document of transfer necessary to
transfer title to such investment to the Trustee or its nominee. In the event
amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the Trustee shall:

               (x)     consistent with any notice required to be given
                       thereunder, demand that payment thereon be made on the
                       last day such Permitted Investment may otherwise mature
                       hereunder in an amount equal to the lesser of (1) all
                       amounts then payable thereunder and (2) the amount
                       required to be withdrawn on such date; and

               (y)     demand payment of all amounts due thereunder promptly
                       upon determination by a Responsible Officer of the
                       Trustee that such Permitted Investment would not
                       constitute a Permitted Investment in respect of funds
                       thereafter on deposit in the Investment Account.

               (b) All income and gain realized from the investment of funds
deposited in the Collection Account, the Distribution Account, the Reserve Fund
and any REO Account held by or on behalf of the Master Servicer shall be for the
benefit of the Master Servicer and shall be subject to its withdrawal in
accordance with Section 3.11 or Section 3.23, as applicable, or withdrawal by
the Trustee in accordance with Section 3.11 or Section 3.25, as applicable. The
Master Servicer

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<PAGE>

shall deposit in the Collection Account, the Distribution Account, the Reserve
Fund or any REO Account, as applicable, the amount of any loss of principal
incurred in respect of any such Permitted Investment made with funds in such
accounts immediately upon realization of such loss.

               (c) Except as otherwise expressly provided in this Agreement, if
any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 8.01 and Section
8.02(v), upon the request of the Holders of Certificates representing more than
50% of the Voting Rights allocated to any Class of Certificates, shall take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings.

               SECTION 3.13.          [Reserved].

               SECTION 3.14.          Maintenance of Hazard Insurance and Errors
                                      and Omissions and Fidelity Coverage.

               (a) The Master Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Master Servicer shall also
cause to be maintained fire insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property, plus accrued interest at the Mortgage Rate and related
Servicing Advances. The Master Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Master Servicer under
any such policies (other than amounts to be applied to the restoration or repair
of the property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11, if received
in respect of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to Section 3.23, if received in respect of an REO Property. Any cost
incurred by the Master Servicer in maintaining any such insurance shall not, for
the purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. If the Mortgaged
Property or REO Property is at any time in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards and flood insurance has been made available, the Master Servicer will
cause to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (i) the unpaid principal
balance of the related

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<PAGE>

Mortgage Loan and (ii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance program (assuming
that the area in which such Mortgaged Property is located is participating in
such program).

               In the event that the Master Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Collection Account
from its own funds the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.

               (b) The Master Servicer shall keep in force during the term of
this Agreement a policy or policies of insurance covering errors and omissions
for failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of Fannie Mae or Freddie Mac if it were the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from Fannie Mae or Freddie Mac. The Master Servicer shall also
maintain a fidelity bond in the form and amount that would meet the requirements
of Fannie Mae or Freddie Mac, unless the Master Servicer has obtained a waiver
of such requirements from Fannie Mae or Freddie Mac. The Master Servicer shall
be deemed to have complied with this provision if an Affiliate of the Master
Servicer has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Master Servicer. Any such errors and omissions policy
and fidelity bond shall by its terms not be cancelable without thirty days'
prior written notice to the Trustee. The Master Servicer shall also cause each
Sub-Servicer to maintain a policy of insurance covering errors and omissions and
a fidelity bond which would meet such requirements.

               SECTION 3.15.          Enforcement of Due-On-Sale Clauses;
                                      Assumption Agreements.

               The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Master Servicer shall not be required to take such action if in its
sole business judgment the Master Servicer believes it is not in the best
interests of the Trust Fund and shall not exercise any such rights if prohibited
by law from doing so. If the Master Servicer reasonably believes it is unable
under applicable law to enforce such "due-on-sale" clause, or if any of the
other conditions set forth

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<PAGE>

in the proviso to the preceding sentence apply, the Master Servicer will enter
into an assumption and modification agreement from or with the person to whom
such property has been conveyed or is proposed to be conveyed, pursuant to which
such person becomes liable under the Mortgage Note and, to the extent permitted
by applicable state law, the Mortgagor remains liable thereon. The Master
Servicer is also authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as the Mortgagor and becomes liable
under the Mortgage Note, provided that no such substitution shall be effective
unless such person satisfies the underwriting criteria of the Master Servicer
and has a credit risk rating at least equal to that of the original Mortgagor.
In connection with any assumption or substitution, the Master Servicer shall
apply such underwriting standards and follow such practices and procedures as
shall be normal and usual in its general mortgage servicing activities and as it
applies to other mortgage loans owned solely by it. The Master Servicer shall
not take or enter into any assumption and modification agreement, however,
unless (to the extent practicable in the circumstances) it shall have received
confirmation, in writing, of the continued effectiveness of any applicable
hazard insurance policy. Any fee collected by the Master Servicer in respect of
an assumption, modification or substitution of liability agreement shall be
retained by the Master Servicer as additional servicing compensation. In
connection with any such assumption, no material term of the Mortgage Note
(including but not limited to the related Mortgage Rate and the amount of the
Monthly Payment) may be amended or modified, except as otherwise required
pursuant to the terms thereof. The Master Servicer shall notify the Trustee that
any such substitution, modification or assumption agreement has been completed
by forwarding to the Trustee the executed original of such substitution,
modification or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.

               Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or by the terms of the Mortgage Note or
any assumption which the Master Servicer may be restricted by law from
preventing, for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or substitution
of liability agreement.

               SECTION 3.16.          Realization Upon Defaulted Mortgage Loans.

               (a) The Master Servicer shall use its best efforts, consistent
with Accepted Servicing Practices, to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.07. The Master
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances by the Master Servicer as contemplated in
Section 3.11 and Section 3.23. The foregoing is subject to the provision that,
in any case in which Mortgaged Property shall have suffered damage from an
Uninsured Cause, the Master Servicer shall not be required to expend its own
funds toward the restoration of such property unless it shall determine in its
discretion that such restoration will

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<PAGE>

increase the proceeds of liquidation of the related Mortgage Loan after
reimbursement to itself for such expenses.

               (b) Notwithstanding the foregoing provisions of this Section 3.16
or any other provision of this Agreement, with respect to any Mortgage Loan as
to which the Master Servicer has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Mortgaged Property, the Master Servicer shall not, on behalf of the Trustee,
either (i) obtain title to such Mortgaged Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any
other action with respect to, such Mortgaged Property, if, as a result of any
such action, the Trustee, the Trust Fund or the Certificateholders would be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or "operator" of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Master Servicer has
also previously determined, based on its reasonable judgment and a report
prepared by a Person who regularly conducts environmental audits using customary
industry standards, that:

                     (1) such Mortgaged Property is in compliance with
               applicable environmental laws or, if not, that it would be in the
               best economic interest of the Trust Fund to take such actions as
               are necessary to bring the Mortgaged Property into compliance
               therewith; and

                     (2) there are no circumstances present at such Mortgaged
               Property relating to the use, management or disposal of any
               hazardous substances, hazardous materials, hazardous wastes, or
               petroleum-based materials for which investigation, testing,
               monitoring, containment, clean-up or remediation could be
               required under any federal, state or local law or regulation, or
               that if any such materials are present for which such action
               could be required, that it would be in the best economic interest
               of the Trust Fund to take such actions with respect to the
               affected Mortgaged Property.

               The cost of the environmental audit report contemplated by this
Section 3.16 shall be advanced by the Master Servicer, subject to the Master
Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(a)(ix), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.

               If the Master Servicer determines, as described above, that it is
in the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund; provided that any amounts disbursed by the
Master Servicer pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to Section 4.03(d). The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master

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<PAGE>

Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(a)(iii) and (a)(ix), such right of reimbursement being
prior to the rights of Certificateholders to receive any amount in the
Collection Account received in respect of the affected Mortgage Loan or other
Mortgage Loans.

               (c) The Master Servicer may at its option purchase from REMIC I
any Mortgage Loan or related REO Property that is 90 days or more delinquent,
which the Master Servicer determines in good faith will otherwise become subject
to foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee prior to purchase), at a price equal to the Purchase
Price; provided, however, that the Master Servicer shall purchase any such
Mortgage Loans or related REO Properties on the basis of delinquency, purchasing
the most delinquent Mortgage Loans or related REO Properties first. The Purchase
Price for any Mortgage Loan or related REO Property purchased hereunder shall be
deposited in the Collection Account, and the Trustee, upon receipt of written
certification from the Master Servicer of such deposit, shall release or cause
to be released to the Master Servicer the related Mortgage File and the Trustee
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the Master Servicer shall furnish and as shall be
necessary to vest in the Master Servicer title to any Mortgage Loan or related
REO Property released pursuant hereto.

               (d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: FIRST, to reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances and P&I Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); SECOND,
to accrued and unpaid interest on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and THIRD, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Master Servicer as follows: FIRST, to
unpaid Servicing Fees; and SECOND, to the balance of the interest then due and
owing. The portion of the recovery so allocated to unpaid Servicing Fees shall
be reimbursed to the Master Servicer or any Sub-Servicer pursuant to Section
3.11(a)(iii).

               SECTION 3.17.          Trustee to Cooperate; Release of Mortgage
                                      Files.

               (a) Upon the payment in full of any Mortgage Loan, or the receipt
by the Master Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Master Servicer will immediately
notify or cause to be notified the Trustee by a certification in the form of
Exhibit E-2 (which certification shall include a statement to the effect that
all amounts received or to be received in connection with such payment which are
required to be deposited in the Collection Account pursuant to Section 3.10 have
been or will be so deposited) of a Servicing Officer and shall request delivery
to it of the Mortgage File. Upon receipt of such certification and request, the
Trustee shall promptly release the related Mortgage File to the Master Servicer.
No expenses incurred in connection with any instrument of satisfaction or deed
of reconveyance shall be chargeable to the Collection Account or the
Distribution Account.

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<PAGE>

               (b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee shall, upon any
request made by or on behalf of the Master Servicer and delivery to the Trustee
of a Request for Release in the form of Exhibit E-l, release the related
Mortgage File to the Master Servicer, and the Trustee shall, at the direction of
the Master Servicer, execute such documents as shall be necessary to the
prosecution of any such proceedings. Such Request for Release shall obligate the
Master Servicer to return each and every document previously requested from the
Mortgage File to the Trustee when the need therefor by the Master Servicer no
longer exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Master
Servicer has delivered, or caused to be delivered, to the Trustee an additional
Request for Release certifying as to such liquidation or action or proceedings.
Upon the request of the Trustee, the Master Servicer shall provide notice to the
Trustee of the name and address of the Person to which such Mortgage File or
such document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Mortgage Loan
was liquidated and that all amounts received or to be received in connection
with such liquidation that are required to be deposited into the Collection
Account have been so deposited, or that such Mortgage Loan has become an REO
Property, any outstanding Requests for Release with respect to such Mortgage
Loan shall be released by the Trustee to the Master Servicer or its designee.

               (c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Master Servicer or the Sub-Servicer, as
the case may be, any court pleadings, requests for trustee's sale or other
documents necessary to the foreclosure or trustee's sale in respect of a
Mortgaged Property or to any legal action brought to obtain judgment against any
Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency judgment,
or to enforce any other remedies or rights provided by the Mortgage Note or
Mortgage or otherwise available at law or in equity. Each such certification
shall include a request that such pleadings or documents be executed by the
Trustee and a statement as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.

               SECTION 3.18.          Servicing Compensation.

               As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Servicing Fee with
respect to each Mortgage Loan payable solely from payments of interest in
respect of such Mortgage Loan, subject to Section 3.24. In addition, the Master
Servicer shall be entitled to recover unpaid Servicing Fees out of Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Master Servicer's responsibilities and obligations under this Agreement;

                                      -72-

<PAGE>

provided, however, that the Master Servicer may pay from the Servicing Fee any
amounts due to a Sub-Servicer pursuant to a Sub-Servicing Agreement entered into
under Section 3.02.

               Additional servicing compensation in the form of assumption or
modification fees, late payment charges, insufficient funds charges or otherwise
(subject to Section 3.24 and other than Prepayment Charges) shall be retained by
the Master Servicer only to the extent such fees or charges are received by the
Master Servicer. The Master Servicer shall also be entitled pursuant to Section
3.11(a)(iv) to withdraw from the Collection Account, pursuant to Section 3.11 to
be paid by the Trustee from the Distribution Account and pursuant to Section
3.23(b) to withdraw from any REO Account, as additional servicing compensation,
interest or other income earned on deposits therein, subject to Section 3.12 and
Section 3.24. The Master Servicer shall be required to pay all expenses incurred
by it in connection with its servicing activities hereunder (including premiums
for the insurance required by Section 3.14, to the extent such premiums are not
paid by the related Mortgagors or by a Sub-Servicer, servicing compensation of
each Sub-Servicer, and to the extent provided herein in Section 8.05, the fees
and expenses of the Trustee) and shall not be entitled to reimbursement therefor
except as specifically provided herein.

               SECTION 3.19.          Reports to the Trustee; Collection Account
                                      Statements.

               Not later than twenty days after each Distribution Date, the
Master Servicer shall forward to the Trustee and the Depositor the most current
available bank statement for the Collection Account. Copies of such statement
shall be provided by the Trustee to any Certificateholder and to any Person
identified to the Trustee as a prospective transferee of a Certificate, upon
request at the expense of the requesting party, provided such statement is
delivered by the Master Servicer to the Trustee.

               SECTION 3.20.          Statement as to Compliance.

               The Master Servicer will deliver to the Trustee and the Depositor
not later than 90 days following the end of the fiscal year of the Master
Servicer, which as of the Closing Date ends on the last day in December, an
Officers' Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Master Servicer during the preceding year and of
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Master Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof. Copies of any such statement shall be provided by the
Trustee to any Certificateholder and to any Person identified to the Trustee as
a prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Master Servicer to
the Trustee.

               SECTION 3.21.          Independent Public Accountants' Servicing
                                      Report.

               Not later than 90 days following the end of each fiscal year of
the Master Servicer, the Master Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Master Servicer a report stating that (i) it has obtained a
letter

                                      -73-

<PAGE>

of representation regarding certain matters from the management of the Master
Servicer which includes an assertion that the Master Servicer has complied with
certain minimum residential mortgage loan servicing standards, identified in the
Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the servicing of
residential mortgage loans during the most recently completed fiscal year and
(ii) on the basis of an examination conducted by such firm in accordance with
standards established by the American Institute of Certified Public Accountants,
such representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that may be appropriate. In rendering its
report such firm may rely, as to matters relating to the direct servicing of
residential mortgage loans by Sub-Servicers, upon comparable reports of firms of
independent certified public accountants rendered on the basis of examinations
conducted in accordance with the same standards (rendered within one year of
such report) with respect to those Sub-Servicers. Immediately upon receipt of
such report, the Master Servicer shall, at its own expense, furnish a copy of
such report to the Trustee and each Rating Agency. Copies of such statement
shall be provided by the Trustee to any Certificateholder upon request, provided
that such statement is delivered by the Master Servicer to the Trustee.

               SECTION 3.22.          Access to Certain Documentation.

               The Master Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation in the Master Servicer's possession regarding the
Mortgage Loans required by applicable laws and regulations. Such access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the Master Servicer designated by it. In
addition, access to the documentation in the Master Servicer's possession
regarding the Mortgage Loans will be provided to any Certificateholder, the
Trustee, and to any Person identified to the Master Servicer as a prospective
transferee of a Certificate; provided, however, that providing access to such
Person will not violate any applicable laws, upon reasonable request during
normal business hours at the offices of the Master Servicer designated by it at
the expense of the Person requesting such access.

               SECTION 3.23.          Title, Management and Disposition of REO
                                      Property.

               (a) The deed or certificate of sale of any REO Property shall be
taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. The Master Servicer, on behalf of REMIC I, shall either
sell any REO Property prior to the end of the third taxable year after REMIC I
acquires ownership of such REO Property for purposes of Section 860G(a)(8) of
the Code or request from the Internal Revenue Service, no later than 60 days
before the day on which the three-year grace period would otherwise expire, an
extension of the three-year grace period, unless the Master Servicer shall have
delivered to the Trustee an Opinion of Counsel, addressed to the Trustee and the
Depositor, to the effect that the holding by REMIC I of such REO Property
subsequent to three years after its acquisition will not result in the
imposition on REMIC I, REMIC II or REMIC III of taxes on "prohibited
transactions" thereof, as defined in Section 860F of the Code, or cause any of
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC under Federal law
at any time that any Certificates are outstanding. The Master Servicer shall
manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt

                                      -74-

<PAGE>

disposition and sale in a manner which does not cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or result in the receipt by REMIC I, REMIC II or REMIC III of any
"income from non-permitted assets" within the meaning of Section 860F(a)(2)(B)
of the Code, or any "net income from foreclosure property" which is subject to
taxation under the REMIC Provisions.

               (b) The Master Servicer shall segregate and hold all funds
collected and received in connection with the operation of any REO Property
separate and apart from its own funds and general assets and shall establish and
maintain, or cause to be established and maintained, with respect to REO
Properties an account held in trust for the Trustee for the benefit of the
Certificateholders (the "REO Account"), which shall be an Eligible Account. The
Master Servicer shall be permitted to allow the Collection Account to serve as
the REO Account, subject to separate ledgers for each REO Property. The Master
Servicer shall be entitled to retain or withdraw any interest income paid on
funds deposited in the REO Account.

               (c) The Master Servicer shall have full power and authority,
subject only to the specific requirements and prohibitions of this Agreement, to
do any and all things in connection with any REO Property as are consistent with
the manner in which the Master Servicer manages and operates similar property
owned by the Master Servicer or any of its Affiliates, all on such terms and for
such period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, and shall
thereafter deposit in the REO Account, in no event more than two Business Days
after the Master Servicer's receipt thereof, all revenues received by it with
respect to an REO Property and shall withdraw therefrom funds necessary for the
proper operation, management and maintenance of such REO Property including,
without limitation:

                     (i) all insurance premiums due and payable in respect of
               such REO Property;

                     (ii) all real estate taxes and assessments in respect of
               such REO Property that may result in the imposition of a lien
               thereon; and

                     (iii) all costs and expenses necessary to maintain such REO
               Property.

To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.

               Notwithstanding the foregoing, none of the Master Servicer or the
Trustee shall:

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<PAGE>

                     (i) authorize the Trust Fund to enter into, renew or extend
               any New Lease with respect to any REO Property, if the New Lease
               by its terms will give rise to any income that does not
               constitute Rents from Real Property;

                    (ii) authorize any amount to be received or accrued under
               any New Lease other than amounts that will constitute Rents from
               Real Property;

                   (iii) authorize any construction on any REO Property, other
               than the completion of a building or other improvement thereon,
               and then only if more than ten percent of the construction of
               such building or other improvement was completed before default
               on the related Mortgage Loan became imminent, all within the
               meaning of Section 856(e)(4)(B) of the Code; or

                    (iv) authorize any Person to Directly Operate any REO
               Property on any date more than 90 days after its date of
               acquisition by the Trust Fund;

unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, provided to the Trustee, to the effect that such action will not cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code at any time that it is held by REMIC
I, in which case the Master Servicer may take such actions as are specified in
such Opinion of Counsel.

               The Master Servicer may contract with any Independent Contractor
for the operation and management of any REO Property, provided that:

                     (i) the terms and conditions of any such contract shall not
               be inconsistent herewith;

                    (ii) any such contract shall require, or shall be
               administered to require, that the Independent Contractor pay all
               costs and expenses incurred in connection with the operation and
               management of such REO Property, including those listed above and
               remit all related revenues (net of such costs and expenses) to
               the Master Servicer as soon as practicable, but in no event later
               than thirty days following the receipt thereof by such
               Independent Contractor;

                   (iii) none of the provisions of this Section 3.23(c) relating
               to any such contract or to actions taken through any such
               Independent Contractor shall be deemed to relieve the Master
               Servicer of any of its duties and obligations to the Trustee on
               behalf of the Certificateholders with respect to the operation
               and management of any such REO Property; and

                    (iv) the Master Servicer shall be obligated with respect
               thereto to the same extent as if it alone were performing all
               duties and obligations in connection with the operation and
               management of such REO Property.

                                      -76-

<PAGE>

The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.

               (d) In addition to the withdrawals permitted under Section
3.23(c), the Master Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and P&I Advances
made in respect of such REO Property or the related Mortgage Loan. On the Master
Servicer Remittance Date, the Master Servicer shall withdraw from each REO
Account maintained by it and deposit into the Distribution Account in accordance
with Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).

               (e) Subject to the time constraints set forth in Section 3.23(a),
each REO Disposition shall be carried out by the Master Servicer at such price
and upon such terms and conditions as the Master Servicer shall deem necessary
or advisable, as shall be normal and usual in its Accepted Servicing Practices.

               (f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Master Servicer or any
Sub-Servicer as provided above, shall be deposited in the Distribution Account
in accordance with Section 3.10(d)(ii) on the Master Servicer Remittance Date in
the month following the receipt thereof for distribution on the related
Distribution Date in accordance with Section 4.01. Any REO Disposition shall be
for cash only (unless changes in the REMIC Provisions made subsequent to the
Startup Day allow a sale for other consideration).

               (g) The Master Servicer shall file information returns with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code, respectively. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.

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<PAGE>

               SECTION 3.24.          Obligations of the Master Servicer in
                                      Respect of Prepayment Interest Shortfalls.

               The Master Servicer shall deliver to the Trustee for deposit into
the Distribution Account by 3:00 p.m. New York time on the Master Servicer
Remittance Date from its own funds an amount equal to the lesser of (i) the
aggregate of the Prepayment Interest Shortfalls for the related Distribution
Date resulting from full or partial Principal Prepayments during the related
Prepayment Period and (ii) the aggregate Servicing Fee for the related
Prepayment Period. Any amounts paid by the Master Servicer pursuant to this
Section 3.24 shall not be reimbursed by REMIC I.

               SECTION 3.25.          Obligations of the Master Servicer in
                                      Respect of Mortgage Rates and Monthly
                                      Payments.

               In the event that a shortfall in any collection on or liability
with respect to any Mortgage Loan results from or is attributable to adjustments
to Mortgage Rates, Monthly Payments or Stated Principal Balances that were made
by the Master Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Master Servicer, upon discovery or receipt
of notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and
any successor master servicer in respect of any such liability. Such indemnities
shall survive the termination or discharge of this Agreement. Notwithstanding
the foregoing, this Section 3.25 shall not limit the ability of the Master
Servicer to seek recovery of any such amounts from the related Mortgagor under
the terms of the related Mortgage Note, as permitted by law.

               SECTION 3.26.          Advance Facility.

               (a) The Trustee on behalf of the Trust Fund, with the consent of
the Master Servicer, is hereby authorized to enter into a facility with any
Person which provides that such Person (an "Advancing Person") may make all or a
portion of the P&I Advances and/or Servicing Advances to the Trust Fund under
this Agreement, although no such facility shall reduce or otherwise affect the
Master Servicer's obligation to fund such P&I Advances and/or Servicing
Advances. To the extent that an Advancing Person makes all or a portion of any
P&I Advance or any Servicing Advance and provides the Trustee with notice
acknowledged by the Master Servicer that such Advancing Person is entitled to
reimbursement, such Advancing Person shall be entitled to receive reimbursement
pursuant to this Agreement for such amount to the extent provided in Section
3.26(b). Such notice from the Advancing Person must specify the amount of the
reimbursement and must specify which Section of this Agreement permits the
applicable P&I Advance or Servicing Advance to be reimbursed. The Trustee shall
have no duty or liability with respect to any calculation of any reimbursement
to be paid to an Advancing Person and shall be entitled to rely without
independent investigation on the Advancing Person's notice provided pursuant to
this Section 3.26. An Advancing Person whose obligations hereunder are limited
to the funding of P&I Advances and/or Servicing Advances shall not be required
to meet the qualifications of a Sub-Servicer pursuant to Section 3.02 hereof.

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<PAGE>

               (b) If an Advancing Person is entitled to reimbursement for any
particular P&I Advance or Servicing Advance, then the Master Servicer shall not
be permitted to reimburse itself therefor under Section 3.11(a)(ii), Section
3.11(a)(iii), Section 3.11(a)(vi) or Section 3.11(a)(ix), but instead the Master
Servicer shall include such amounts in the applicable remittance to the Trustee
made pursuant to Section 3.10(b) to the extent of amounts on deposit in the
Collection Account on the related Master Servicer Remittance Date. The Trustee
is hereby authorized to pay to an Advancing Person, reimbursements for P&I
Advances and Servicing Advances from the Distribution Account to the same extent
the Master Servicer would have been permitted to reimburse itself for such P&I
Advances and/or Servicing Advances in accordance with Section 3.11(a)(ii),
Section 3.11(a)(iii), Section 3.11(a)(vi) or Section 3.11(a)(ix), as the case
may be, had the Master Servicer made such P&I Advance or Servicing Advance.
Notwithstanding the foregoing, an Advancing Person is NOT entitled to be
reimbursed by the Trustee from the Distribution Account for any unreimbursed
Advances from funds held in the Collection Account for future distribution
pursuant to the provisions of Section 3.11(a)(ii) and Section 3.13.

        Section 3.27.  PMI Policy; Claims Under the PMI Policy.

        Notwithstanding anything to the contrary elsewhere in this Article III,
the Master Servicer shall not agree to any modification or assumption of a PMI
Mortgage Loan or take any other action with respect to a PMI Mortgage Loan that
could result in denial of coverage under the PMI Policy. The Master Servicer
shall notify the PMI Insurer that the Trustee, on behalf of the
Certificateholders, is the insured, as that term is defined in the PMI Policy,
of each PMI Mortgage Loan. The Master Servicer shall, on behalf of the Trustee,
prepare and file on a timely basis with the PMI Insurer, with a copy to the
Trustee, all claims which may be made under the PMI Policy with respect to the
PMI Mortgage Loans. The Master Servicer shall take all actions required under
the PMI Policy as a condition to the payment of any such claim. Any amount
received from the PMI Insurer with respect to any such PMI Mortgage Loan shall
be deposited by the Master Servicer, no later than two Business Days following
receipt thereof, into the Collection Account.

                                      -79-

<PAGE>

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

               SECTION 4.01.          Distributions.

               (a)(1)(A) On the first Distribution Date, amounts on deposit in
the Reserve Fund will be transferred from the Reserve Fund to the Distribution
Account and shall be distributed in accordance with the priorities set forth
herein. On each Distribution Date following the first Distribution Date, the
following amounts, in the following order of priority, shall be distributed by
REMIC I to REMIC II on account of the REMIC I Regular Interests or withdrawn
from the Distribution Account and distributed to the holders of the Class R-I
Certificates, as the case may be:

                     (i) first, to the Holders of REMIC I Regular Interest
               I-LT2, in an amount equal to (A) the Uncertificated Interest for
               such Distribution Date, plus (B) any amounts in respect thereof
               remaining unpaid from previous Distribution Dates and second, to
               the Holders of REMIC I Regular Interest I-LT1 and I-LTP, in an
               amount equal to (A) the Uncertificated Interest for such
               Distribution Date, plus (B) any amounts in respect thereof
               remaining unpaid from previous Distribution Dates;

                    (ii) to the Holders of the REMIC I Regular Interest I-LTP,
               on the Distribution Date immediately following the expiration of
               the latest Prepayment Charge term as identified on the Mortgage
               Loan Schedule or any Distribution Date thereafter until $100 has
               been distributed pursuant to this clause;

                   (iii) on each Distribution Date, the remainder of the
               Available Distribution Amount for such Distribution Date after
               the distributions made pursuant to clause (i) and clause (ii)
               above, first, to the Holders of REMIC I Regular Interest I-LT1
               until the principal balance of such REMIC I Regular Interest is
               reduced to zero and second, to the Holders of REMIC I Regular
               Interest I-LT2 until the principal balance of such REMIC I
               Regular Interest is reduced to zero; and

                    (iv) to the Holders of the Class R-I Certificates, any
               amounts remaining after the distributions pursuant to clauses (i)
               through (iii) above.

On each Distribution Date, all amounts representing Prepayment Charges in
respect of the Mortgage Loans received during the related Prepayment Period will
be distributed by REMIC I to the Holders of REMIC I Regular Interest I-LTP. The
payment of the foregoing amounts to the Holders of REMIC I Regular Interest
I-LTP shall not reduce the Uncertificated Balance thereof.

               (B) On each Distribution Date, the following amounts, in the
following order of priority, shall be distributed by REMIC II to REMIC III on
account of the REMIC II Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R-II Certificates, as the
case may be:

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<PAGE>

                     (i) first, to the Holders of REMIC II Regular Interest
               II-LTIO, in an amount equal to (A) the Uncertificated Interest
               for such Distribution Date, plus (B) any amounts in respect
               thereof remaining unpaid from previous Distribution Dates and
               then to Holders of REMIC II Regular Interest II-LT1, REMIC
               Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC
               II Regular Interest II-LT4, REMIC II Regular Interest II-LT5,
               REMIC II Regular Interest II-LT6 and REMIC II Regular Interest
               II-LTP, PRO RATA, in an amount equal to (A) the Uncertificated
               Accrued Interest for such Distribution Date, plus (B) any amounts
               in respect thereof remaining unpaid from previous Distribution
               Dates. Amounts payable as Uncertificated Interest in respect of
               REMIC II Regular Interest II-LT6 shall be reduced when the REMIC
               II Overcollateralized Amount is less than the REMIC II Required
               Overcollateralized Amount, by the lesser of (x) the amount of
               such difference and (y) the Maximum II-LT6 Uncertificated
               Interest Deferral Amount;

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

                       (a) to the Holders of REMIC II Regular Interest II-LT1,
                       98.00% of such remainder, until the Uncertificated
                       Balance of such Uncertificated REMIC II Regular Interest
                       is reduced to zero;

                       (b) to the Holders of REMIC II Regular Interest II-LT2,
                       REMIC II Regular Interest II-LT3, REMIC II Regular
                       Interest II-LT4 and REMIC II Regular Interest II-LT5,
                       1.00% of such remainder, in the same proportion as
                       principal payments are allocated to the Corresponding
                       Certificates, until the Uncertificated Balances of such
                       REMIC II Regular Interests are reduced to zero;

                       (c) to the Holders of REMIC II Regular Interest II-LT6,
                       1.00% of such remainder, until the Uncertificated Balance
                       of such REMIC II Regular Interest is reduced to zero;

                       (d) to the Holders of REMIC II Regular Interest II-LTP,
                       on the Distribution Date immediately following the
                       expiration of the latest Prepayment Charge as identified
                       on the Prepayment Charge Schedule or any Distribution
                       Date thereafter until $100 has been distributed pursuant
                       to this clause; then

                       (e) any remaining amount to the Holders of the Class R-II
                       Certificates; and

                     (iii) third, to REMIC II Regular Interest II-LTP, 100% of
               the amount paid in respect of REMIC I Regular Interest I-LTP;

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<PAGE>

provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to an Overcollateralization Reduction Amount shall be allocated to
Holders of REMIC II Regular Interest II-LT1 and REMIC II Regular Interest
II-LT6, respectively.

               (2) On each Distribution Date other than the first Distribution
Date, prior to making the distributions set forth below, the Trustee shall
withdraw the PMI Insurer Fee from the Distribution Account and pay such amount
to the PMI Insurer, based on information received from the Master Servicer. On
each Distribution Date, the Trustee shall withdraw from the Distribution Account
an amount equal to the Interest Remittance Amount and distribute to the
Certificateholders the following amounts, in the following order of priority:

                     (i) to the Holders of the Class A-IO Certificates, an
               amount equal to the Senior Interest Distribution Amount allocable
               to the Class A-IO Certificates;

                     (ii) to the Holders of the Class A Certificates, an amount
               equal to the Senior Interest Distribution Amount allocable to the
               Class A Certificates;

                     (iii) to the Holders of the Class M-1 Certificates, an
               amount equal to the Interest Distribution Amount allocable to the
               Class M-1 Certificates;

                     (iv) to the Holders of the Class M-2 Certificates, an
               amount equal to the Interest Distribution Amount allocable to the
               Class M-2 Certificates; and

                     (v) to the Holders of the Class M-3 Certificates, an amount
               equal to the Interest Distribution Amount allocable to the Class
               M-3 Certificates.

               (3) On each Distribution Date, the Trustee shall withdraw from
the Distribution Account an amount equal to the Principal Distribution Amount
and distribute to the Certificateholders the following amounts, in the following
order of priority:

                     (i) On each Distribution Date (a) prior to the Stepdown
               Date or (b) on which a Trigger Event is in effect, the Principal
               Distribution Amount shall be distributed in the following order
               of priority;

                       FIRST, to the Holders of the Class A Certificates, until
                       the Certificate Principal Balance of such Class has been
                       reduced to zero;

                       SECOND, to the Holders of the Class M-1 Certificates,
                       until the Certificate Principal Balance of such Class has
                       been reduced to zero;

                       THIRD, to the Holders of the Class M-2 Certificates,
                       until the Certificate Principal Balance of such Class has
                       been reduced to zero; and

                       FOURTH, to the Holders of the Class M-3 Certificates,
                       until the Certificate Principal Balance of such Class has
                       been reduced to zero.

                                      -82-

<PAGE>

                    (ii) On each Distribution Date (a) on or after the Stepdown
               Date and (b) on which a Trigger Event is not in effect, the
               Principal Distribution Amount shall be distributed in the
               following order of priority;

                       FIRST, the lesser of (x) the Principal Distribution
                       Amount and (y) the Class A Principal Distribution Amount
                       shall be distributed to the Holders of the Class A
                       Certificates, until the Certificate Principal Balance of
                       such Class has been reduced to zero;

                       SECOND, the lesser of (x) the excess of (i) the Principal
                       Distribution Amount over (ii) the amount distributed to
                       the Holders of the Class A Certificates pursuant to
                       clause FIRST above and (y) the Class M-1 Principal
                       Distribution Amount shall be distributed to the Holders
                       of the Class M-1 Certificates, until the Certificate
                       Principal Balance of such Class has been reduced to zero;

                       THIRD, the lesser of (x) the excess of (i) the Principal
                       Distribution Amount over (ii) the sum of the amounts
                       distributed to the Holders of the Class A Certificates
                       pursuant to clause FIRST above and to the Holders of the
                       Class M-1 Certificates pursuant to clause SECOND above
                       and (y) the Class M-2 Principal Distribution Amount shall
                       be distributed to the Holders of the Class M-2
                       Certificates, until the Certificate Principal Balance of
                       such Class has been reduced to zero; and

                       FOURTH, the lesser of (x) the excess of (i) the Principal
                       Distribution Amount over (ii) the sum of the amounts
                       distributed to the Holders of the Class A Certificates
                       pursuant to clause FIRST above, to the Holders of the
                       Class M-1 Certificates pursuant to clause SECOND above
                       and to the Holders of the Class M-2 Certificates pursuant
                       to clause THIRD above and (y) the Class M-3 Principal
                       Distribution Amount shall be distributed to the Holders
                       of the Class M-3 Certificates, until the Certificate
                       Principal Balance of such Class has been reduced to zero.

               (4) On each Distribution Date, the Net Monthly Excess Cashflow
(or, in the case of clause (i) below, the Net Monthly Excess Cashflow exclusive
of any Overcollateralization Reduction Amount) shall be distributed as follows:

                       (i) to the Holders of the Class or Classes of
                       Certificates then entitled to receive distributions in
                       respect of principal, in an amount equal to the principal
                       portion of any Realized Losses incurred or deemed to have
                       been incurred on the Mortgage Loans, applied to reduce
                       the Certificate Principal Balance of such Certificates
                       until the aggregate Certificate Principal Balance of such
                       Certificates is reduced to zero;

                       (ii) to the Holders of the Class or Classes of
                       Certificates then entitled to receive distributions in
                       respect of principal, in an amount equal to the
                       Overcollateralization Increase Amount, applied to reduce
                       the Certificate

                                      -83-

<PAGE>

                       Principal Balance of such Certificates until the
                       aggregate Certificate Principal Balance of such
                       Certificates is reduced to zero;

                       (iii) to the Holders of the Class M-1 Certificates, in an
                       amount equal to the Interest Carry Forward Amount
                       allocable to such Class of Certificates;

                       (iv) to the Holders of the Class M-2 Certificates, in an
                       amount equal to the Interest Carry Forward Amount
                       allocable to such Class of Certificates;

                       (v) to the Holders of the Class M-3 Certificates, in an
                       amount equal to the Interest Carry Forward Amount
                       allocable to such Class of Certificates;

                       (vi) CONCURRENTLY, to the Holders of the Class A
                       Certificates and the Class A-IO Certificates PRO RATA, in
                       an amount equal to the aggregate of any Prepayment
                       Interest Shortfalls (to the extent not covered by
                       payments pursuant to Section 3.24) and any Relief Act
                       Interest Shortfall allocated to such Certificates;

                       (vii) to the Holders of the Class M-1 Certificates, in an
                       amount equal to the aggregate of any Prepayment Interest
                       Shortfalls (to the extent not covered by payments
                       pursuant to Section 3.24) and any Relief Act Interest
                       Shortfall allocated to such Certificates;

                       (viii) to the Holders of the Class M-2 Certificates, in
                       an amount equal to the aggregate of any Prepayment
                       Interest Shortfalls (to the extent not covered by
                       payments pursuant to Section 3.24) and any Relief Act
                       Interest Shortfall allocated to such Certificates;

                       (ix) to the Holders of the Class M-3 Certificates, in an
                       amount equal to the aggregate of any Prepayment Interest
                       Shortfalls (to the extent not covered by payments
                       pursuant to Section 3.24) and any Relief Act Interest
                       Shortfall allocated to such Certificates;

                       (x) to the Holders of the Class CE Certificates the
                       Interest Distribution Amount and any
                       Overcollateralization Reduction Amount for such
                       Distribution Date; and

                       (xi) to the Holders of the Class R-III Certificates, any
                       remaining amounts; provided that if such Distribution
                       Date is the Distribution Date immediately following the
                       expiration of the latest Prepayment Charge term as
                       identified on the Mortgage Loan Schedule or any
                       Distribution Date thereafter, then any such remaining
                       amounts will be distributed FIRST, to the Holders of the
                       Class P Certificates, until the Certificate Principal
                       Balance thereof has been reduced to zero; and SECOND, to
                       the Holders of the Class R-III Certificates.

                                      -84-

<PAGE>

               (b) On each Distribution Date, all amounts received by the
Trustee in respect of payments made by the counterparty to the Yield Maintenance
Agreement will be distributed by the Trustee to the Holders of the Class C
Certificates and shall not be available for distribution to the Holders of any
other Class of Certificates. The payment of the foregoing amounts to the Holders
of the Class C Certificates shall not be applied as a payment of interest or to
reduce the Certificate Principal Balances thereof.

               On each Distribution Date, the Trustee shall withdraw any amounts
then on deposit in the Distribution Account that represent Prepayment Charges
collected by the Master Servicer in connection with the Principal Prepayment of
any of the Mortgage Loans or any Master Servicer Prepayment Charge Payment
Amount and shall distribute such amounts to the Holders of the Class P
Certificates. Such distributions shall not be applied to reduce the Certificate
Principal Balance of the Class P Certificates.

               (c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Certificates having an initial
aggregate Certificate Principal Balance or Notional Amount that is in excess of
the lesser of (i) $5,000,000 or (ii) two-thirds of the initial Certificate
Principal Balance or Notional Amount of such Class of Certificates, or otherwise
by check mailed by first class mail to the address of such Holder appearing in
the Certificate Register. The final distribution on each Certificate will be
made in like manner, but only upon presentment and surrender of such Certificate
at the Corporate Trust Office of the Trustee or such other location specified in
the notice to Certificateholders of such final distribution.

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

               (d) The rights of the Certificateholders to receive distributions
in respect of the Certificates, and all interests of the Certificateholders in
such distributions, shall be as set forth in this Agreement. None of the Holders
of any Class of Certificates, the Trustee or the Master Servicer

                                      -85-

<PAGE>

shall in any way be responsible or liable to the Holders of any other Class of
Certificates in respect of amounts properly previously distributed on the
Certificates.

               (e) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than three (3) days before the related Distribution Date, mail to each
Holder on such date of such Class of Certificates a notice to the effect that:

             (i) the Trustee expects that the final distribution with respect to
        such Class of Certificates will be made on such Distribution Date but
        only upon presentation and surrender of such Certificates at the office
        of the Trustee therein specified, and

            (ii) no interest shall accrue on such Certificates from and after
        the end of the related Interest Accrual Period.

               Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be set
aside and held in trust by the Trustee and credited to the account of the
appropriate non-tendering Holder or Holders. If any Certificates as to which
notice has been given pursuant to this Section 4.01(e) shall not have been
surrendered for cancellation within six months after the time specified in such
notice, the Trustee shall mail a second notice to the remaining non- tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee shall, directly or through an agent, mail a final
notice to the remaining non-tendering Certificateholders concerning surrender of
their Certificates but shall continue to hold any remaining funds for the
benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Salomon Smith Barney Inc. all such
amounts, and all rights of non-tendering Certificateholders in or to such
amounts shall thereupon cease. No interest shall accrue or be payable to any
Certificateholder on any amount held in trust by the Trustee as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 4.01(e). Any such amounts held in trust
by the Trustee shall be held in an Eligible Account and the Trustee may direct
any depository institution maintaining such account to invest the funds in one
or more Permitted Investments. All income and gain realized from the investment
of funds deposited in such accounts held in trust by the Trustee shall be for
the benefit of the Trustee; provided, however, that the Trustee shall deposit in
such account the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon the
realization of such loss.

               (f) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate or a
Mezzanine Certificate be reduced more than once in respect of any particular
amount both (a) allocated to such Certificate in respect of Realized Losses
pursuant to Section 4.04 and (b) distributed to the Holder of such Certificate
in reduction of the Certificate Principal Balance thereof pursuant to this
Section 4.01 from Net Monthly

                                      -86-

<PAGE>

Excess Cashflow and (ii) in no event shall the Uncertificated Balance of a REMIC
I Regular Interest or REMIC II Regular Interest be reduced more than once in
respect of any particular amount both (a) allocated to such REMIC I Regular
Interest or REMIC II Regular Interest in respect of Realized Losses pursuant to
Section 4.04 and (b) distributed on such REMIC I Regular Interest or REMIC II
Regular Interest in reduction of the Uncertificated Balance thereof pursuant to
this Section 4.01.

               SECTION 4.02.          Statements to Certificateholders.

               On each Distribution Date, the Trustee shall prepare and forward
by mail to each Holder of the Regular Certificates, a statement as to the
distributions made on such Distribution Date setting forth:

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

                     (ii) the amount of the distribution made on such
               Distribution Date to the Holders of the Certificates of each
               Class allocable to interest;

                   (iii) the aggregate Servicing Fee received by the Master
               Servicer during the related Due Period and such other customary
               information as the Trustee deems necessary or desirable, or which
               a Certificateholder reasonably requests, to enable
               Certificateholders to prepare their tax returns;

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

                     (v) the aggregate Stated Principal Balance of the Mortgage
               Loans and any REO Properties as of the close of business on such
               Distribution Date;

                    (vi) the number, aggregate principal balance, weighted
               average remaining term to maturity and weighted average Mortgage
               Rate of the Mortgage Loans as of the related Due Date;

                   (vii) the number and aggregate unpaid principal balance of
               Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to
               89 days, (c) delinquent 90 or more days, in each case, as of the
               last day of the preceding calendar month, (d) as to which
               foreclosure proceedings have been commenced and (e) with respect
               to which the related Mortgagor has filed for protection under
               applicable bankruptcy laws, with respect to whom bankruptcy
               proceedings are pending or with respect to whom bankruptcy
               protection is in force;

                  (viii) with respect to any Mortgage Loan that became an REO
               Property during the preceding calendar month, the loan number of
               such Mortgage Loan, the unpaid principal balance and the Stated
               Principal Balance of such Mortgage Loan as of the date it became
               an REO Property;

                                      -87-

<PAGE>

                     (ix) the book value of any REO Property as of the close of
               business on the last Business Day of the calendar month preceding
               the Distribution Date;

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

                     (xi) the aggregate amount of Realized Losses incurred
               during the related Prepayment Period (or, in the case of
               Bankruptcy Losses allocable to interest, during the related Due
               Period), separately identifying whether such Realized Losses
               constituted Bankruptcy Losses and the aggregate amount of
               Realized Losses incurred since the Closing Date;

                     (xii) the aggregate amount of Extraordinary Trust Fund
               Expenses withdrawn from the Collection Account or the
               Distribution Account for such Distribution Date;

                     (xiii) the aggregate Certificate Principal Balance and
               Notional Amount, as applicable, of each Class of Certificates,
               after giving effect to the distributions, and allocations of
               Realized Losses, made on such Distribution Date, separately
               identifying any reduction thereof due to allocations of Realized
               Losses;

                     (xiv) the Certificate Factor for each such Class of
               Certificates applicable to such Distribution Date;

                     (xv) the Interest Distribution Amount in respect of the
               Class A Certificates, the Mezzanine Certificates and the Class CE
               Certificates for such Distribution Date and the Interest Carry
               Forward Amount, if any, with respect to the Class A Certificates,
               the Mezzanine Certificates and the Class A-IO Certificates on
               such Distribution Date, and in the case of the Class A
               Certificates, the Mezzanine Certificates, the Class A-IO
               Certificates and the Class CE Certificates, separately
               identifying any reduction thereof due to allocations of Realized
               Losses, Prepayment Interest Shortfalls and Relief Act Interest
               Shortfalls;

                     (xvi) the aggregate amount of any Prepayment Interest
               Shortfall for such Distribution Date, to the extent not covered
               by payments by the Master Servicer pursuant to Section 3.24;

                     (xvii) the aggregate amount of Relief Act Interest
               Shortfalls for such Distribution Date;

                     (xviii) the Required Overcollateralized Amount and the
               Credit Enhancement Percentage for such Distribution Date;

                     (xix) the Overcollateralization Increase Amount, if any,
               for such Distribution Date;

                                      -88-

<PAGE>

                     (xx) the Overcollateralization Reduction Amount, if any,
               for such Distribution Date;

                     (xxi) the respective Pass-Through Rates applicable to the
               Class A Certificates, the Mezzanine Certificates, the Class A-IO
               Certificates and the Class CE Certificates for such Distribution
               Date and the Pass-Through Rate applicable to the Class A
               Certificates and the Mezzanine Certificates for the immediately
               succeeding Distribution Date;

                     (xxii) the Loss Severity Percentage with respect to each
               Mortgage Loan;

                     (xxiii) the Aggregate Loss Severity Percentage;

                     (xxiv) (A) the amount of payments received related to
               claims under the PMI Policy during the related Prepayment Period
               (and the number of Mortgage Loans to which such payments related)
               and (B) the cumulative amount of payments received related to
               claims under the PMI Policy since the Closing Date (and the
               number of Mortgage Loans to which such payments related); and

                     (xxiii) (A) the dollar amount of claims made under the PMI
               Policy that were denied during the Prepayment Period (and the
               number of Mortgage Loans to which such denials related) and (B)
               the dollar amount of the cumulative claims made under the PMI
               Policy that were denied since the Closing Date (and the number of
               Mortgage Loans to which such denials related).

               In the case of information furnished pursuant to subclauses (i)
through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.

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

               On each Distribution Date, the Trustee shall forward to the
Depositor, the Trustee, to each Holder of a Residual Certificate and to the
Master Servicer, a copy of the reports forwarded to the Regular
Certificateholders on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed with respect to the Residual Certificates,
respectively, on such Distribution Date.

                                      -89-

<PAGE>

               Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Residual Certificate a statement setting forth
the amount, if any, actually distributed with respect to the Residual
Certificates, as appropriate, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder.

               The Trustee shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trustee's duties are limited to the extent
that the Trustee receives timely reports as required from the Master Servicer.

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

               SECTION 4.03.          Remittance Reports; P&I Advances.

               (a) On the tenth day of each calendar month, the Master Servicer
shall deliver to the Trustee in an electronic format acceptable to the Trustee,
information with respect to each Mortgage Loan as is mutually agreed upon
between the Master Servicer and the Trustee. On the Business Day following each
Determination Date, the Master Servicer shall deliver to the Trustee by telecopy
(or by such other means as the Master Servicer or the Trustee, as the case may
be, may agree from time to time) a Remittance Report with respect to the related
Distribution Date. On the same date, the Master Servicer shall forward to the
Trustee by overnight mail a computer readable magnetic tape or electronically
transmit (in a format acceptable to the Trustee) on the day thereafter, a data
file containing the information set forth in such Remittance Report with respect
to the related Distribution Date. Such Remittance Report will include (i) the
amount of P&I Advances to be made by the Master Servicer in respect of the
related Distribution Date, the aggregate amount of P&I Advances outstanding
after giving effect to such P&I Advances, and the aggregate amount of
Nonrecoverable P&I Advances in respect of such Distribution Date and (ii) such
other information with respect to the Mortgage Loans as the Trustee may
reasonably require to perform the calculations necessary to make the
distributions contemplated by Section 4.01 and to prepare the statements to
Certificateholders contemplated by Section 4.02. The Trustee shall not be
responsible (except with regard to any information regarding the Prepayment
Charges to the extent set forth below) to recompute, recalculate or verify any
information provided to it by the Master Servicer. Notwithstanding the
foregoing, in connection with any Principal Prepayment on any Mortgage Loan
listed on Schedule 2 hereto, the Trustee shall verify that the related
Prepayment Charge was delivered to the Trustee for deposit in the Distribution
Account in the amount set forth on such Schedule 2 or that such Prepayment
Charge was waived in accordance with the terms hereof.

               (b) The amount of P&I Advances to be made by the Master Servicer
for any Distribution Date shall equal, subject to Section 4.03(d), the sum of
(i) the aggregate amount of Monthly Payments (with each interest portion thereof
net of the related Servicing Fee), due on the

                                      -90-

<PAGE>

related Due Date in respect of the Mortgage Loans, which Monthly Payments were
delinquent as of the close of business on the related Determination Date and
(ii) with respect to each REO Property, which REO Property was acquired during
or prior to the related Prepayment Period and as to which REO Property an REO
Disposition did not occur during the related Prepayment Period, an amount equal
to the excess, if any, of the REO Imputed Interest on such REO Property for the
most recently ended calendar month, over the net income from such REO Property
transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date.

               By 3:00 p.m. New York time on the Master Servicer Remittance
Date, the Master Servicer shall remit in immediately available funds to the
Trustee for deposit in the Distribution Account an amount equal to the aggregate
amount of P&I Advances, if any, to be made in respect of the Mortgage Loans and
REO Properties for the related Distribution Date either (i) from its own funds
or (ii) from the Collection Account, to the extent of funds held therein for
future distribution (in which case it will cause to be made an appropriate entry
in the records of Collection Account that amounts held for future distribution
have been, as permitted by this Section 4.03, used by the Master Servicer in
discharge of any such P&I Advance) or (iii) in the form of any combination of
(i) and (ii) aggregating the total amount of P&I Advances to be made by the
Master Servicer with respect to the Mortgage Loans and REO Properties. Any
amounts held for future distribution and so used shall be appropriately
reflected in the Master Servicer's records and replaced by the Master Servicer
by deposit in the Collection Account on or before any future Master Servicer
Remittance Date to the extent that the Available Distribution Amount for the
related Distribution Date (determined without regard to P&I Advances to be made
on the Master Servicer Remittance Date) shall be less than the total amount that
would be distributed to the Classes of Certificateholders pursuant to Section
4.01 on such Distribution Date if such amounts held for future distributions had
not been so used to make P&I Advances. The Trustee will provide notice to the
Master Servicer by telecopy by the close of business on the third Business Day
prior to the Distribution Date in the event that the amount remitted by the
Master Servicer to the Trustee on such date is less than the P&I Advances
required to be made by the Master Servicer for the related Distribution Date.

               (c) The obligation of the Master Servicer to make such P&I
Advances is mandatory, notwithstanding any other provision of this Agreement but
subject to (d) below, and, with respect to any Mortgage Loan or REO Property,
shall continue until a Final Recovery Determination in connection therewith or
the removal thereof from the Trust Fund pursuant to any applicable provision of
this Agreement, except as otherwise provided in this Section.

               (d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by the
Master Servicer if such P&I Advance or Servicing Advance would, if made,
constitute a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance,
respectively. The determination by the Master Servicer that it has made a
Nonrecoverable P&I Advance or a Nonrecoverable Servicing Advance or that any
proposed P&I Advance or Servicing Advance, if made, would constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively,
shall be evidenced by an Officers' Certificate of the Master Servicer delivered
to the Depositor and the Trustee.

                                      -91-

<PAGE>

               SECTION 4.04.          Allocation of Realized Losses.

               (a) Prior to each Determination Date, the Master Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Bankruptcy Losses; and (iii)
the respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, the Master Servicer
shall also determine as to each Mortgage Loan: (i) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Prepayment Period; and (ii) the total amount of Realized Losses, if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by the Master Servicer shall be
evidenced by an Officers' Certificate delivered to the Trustee by the Master
Servicer prior to the Determination Date immediately following the end of (i) in
the case of Bankruptcy Losses allocable to interest, the Due Period during which
any such Realized Loss was incurred, and (ii) in the case of all other Realized
Losses, the Prepayment Period during which any such Realized Loss was incurred.

               (b) All Realized Losses on the Mortgage Loans shall be allocated
by the Trustee on each Distribution Date as follows: first, to Net Monthly
Excess Cashflow; second, to the Class CE Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; third, to the Class M-3
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; fourth, to the Class M-2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and fifth, to the Class M-1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero. All Realized Losses to be allocated to the Certificate Principal
Balances of all Classes on any Distribution Date shall be so allocated after the
actual distributions to be made on such date as provided above. All references
above to the Certificate Principal Balance of any Class of Certificates shall be
to the Certificate Principal Balance of such Class immediately prior to the
relevant Distribution Date, before reduction thereof by any Realized Losses, in
each case to be allocated to such Class of Certificates, on such Distribution
Date.

               Any allocation of Realized Losses to a Mezzanine Certificate on
any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated; any allocation of Realized Losses to
a Class CE Certificate shall be made by reducing the amount otherwise payable in
respect thereof pursuant to Section 4.01(a)(4)(x). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A Certificates or the Class P Certificates.

               As used herein, an allocation of a Realized Loss on a "PRO RATA
basis" among two or more specified Classes of Certificates means an allocation
on a PRO RATA basis, among the various Classes so specified, to each such Class
of Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date. All Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the Certificates of such Class in
proportion to the Percentage Interests evidenced thereby.

                                      -92-

<PAGE>

               (c) All Realized Losses on the Mortgage Loans shall be allocated
by the Trustee on each Distribution Date to the REMIC I Regular Interest I-LT1
and REMIC I Regular Interest I- LT2 on a PRO RATA basis based on their
respective Uncertificated Balances.

               (d) All Realized Losses on the Mortgage Loans shall be allocated
by the Trustee on each Distribution Date to the following REMIC II Regular
Interests in the specified percentages, as follows: first, to Uncertificated
Interest payable to the REMIC II Regular Interest II-LT1 and REMIC II Regular
Interest II-LT6 up to an aggregate amount equal to the REMIC II Interest Loss
Allocation Amount, 98% and 2%, respectively; second, to the Uncertificated
Balances of the REMIC II Regular Interest II-LT1 and REMIC II Regular Interest
II-LT6 up to an aggregate amount equal to the REMIC II Principal Loss Allocation
Amount, 98% and 2%, respectively; third, to the Uncertificated Balances of REMIC
II Regular Interest II-LT1, REMIC II Regular Interest II-LT5 and REMIC II
Regular Interest II-LT6, 98%, 1% and 1%, respectively, until the Uncertificated
Balance of REMIC II Regular Interest II-LT5 has been reduced to zero; fourth to
the Uncertificated Balances of REMIC II Regular Interest II-LT1, REMIC II
Regular Interest II-LT4 and REMIC II Regular Interest II-LT6, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
II-LT4 has been reduced to zero; and fifth to the Uncertificated Balances of
REMIC II Regular Interest II-LT1, REMIC II Regular Interest II-LT3 and REMIC II
Regular Interest II-LT6, 98%, 1% and 1%, respectively, until the Uncertificated
Balance of REMIC II Regular Interest II-LT3 has been reduced to zero.

               SECTION 4.05.          Compliance with Withholding Requirements.

               Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.

               SECTION 4.06.          Exchange Commission; Additional
                                      Information.

               Within 15 days after each Distribution Date, the Trustee shall
file with the Commission via the Electronic Data Gathering and Retrieval System,
a Form 8-K with a copy of the statement to Certificateholders for such
Distribution Date as an exhibit thereto. Prior to January 30, 2002, the Trustee
shall file a Form 15 Suspension Notification with respect to the Trust Fund, if
applicable. Prior to March 30, 2002, the Trustee shall file a Form 10-K,
substantially in the form attached hereto as Exhibit H, with respect to the
Trust Fund. The Depositor hereby grants to the Trustee a limited power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney shall continue until the earlier of (i) receipt by the Trustee
from the Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. Upon request, the Trustee shall deliver to the
Depositor a copy of any Form 8-K or Form 10- K filed pursuant to this Section
4.06.

                                      -93-

<PAGE>

                                    ARTICLE V

                                THE CERTIFICATES

               SECTION 5.01.          The Certificates.

               (a) The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.

               The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-10. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.

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

               (b) The Class A Certificates and the Mezzanine Certificates shall
initially be issued as one or more Certificates held by the Book-Entry Custodian
or, if appointed to hold such Certificates as provided below, the Depository and
registered in the name of the Depository or its nominee and, except as provided
below, registration of such Certificates may not be transferred by the Trustee
except to another Depository that agrees to hold such Certificates for the
respective Certificate Owners with Ownership Interests therein. The Certificate
Owners shall hold their respective Ownership Interests in and to such
Certificates through the book-entry facilities of the Depository and, except as
provided below, shall not be entitled to definitive, fully registered
Certificates ("Definitive Certificates") in respect of such Ownership Interests.
All transfers by Certificate Owners of their respective Ownership Interests in
the Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall only transfer the Ownership
Interests in the Book-Entry Certificates of Certificate Owners it represents or
of brokerage firms for which it acts as agent in accordance with the
Depository's normal procedures. The Trustee is hereby initially appointed as the
Book-Entry Custodian and hereby agrees to act as such in accordance herewith and
in accordance with the agreement that it has with the Depository authorizing it
to act as such. The Book-Entry Custodian may, and, if it is no longer qualified
to act as such, the Book- Entry Custodian shall, appoint, by a written
instrument delivered to the Depositor, the Master Servicer and the Trustee, any
other transfer agent (including the Depository or any successor Depository) to
act as Book-Entry Custodian under such conditions as the predecessor Book-Entry
Custodian and the Depository or any successor Depository may prescribe, provided
that the

                                      -94-

<PAGE>

predecessor Book-Entry Custodian shall not be relieved of any of its duties or
responsibilities by reason of any such appointment of other than the Depository.
If the Trustee resigns or is removed in accordance with the terms hereof, the
Trustee, the successor trustee or, if it so elects, the Depository shall
immediately succeed to its predecessor's duties as Book-Entry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any
Certificates held as Book-Entry Certificates by the Book-Entry Custodian.

               The Trustee, the Master Servicer and the Depositor may for all
purposes (including the making of payments due on the Book-Entry Certificates)
deal with the Depository as the authorized representative of the Certificate
Owners with respect to the Book-Entry Certificates for the purposes of
exercising the rights of Certificateholders hereunder. The rights of Certificate
Owners with respect to the Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the Book-Entry Certificates with respect to any particular matter
shall not be deemed inconsistent if they are made with respect to different
Certificate Owners. The Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by Certificateholders
and shall give notice to the Depository of such record date.

               If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (iii) after the occurrence of a Master Servicer Event of Default, Certificate
Owners representing in the aggregate not less than 51% of the Ownership
Interests of the Book-Entry Certificates advise the Trustee through the
Depository, in writing, that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book- Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, accompanied by registration instructions from the Depository for
registration of transfer, the Trustee shall cause the Definitive Certificates to
be issued. Such Definitive Certificates will be issued in minimum denominations
of $10,000, except that any beneficial ownership that was represented by a Book-
Entry Certificate in an amount less than $10,000 immediately prior to the
issuance of a Definitive Certificate shall be issued in a minimum denomination
equal to the amount represented by such Book-Entry Certificate. None of the
Depositor, the Master Servicer, the Trustee shall be liable for any delay in the
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates, and the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.

                                      -95-

<PAGE>

               SECTION 5.02.          Registration of Transfer and Exchange of
                                      Certificates.

               (a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.11, a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided.

               (b) No transfer of any Class CE Certificate, Class P Certificate
or Residual Certificate shall be made unless that transfer is made pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), and effective registration or qualification under applicable
state securities laws, or is made in a transaction that does not require such
registration or qualification. In the event that such a transfer of a Class A-IO
Certificate, Class CE Certificate, Class P Certificate or Residual Certificate
is to be made without registration or qualification (other than in connection
with the initial transfer of any such Certificate by the Depositor to an
affiliate of the Depositor), the Trustee shall require receipt of: (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Certificateholder desiring to effect the
transfer and from such Certificateholder's prospective transferee, substantially
in the forms attached hereto as Exhibit F-1; and (ii) in all other cases, an
Opinion of Counsel satisfactory to it that such transfer may be made without
such registration or qualification (which Opinion of Counsel shall not be an
expense of the Trust Fund or of the Depositor, the Trustee, the Master Servicer
in its capacity as such or any Sub-Servicer), together with copies of the
written certification(s) of the Certificateholder desiring to effect the
transfer and/or such Certificateholder's prospective transferee upon which such
Opinion of Counsel is based, if any. None of the Depositor, the Trustee is
obligated to register or qualify any such Certificates under the 1933 Act or any
other securities laws or to take any action not otherwise required under this
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Certificateholder desiring to effect the transfer of any such
Certificate shall, and does hereby agree to, indemnify the Trustee, the
Depositor and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.

               (c) No transfer of a Class CE Certificate, Class P Certificate or
Residual Certificate or any interest therein shall be made to any Plan subject
to ERISA or Section 4975 of the Code, any Person acting, directly or indirectly,
on behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Depositor,
the Trustee and the Master Servicer are provided with an Opinion of Counsel
which establishes to the satisfaction of the Depositor, the Trustee and the
Master Servicer that the purchase of such Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor, the
Master Servicer, the Trustee or the Trust Fund to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Depositor, the Master Servicer, the Trustee or
the Trust Fund. In lieu of such Opinion of Counsel, any prospective Transferee
of such Certificates may provide a certification in the form of Exhibit G to
this Agreement (or other form acceptable to the Depositor, the Trustee and the
Master Servicer), which the Trustee may rely

                                      -96-

<PAGE>

upon without further inquiry or investigation. Neither an Opinion of Counsel nor
any certification will be required in connection with the initial transfer of
any such Certificate by the Depositor to an affiliate of the Depositor (in which
case, the Depositor or any affiliate thereof shall have deemed to have
represented that such affiliate is not a Plan or a Person investing Plan Assets)
and the Trustee shall be entitled to conclusively rely upon a representation
(which, upon the request of the Trustee, shall be a written representation) from
the Depositor of the status of such transferee as an affiliate of the Depositor.
The Yield Maintenance Agreement shall be deemed a separate subtrust and shall
not be an asset of the subtrust portion of the Trust Fund which is the
investment pool from which the Class A Certificates, the Mezzanine Certificates
and the Class A-IO Certificates are being paid.

    Each beneficial owner of a Mezzanine Certificates or any interest therein
shall be deemed to have represented, by virtue of its acquisition or holding of
that certificate or interest therein, that either (i) it is not a Plan investor,
(ii) it has acquired and is holding such Mezzanine Certificates in reliance on
the Underwriters' Exemption, and that it understands that there are certain
conditions to the availability of the Underwriters' Exemption, including that
the Mezzanine Certificates must be rated, at the time of purchase, not lower
than "BBB-" (or its equivalent) by Fitch, Moody's or S&P or (iii) (1) it is an
insurance company, (2) the source of funds used to acquire or hold the
certificate or interest therein is an "insurance company general account," as
such term is defined in PTCE 95-60, and (3) the conditions in Sections I and III
of PTCE 95-60 have been satisfied.

    If any Class CE Certificate, Class P Certificate or Residual Certificate or
any interest therein is acquired or held in violation of the provisions of the
preceding paragraph, the next preceding permitted beneficial owner will be
treated as the beneficial owner of that Certificate retroactive to the date of
transfer to the purported beneficial owner. Any purported beneficial owner whose
acquisition or holding of any such Certificate or interest therein was effected
in violation of the provisions of the preceding paragraph shall indemnify and
hold harmless the Depositor, the Master Servicer, the Trustee and the Trust Fund
from and against any and all liabilities, claims, costs or expenses incurred by
those parties as a result of that acquisition or holding.

        (d) (i) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably authorized the Trustee or its designee under clause (iii)(A)
below to deliver payments to a Person other than such Person and to negotiate
the terms of any mandatory sale under clause (iii)(B) below and to execute all
instruments of Transfer and to do all other things necessary in connection with
any such sale. The rights of each Person acquiring any Ownership Interest in a
Residual Certificate are expressly subject to the following provisions:

               (A) Each Person holding or acquiring any Ownership Interest in a
            Residual Certificate shall be a Permitted Transferee and shall
            promptly notify the Trustee of any change or impending change in its
            status as a Permitted Transferee.

               (B) In connection with any proposed Transfer of any Ownership
            Interest in a Residual Certificate, the Trustee shall require
            delivery to it, and shall not register the Transfer of any Residual
            Certificate until its receipt of, an affidavit and agreement (a
            "Transfer Affidavit and Agreement," in the form attached hereto as
            Exhibit F-2) from the proposed

                                      -97-

<PAGE>

            Transferee, in form and substance satisfactory to the Trustee,
            representing and warranting, among other things, that such
            Transferee is a Permitted Transferee, that it is not acquiring its
            Ownership Interest in the Residual Certificate that is the subject
            of the proposed Transfer as a nominee, trustee or agent for any
            Person that is not a Permitted Transferee, that for so long as it
            retains its Ownership Interest in a Residual Certificate, it will
            endeavor to remain a Permitted Transferee, and that it has reviewed
            the provisions of this Section 5.02(d) and agrees to be bound by
            them.

               (C) Notwithstanding the delivery of a Transfer Affidavit and
            Agreement by a proposed Transferee under clause (B) above, if a
            Responsible Officer of the Trustee who is assigned to this
            transaction has actual knowledge that the proposed Transferee is not
            a Permitted Transferee, no Transfer of an Ownership Interest in a
            Residual Certificate to such proposed Transferee shall be effected.

               (D) Each Person holding or acquiring any Ownership Interest in a
            Residual Certificate shall agree (x) to require a Transfer Affidavit
            and Agreement in the form attached hereto as Exhibit F-2 from any
            other Person to whom such Person attempts to transfer its Ownership
            Interest in a Residual Certificate and (y) not to transfer its
            Ownership Interest unless it provides a Transferor Affidavit (in the
            form attached hereto as Exhibit F-2) to the Trustee stating that,
            among other things, it has no actual knowledge that such other
            Person is not a Permitted Transferee.

               (E) Each Person holding or acquiring an Ownership Interest in a
            Residual Certificate, by purchasing an Ownership Interest in such
            Certificate, agrees to give the Trustee written notice that it is a
            "pass-through interest holder" within the meaning of temporary
            Treasury regulation Section 1.67-3T(a)(2)(i)(A) immediately upon
            acquiring an Ownership Interest in a Residual Certificate, if it is,
            or is holding an Ownership Interest in a Residual Certificate on
            behalf of, a "pass-through interest holder."

         (ii) The Trustee will register the Transfer of any Residual Certificate
        only if it shall have received the Transfer Affidavit and Agreement and
        all of such other documents as shall have been reasonably required by
        the Trustee as a condition to such registration. In addition, no
        Transfer of a Residual Certificate shall be made unless the Trustee
        shall have received a representation letter from the Transferee of such
        Certificate to the effect that such Transferee is a Permitted
        Transferee.

        (iii) (A) If any purported Transferee shall become a Holder of a
        Residual Certificate in violation of the provisions of this Section
        5.02(d), then the last preceding Permitted Transferee shall be restored,
        to the extent permitted by law, to all rights as holder thereof
        retroactive to the date of registration of such Transfer of such
        Residual Certificate. The Trustee shall be under no liability to any
        Person for any registration of Transfer of a Residual Certificate that
        is in fact not permitted by this Section 5.02(d) or for making any
        payments due on such Certificate to the holder thereof or for taking any
        other action with respect to such holder under the provisions of this
        Agreement.

                                      -98-

<PAGE>

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

         (iv) The Trustee shall make available to the Internal Revenue Service
        and those Persons specified by the REMIC Provisions all information
        necessary to compute any tax imposed (A) as a result of the Transfer of
        an Ownership Interest in a Residual Certificate to any Person who is a
        Disqualified Organization, including the information described in
        Treasury regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with
        respect to the "excess inclusions" of such Residual Certificate and (B)
        as a result of any regulated investment company, real estate investment
        trust, common trust fund, partnership, trust, estate or organization
        described in Section 1381 of the Code that holds an Ownership Interest
        in a Residual Certificate having as among its record holders at any time
        any Person which is a Disqualified Organization. Reasonable compensation
        for providing such information may be accepted by the Trustee.

          (v) The provisions of this Section 5.02(d) set forth prior to this
        subsection (v) may be modified, added to or eliminated, provided that
        there shall have been delivered to the Trustee at the expense of the
        party seeking to modify, add to or eliminate any such provision the
        following:

               (A) written notification from each Rating Agency to the effect
            that the modification, addition to or elimination of such provisions
            will not cause such Rating Agency to downgrade its then-current
            ratings of any Class of Certificates; and

               (B) an Opinion of Counsel, in form and substance satisfactory to
            the Trustee, to the effect that such modification of, addition to or
            elimination of such provisions will not cause any of REMIC I, REMIC
            II, or REMIC III to cease to qualify as a REMIC and will not cause
            any of REMIC I, REMIC II or REMIC III as the case may be, to be
            subject to an entity-level tax caused by the Transfer of any
            Residual Certificate to a Person that is not a Permitted Transferee
            or a Person other than the prospective transferee to be subject to a
            REMIC-tax caused by the Transfer of a Residual Certificate to a
            Person that is not a Permitted Transferee.

                                      -99-

<PAGE>

        (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.11, the Trustee shall
execute, authenticate and deliver, in the name of the designated Transferee or
Transferees, one or more new Certificates of the same Class of a like aggregate
Percentage Interest.

        (f) At the option of the Holder thereof, any Certificate may be
exchanged for other Certificates of the same Class with authorized denominations
and a like aggregate Percentage Interest, upon surrender of such Certificate to
be exchanged at any office or agency of the Trustee maintained for such purpose
pursuant to Section 8.11. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, authenticate and deliver, the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing.

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

        (h) All Certificates surrendered for transfer and exchange shall be
canceled and destroyed by the Trustee in accordance with its customary
procedures.

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

        If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as may be required by it to save it harmless, then, in the absence of
actual knowledge by the Trustee that such Certificate has been acquired by a
bona fide purchaser or the Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of the same Class and of like denomination and
Percentage Interest. Upon the issuance of any new Certificate under this
Section, the Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the applicable
REMIC created hereunder, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.

                                      -100-

<PAGE>

        SECTION 5.04.      Persons Deemed Owners.

        The Depositor, the Master Servicer, the Trustee and any agent of any of
them may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 4.01 and for all other purposes whatsoever, and none of the Depositor,
the Master Servicer, the Trustee or any agent of any of them shall be affected
by notice to the contrary.

        SECTION 5.05.      Certain Available Information.

        On or prior to the date of the first sale of any Class CE Certificate,
Class P Certificate or Residual Certificate to an Independent third party, the
Depositor shall provide to the Trustee ten copies of any private placement
memorandum or other disclosure document used by the Depositor in connection with
the offer and sale of such Certificates. In addition, if any such private
placement memorandum or disclosure document is revised, amended or supplemented
at any time following the delivery thereof to the Trustee, the Depositor
promptly shall inform the Trustee of such event and shall deliver to the Trustee
ten copies of the private placement memorandum or disclosure document, as
revised, amended or supplemented. The Trustee shall maintain at its Corporate
Trust Office and shall make available free of charge during normal business
hours for review by any Holder of a Certificate or any Person identified to the
Trustee as a prospective transferee of a Certificate, originals or copies of the
following items: (i) in the case of a Holder or prospective transferee of a
Class CE Certificate, Class P Certificate or Residual Certificate, the related
private placement memorandum or other disclosure document relating to such Class
of Certificates, in the form most recently provided to the Trustee; and (ii) in
all cases, (A) this Agreement and any amendments hereof entered into pursuant to
Section 11.01, (B) all monthly statements required to be delivered to
Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trustee since the Closing Date
pursuant to Section 10.01(h), (D) any and all Officers' Certificates delivered
to the Trustee by the Master Servicer since the Closing Date to evidence the
Master Servicer's determination that any P&I Advance or Servicing Advance was,
or if made, would be a Nonrecoverable P&I Advance or Nonrecoverable Servicing
Advance, respectively, and (E) any and all Officers' Certificates delivered to
the Trustee by the Master Servicer since the Closing Date pursuant to Section
4.04(a). Copies and mailing of any and all of the foregoing items will be
available from the Trustee upon request at the expense of the Person requesting
the same.

                                      -101-

<PAGE>

                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

        SECTION 6.01.      Liability of the Depositor and the Master Servicer.

        The Depositor and the Master Servicer each shall be liable in accordance
herewith only to the extent of the obligations specifically imposed by this
Agreement upon them in their respective capacities as Depositor and Master
Servicer and undertaken hereunder by the Depositor and the Master Servicer
herein.

        SECTION 6.02.      Merger or Consolidation of the Depositor or the
                           Master Servicer.

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

        The Depositor or the Master Servicer may be merged or consolidated with
or into any Person, or transfer all or substantially all of its assets to any
Person, in which case any Person resulting from any merger or consolidation to
which the Depositor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Fannie Mae or Freddie Mac; and provided further that the Rating Agencies'
ratings of the Class A Certificates and the Mezzanine Certificates in effect
immediately prior to such merger or consolidation will not be qualified, reduced
or withdrawn as a result thereof (as evidenced by a letter to such effect from
the Rating Agencies).

        SECTION 6.03.      Limitation on Liability of the Depositor, the Master
                           Servicer and Others.

        None of the Depositor, the Master Servicer or any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on the Master Servicer
pursuant hereto, or against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder. The Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer may rely in good faith

                                      -102-

<PAGE>

on any document of any kind which, PRIMA FACIE, is properly executed and
submitted by any Person respecting any matters arising hereunder. The Depositor,
the Master Servicer and any director, officer, employee or agent of the
Depositor or the Master Servicer shall be indemnified and held harmless by the
Trust Fund against any loss, liability or expense incurred in connection with
any legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense relating to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) or any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement and,
in its opinion, does not involve it in any expense or liability; provided,
however, that each of the Depositor and the Master Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, unless the
Depositor or the Master Servicer acts without the consent of Holders of
Certificates entitled to at least 51% of the Voting Rights, the legal expenses
and costs of such action and any liability resulting therefrom (except any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder) shall be expenses, costs and
liabilities of the Trust Fund, and the Depositor and the Master Servicer shall
be entitled to be reimbursed therefor from the Collection Account as and to the
extent provided in Section 3.11, any such right of reimbursement being prior to
the rights of the Certificateholders to receive any amount in the Collection
Account.

        SECTION 6.04.      Limitation on Resignation of the Master Servicer.

        The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
Master Servicer and delivered to the Trustee. No resignation of the Master
Servicer shall become effective until the Trustee or a successor servicer shall
have assumed the Master Servicer's responsibilities, duties, liabilities (other
than those liabilities arising prior to the appointment of such successor) and
obligations under this Agreement.

        Except as expressly provided herein, the Master Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. The foregoing prohibition on
assignment shall not prohibit the Master Servicer from designating a Subservicer
as payee of any indemnification amount payable to the Master Servicer hereunder;
provided, however, that as provided in Section 3.06 hereof, no Subservicer shall
be a third-party beneficiary hereunder and the parties hereto shall not be
required to recognize any Subservicer as an indemnitee under this Agreement. If,
pursuant to any provision hereof, the duties of the Master Servicer are
transferred to a successor master servicer, the entire amount of the Servicing
Fee and other compensation payable to the Master Servicer pursuant hereto shall
thereafter be payable to such successor master servicer.

                                      -103-

<PAGE>

        SECTION 6.05.      Rights of the Depositor in Respect of the Master
                           Servicer.

        The Master Servicer shall afford (and any Sub-Servicing Agreement shall
provide that each Sub-Servicer shall afford) the Depositor and the Trustee, upon
reasonable notice, during normal business hours, access to all records
maintained by the Master Servicer (and any such Sub-Servicer) in respect of the
Master Servicer's rights and obligations hereunder and access to officers of the
Master Servicer (and those of any such Sub-Servicer) responsible for such
obligations. Upon request, the Master Servicer shall furnish to the Depositor
and the Trustee its (and any such Sub- Servicer's) most recent financial
statements and such other information relating to the Master Servicer's capacity
to perform its obligations under this Agreement as it possesses (and that any
such Sub-Servicer possesses). To the extent such information is not otherwise
available to the public, the Depositor and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without the Master
Servicer's written consent, except as required pursuant to this Agreement or to
the extent that it is appropriate to do so (i) in working with legal counsel,
auditors, taxing authorities or other governmental agencies or (ii) pursuant to
any law, rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the Depositor and the
Trustee or the Trust Fund, and in any case, the Depositor or the Trustee as the
case may be, shall use its best efforts to assure the confidentiality of any
such disseminated non- public information. The Depositor may, but is not
obligated to, enforce the obligations of the Master Servicer under this
Agreement and may, but is not obligated to, perform, or cause a designee to
perform, any defaulted obligation of the Master Servicer under this Agreement or
exercise the rights of the Master Servicer under this Agreement; provided that
the Master Servicer shall not be relieved of any of its obligations under this
Agreement by virtue of such performance by the Depositor or its designee. The
Depositor shall not have any responsibility or liability for any action or
failure to act by the Master Servicer and is not obligated to supervise the
performance of the Master Servicer under this Agreement or otherwise.

                                      -104-

<PAGE>

                                   ARTICLE VII

                                     DEFAULT

        SECTION 7.01.      Master Servicer Events of Default.

        (a) "Master Servicer Event of Default," wherever used herein, means any
one of the following events:

          (i) any failure by the Master Servicer to remit to the Trustee for
        distribution to the Certificateholders any payment (other than a P&I
        Advance required to be made from its own funds on any Master Servicer
        Remittance Date pursuant to Section 4.03) required to be made under the
        terms of the Certificates and this Agreement which continues unremedied
        for a period of one Business Day after the date upon which written
        notice of such failure, requiring the same to be remedied, shall have
        been given to the Master Servicer by the Depositor or the Trustee (in
        which case notice shall be provided by telecopy), or to the Master
        Servicer, the Depositor and the Trustee by the Holders of Certificates
        entitled to at least 25% of the Voting Rights; or

         (ii) any failure on the part of the Master Servicer duly to observe or
        perform in any material respect any other of the covenants or agreements
        on the part of the Master Servicer contained in this Agreement, or the
        breach by the Master Servicer of any representation and warranty
        contained in Section 2.05, which continues unremedied for a period of 30
        days (or if such failure or breach cannot be remedied within 30 days,
        then such remedy shall have been commenced within 30 days and diligently
        pursued thereafter; provided, however, that in no event shall such
        failure or breach be allowed to exist for a period of greater than 90
        days) after the earlier of (i) the date on which written notice of such
        failure, requiring the same to be remedied, shall have been given to the
        Master Servicer by the Depositor, the Trustee or to the Master Servicer,
        the Depositor and the Trustee by the Holders of Certificates entitled to
        at least 25% of the Voting Rights and (ii) actual knowledge of such
        failure by a Servicing Officer of the Master Servicer; or

        (iii) a decree or order of a court or agency or supervisory authority
        having jurisdiction in the premises in an involuntary case under any
        present or future federal or state bankruptcy, insolvency or similar law
        or the appointment of a conservator or receiver or liquidator in any
        insolvency, readjustment of debt, marshalling of assets and liabilities
        or similar proceeding, or for the winding-up or liquidation of its
        affairs, shall have been entered against the Master Servicer and such
        decree or order shall have remained in force undischarged or unstayed
        for a period of 90 days; or

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

                                      -105-

<PAGE>

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

         (vi)  any failure by the Master Servicer of the Master Servicer
        Termination Test; or

        (vii) any failure of the Master Servicer to make any P&I Advance on any
        Master Servicer Remittance Date required to be made from its own funds
        pursuant to Section 4.03 which continues unremedied until 3:00 p.m. New
        York time on the second Business Day immediately following the Master
        Servicer Remittance Date.

If a Master Servicer Event of Default described in clauses (i) through (vi) of
this Section shall occur, then, and in each and every such case, so long as such
Master Servicer Event of Default shall not have been remedied, the Depositor or
the Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Master Servicer (and to the Depositor if given by the Trustee or
to the Trustee if given by the Depositor), terminate all of the rights and
obligations of the Master Servicer in its capacity as Master Servicer under this
Agreement, to the extent permitted by law, and in and to the Mortgage Loans and
the proceeds thereof. If a Master Servicer Event of Default described in clause
(vii) hereof shall occur, the Trustee shall, by notice in writing to the Master
Servicer and the Depositor, terminate all of the rights and obligations of the
Master Servicer in its capacity as Master Servicer under this Agreement and in
and to the Mortgage Loans and the proceeds thereof. On or after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Certificates
(other than as a Holder of any Certificate) or the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee pursuant to and under this Section,
and, without limitation, the Trustee is hereby authorized and empowered, as
attorney-in-fact or otherwise, to execute and deliver, on behalf of and at the
expense of the Master Servicer, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. The Master Servicer agrees promptly (and in any event no later than
ten Business Days subsequent to such notice) to provide the Trustee with all
documents and records requested by it to enable it to assume the Master
Servicer's functions under this Agreement, and to cooperate with the Trustee in
effecting the termination of the Master Servicer's responsibilities and rights
under this Agreement, including, without limitation, the transfer within one
Business Day to the Trustee for administration by it of all cash amounts which
at the time shall be or should have been credited by the Master Servicer to the
Collection Account held by or on behalf of the Master Servicer, the Distribution
Account or any REO Account or Servicing Account held by or on behalf of the
Master Servicer or thereafter be received with respect to the Mortgage Loans or
any REO Property serviced by the Master Servicer (provided, however, that the
Master Servicer shall continue to be entitled to receive all amounts accrued or
owing to it under this Agreement on or prior to the date of such termination,
whether in respect of P&I Advances or otherwise, and shall continue to be
entitled to the benefits of Section 6.03, notwithstanding any such termination,
with respect to events occurring prior to such termination). For purposes of
this Section 7.01, the Trustee shall not be deemed to have knowledge of a Master
Servicer Event of Default unless a Responsible Officer of the Trustee assigned
to and

                                      -106-

<PAGE>

working in the Trustee's Corporate Trust Office has actual knowledge thereof or
unless written notice of any event which is in fact such a Master Servicer Event
of Default is received by the Trustee and such notice references the
Certificates, the Trust Fund or this Agreement.

        SECTION 7.02.      Trustee to Act; Appointment of Successor.

        (a) (1) On and after the time the Master Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer under this Agreement and the
transactions set forth or provided for herein, and all the responsibilities,
duties and liabilities relating thereto and arising thereafter shall be assumed
by the Trustee (except for any representations or warranties of the Master
Servicer under this Agreement, the responsibilities, duties and liabilities
contained in Section 2.05 and the obligation to deposit amounts in respect of
losses pursuant to Section 3.12) by the terms and provisions hereof including,
without limitation, the Master Servicer's obligations to make P&I Advances
pursuant to Section 4.03; provided, however, that if the Trustee is prohibited
by law or regulation from obligating itself to make advances regarding
delinquent mortgage loans, then the Trustee shall not be obligated to make P&I
Advances pursuant to Section 4.03; and provided further, that any failure to
perform such duties or responsibilities caused by the Master Servicer's failure
to provide information required by Section 7.01 shall not be considered a
default by the Trustee as successor to the Master Servicer hereunder. As
compensation therefor, the Trustee shall be entitled to the Servicing Fee and
all funds relating to the Mortgage Loans to which the Master Servicer would have
been entitled if it had continued to act hereunder. Notwithstanding the above
and subject to Section 7.02(a)(2) below, the Trustee if it shall be unwilling to
so act, or shall, if it is unable to so act or if it is prohibited by law from
making advances regarding delinquent mortgage loans or if the Holders of
Certificates entitled to at least 51% of the Voting Rights so request in writing
to the Trustee promptly appoint or petition a court of competent jurisdiction to
appoint, an established mortgage loan servicing institution acceptable to each
Rating Agency and having a net worth of not less than $15,000,000, as the
successor to the Master Servicer under this Agreement in the assumption of all
or any part of the responsibilities, duties or liabilities of the Master
Servicer under this Agreement.

            (2)No appointment of a successor to the Master Servicer under this
Agreement shall be effective until the assumption by the successor of all of the
Master Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Master Servicer as such hereunder. The Depositor, the Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Pending appointment of a successor to the Master
Servicer under this Agreement or the Trustee shall act in such capacity as
hereinabove provided.

        (b) If the Master Servicer fails to remit to the Trustee for
distribution to the Certificateholders any payment required to be made under the
terms of this Agreement (for purposes of this Section 7.02(b), a "Remittance")
because the Master Servicer is the subject of a proceeding under the federal
Bankruptcy Code and the making of such Remittance is prohibited by Section 362
of the federal Bankruptcy Code, the Trustee upon notice of such prohibition,
regardless of whether it has received

                                      -107-

<PAGE>

a notice of termination under Section 7.01, advance the amount of such
Remittance by depositing such amount in the Distribution Account on the related
Distribution Date. The Trustee shall be obligated to make such advance only if
(i) such advance, in the good faith judgment of the Trustee can reasonably be
expected to be ultimately recoverable from Stayed Funds and (ii) the Trustee is
not prohibited by law from making such advance or obligating itself to do so.
Upon remittance of the Stayed Funds to the Trustee or the deposit thereof in the
Distribution Account by the Master Servicer, a trustee in bankruptcy or a
federal bankruptcy court, the Trustee, may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trustee's,
right to recover from the Master Servicer's own funds interest on the amount of
any such advance. If the Trustee, as the case may be, at any time makes an
advance under this Subsection which it later determines in its good faith
judgment will not be ultimately recoverable from the Stayed Funds with respect
to which such advance was made, the Trustee shall be entitled to reimburse
itself for such advance, without interest, by withdrawing from the Distribution
Account, out of amounts on deposit therein, an amount equal to the portion of
such advance attributable to the Stayed Funds.

        SECTION 7.03.      Notification to Certificateholders.

        (a) Upon any termination of the Master Servicer pursuant to Section 7.01
above or any appointment of a successor to the Master Servicer pursuant to
Section 7.02 above, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.

        (b) Not later than the later of 60 days after the occurrence of any
event, which constitutes or which, with notice or lapse of time or both, would
constitute a Master Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Master Servicer Event of Default shall
have been cured or waived.

        SECTION 7.04.      Waiver of Master Servicer Events of Default.

        The Holders representing at least 66% of the Voting Rights evidenced by
all Classes of Certificates affected by any default or Master Servicer Event of
Default hereunder may waive such default or Master Servicer Event of Default;
PROVIDED, HOWEVER, that a default or Master Servicer Event of Default under
clause (i) or (vii) of Section 7.01 may be waived only by all of the Holders of
the Regular Certificates. Upon any such waiver of a default or Master Servicer
Event of Default, such default or Master Servicer Event of Default shall cease
to exist and shall be deemed to have been remedied for every purpose hereunder.
No such waiver shall extend to any subsequent or other default or Master
Servicer Event of Default or impair any right consequent thereon except to the
extent expressly so waived.

                                      -108-

<PAGE>

                                  ARTICLE VIII

                        CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR

        SECTION 8.01.      Duties of Trustee

        The Trustee prior to the occurrence of a Master Servicer Event of
Default and after the curing of all Master Servicer Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Master Servicer Event of
Default, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.

        The Trustee upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to it, which
are specifically required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they conform to the
requirements of this Agreement. If any such instrument is found not to conform
to the requirements of this Agreement in a material manner, it shall take such
action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to its satisfaction, it will provide notice thereof
to the Certificateholders.

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

          (i) Prior to the occurrence of a Master Servicer Event of Default, and
        after the curing of all such Master Servicer Events of Default which may
        have occurred, the duties and obligations of the Trustee shall be
        determined solely by the express provisions of this Agreement, the
        Trustee shall be liable except for the performance of such duties and
        obligations as are specifically set forth in this Agreement, no implied
        covenants or obligations shall be read into this Agreement against the
        Trustee, and in the absence of bad faith on the part of the Trustee, the
        Trustee may conclusively rely, as to the truth of the statements and the
        correctness of the opinions expressed therein, upon any certificates or
        opinions furnished to the Trustee that conform to the requirements of
        this Agreement;

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

        (iii) The Trustee shall not be personally liable with respect to any
        action taken, suffered or omitted to be taken by it in good faith in
        accordance with the direction of the Holders of Certificates entitled to
        at least 25% of the Voting Rights relating to the time, method and place
        of conducting any proceeding for any remedy available to it or
        exercising any trust or power conferred upon it under this Agreement.

                                      -109-

<PAGE>

        SECTION 8.02.      Certain Matters Affecting the Trustee

        (a) Except as otherwise provided in Section 8.01:

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

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

        (iii) The Trustee shall not be under any obligation to exercise any of
        the trusts or powers vested in it by this Agreement or to institute,
        conduct or defend any litigation hereunder or in relation hereto at the
        request, order or direction of any of the Certificateholders, pursuant
        to the provisions of this Agreement, unless such Certificateholders
        shall have offered to the Trustee reasonable security or indemnity
        against the costs, expenses and liabilities which may be incurred
        therein or thereby; nothing contained herein shall, however, relieve the
        Trustee of the obligation, upon the occurrence of a Master Servicer
        Event of Default (which has not been cured or waived), to exercise such
        of the rights and powers vested in it by this Agreement, and to use the
        same degree of care and skill in their exercise as a prudent person
        would exercise or use under the circumstances in the conduct of such
        person's own affairs;

         (iv) The Trustee shall not be personally liable for any action taken,
        suffered or omitted by it in good faith and believed by it to be
        authorized or within the discretion or rights or powers conferred upon
        it by this Agreement;

          (v) Prior to the occurrence of a Master Servicer Event of Default
        hereunder and after the curing of all Master Servicer Events of Default
        which may have occurred, the Trustee shall not be bound to make any
        investigation into the facts or matters stated in any resolution,
        certificate, statement, instrument, opinion, report, notice, request,
        consent, order, approval, bond or other paper or document, unless
        requested in writing to do so by the Holders of Certificates entitled to
        at least 25% of the Voting Rights; provided, however, that if the
        payment within a reasonable time to the Trustee, of the costs, expenses
        or liabilities likely to be incurred by it in the making of such
        investigation is, in the opinion of the Trustee, not reasonably assured
        to the Trustee, by such Certificateholders, the Trustee may require
        reasonable indemnity against such expense, or liability from such
        Certificateholders as a condition to taking any such action;

         (vi) The Trustee may execute any of the trusts or powers hereunder or
        perform any duties hereunder either directly or by or through agents or
        attorneys; and

                                      -110-

<PAGE>

        (vii) The Trustee shall not be personally liable for any loss resulting
        from the investment of funds held in the Collection Account at the
        direction of the Master Servicer pursuant to Section 3.12.

        (b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.

        SECTION 8.03.      Trustee not Liable for Certificates or Mortgage
                           Loans.

        The recitals contained herein and in the Certificates (other than the
signature of the Trustee, the authentication of the Trustee on the Certificates,
the acknowledgments of the Trustee contained in Article II and the
representations and warranties of the Trustee in Section 8.12) shall be taken as
the statements of the Depositor and the Trustee shall not assume any
responsibility for their correctness. The Trustee shall not make any
representations or warranties as to the validity or sufficiency of this
Agreement (other than as specifically set forth in Section 8.12) or of the
Certificates (other than the signature of the Trustee, and authentication of the
Trustee on the Certificates) or of any Mortgage Loan or related document. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor or the Master Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Collection
Account by the Master Servicer, other than any funds held by or on behalf of the
Trustee in accordance with Section 3.10.

        SECTION 8.04.      Trustee May Own Certificates.

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

        SECTION 8.05.      Trustee's Fees and Expenses.

        (a) The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself the Trustee Fee. The Trustee and any
director, officer, employee or agent of the Trustee, shall be indemnified by the
Trust Fund and held harmless against any loss, liability or expense (not
including expenses, disbursements and advances incurred or made by the Trustee
including the compensation and the expenses and disbursements of its agents and
counsel, in the ordinary course of the Trustee's performance in accordance with
the provisions of this Agreement) incurred by the Trustee in connection with any
claim or legal action or any pending or threatened claim or legal action arising
out of or in connection with the acceptance or administration of its obligations
and duties under this Agreement, other than any loss, liability or expense (i)
resulting from any breach of the Master Servicer's obligations in connection
with this Agreement, (ii) that constitutes a specific liability of the Trustee
pursuant to Section 10.01(g) or (iii) any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder as a result of a breach of the

                                      -111-

<PAGE>

Trustee's obligations under Article X hereof. The Master Servicer agrees to
indemnify the Trustee, from, and hold it harmless against, any loss, liability
or expense arising in respect of any breach by the Master Servicer of its
obligations in connection with this Agreement. Such indemnity shall survive the
termination or discharge of this Agreement and the resignation or removal of the
Trustee. Any payment hereunder made by the Master Servicer to the Trustee shall
be from the Master Servicer's own funds, without reimbursement from REMIC I
therefor.

        (b) The Trustee shall pay any annual rating agency fees of the Rating
Agencies for ongoing surveillance from its own funds without right of
reimbursement.

        SECTION 8.06.      Eligibility Requirements for Trustee

        The Trustee hereunder shall at all times be a corporation or an
association (other than the Depositor, the Originator, the Seller, the Master
Servicer or any Affiliate of the foregoing) organized and doing business under
the laws of any state or the United States of America, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 (or a member of a bank holding company whose capital and
surplus is at least $50,000,000) and subject to supervision or examination by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of conditions so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07.

        SECTION 8.07.      Resignation and Removal of the Trustee

        The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Depositor, the Master
Servicer and to the Certificateholders. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the resigning
Trustee and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders, the Trustee and the Master Servicer by the
Depositor. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.

        If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
therefor by the Depositor or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Depositor may remove
the and appoint a successor by written instrument, in duplicate, which
instrument shall be delivered to the Trustee so removed and to the successor
trustee.

                                      -112-

<PAGE>

A copy of such instrument shall be delivered to the Certificateholders, the
Trustee and the Master Servicer by the Depositor.

        The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders and the Master Servicer by the
Depositor.

        Any resignation or removal of the Trustee and appointment of a successor
trustee, pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee as provided
in Section 8.08. Notwithstanding the foregoing, in the event the Trustee is
unable to continue to perform its obligations pursuant to the terms of this
Agreement prior to the appointment of a successor, the Trustee shall be
obligated to perform such obligations until a new trustee is appointed. Such
performance shall be without prejudice to any claim by a party hereto or
beneficiary hereof resulting from the Trustee's breach of its obligations
hereunder.

        SECTION 8.08.      Successor Trustee

        Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements to the extent held by it hereunder, as well
as all moneys, held by it hereunder, and the Depositor and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties and obligations.

        No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06 and the appointment of such
successor trustee shall not result in a downgrading of any Class of Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.

        Upon acceptance of appointment by a successor trustee, as provided in
this Section, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.

                                      -113-

<PAGE>

        SECTION 8.09.      Merger or Consolidation of Trustee

        Any corporation or association into which either the Trustee may be
merged or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to the
business of the Trustee shall be the successor of the Trustee hereunder,
provided such corporation or association shall be eligible under the provisions
of Section 8.06, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.

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

        Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of REMIC I or property securing the same may at the time be located, the Trustee
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-
trustees, jointly with the Trustee, or separate trustee or separate trustees, of
all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, such title to REMIC I, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as the 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 8.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.08 hereof.

        In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to a defaulting Master Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to REMIC I or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.

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

        Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful

                                      -114-

<PAGE>

act under or in respect of this Agreement on its behalf and in its name. If any
separate trustee or co- trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee or co-trustee.

        SECTION 8.11.      Appointment of Office or Agency.

        The Trustee will appoint an office or agency in the City of St. Paul,
Minnesota where the Certificates may be surrendered for registration of transfer
or exchange, and presented for final distribution, and where notices and demands
to or upon the Trustee in respect of the Certificates and this Agreement may be
served.

        SECTION 8.12.      Representations and Warranties.

        The Trustee hereby represents and warrants to the Master Servicer and
the Depositor, as of the Closing Date, that:

        (i) it is a national banking association duly organized, validly
    existing and in good standing under the laws of the United States of
    America.

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

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

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

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

        (vi) No litigation is pending or, to the best of its knowledge,
    threatened against it, which would prohibit it from entering into this
    Agreement or, in its good faith reasonable judgment,

                                      -115-

<PAGE>

    is likely to materially and adversely affect either the ability of it to
    perform its obligations under this Agreement or its financial condition.

                                      -116-

<PAGE>

                                   ARTICLE IX

                                   TERMINATION

        SECTION 9.01       Termination Upon Repurchase or Liquidation of All
                           Mortgage Loans.

        (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer and
the Trustee (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to make remittances to the
Trustee and the Trustee to make payments in respect of the REMIC I Regular
Interests, the REMIC II Regular Interests, the Classes of Certificates as
hereinafter set forth) shall terminate upon payment to the Certificateholders
and the deposit of all amounts held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Terminator (as defined
below) of all Mortgage Loans and each REO Property remaining in REMIC I and (ii)
the final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan or REO Property remaining in REMIC I; provided, however,
that in no event shall the trust created hereby continue beyond the expiration
of 21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. Subject to Section 3.10 hereof, the purchase by the
Terminator of all Mortgage Loans and each REO Property remaining in REMIC I
shall be at a price (the "Termination Price") equal to the greater of (A) the
aggregate Purchase Price of all the Mortgage Loans included in REMIC I, plus the
appraised value of each REO Property, if any, included in REMIC I, such
appraisal to be conducted by an appraiser mutually agreed upon by the Terminator
and the Trustee in their reasonable discretion and (B) the aggregate fair market
value of all of the assets of REMIC I (as determined by the Terminator and the
Trustee, as of the close of business on the third Business Day next preceding
the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Section 9.01) plus
any additional amounts necessary to pay all interest accrued on, as well as
amounts necessary to retire the principal balance of, any net interest margin
securities to be issued by a separate trust and secured by all or a portion of
the Class CE Certificates and Class P Certificates.

        (b) The Master Servicer shall have the right (the party exercising such
right, the "Terminator"), to purchase all of the Mortgage Loans and each REO
Property remaining in REMIC I pursuant to clause (i) of the preceding paragraph
no later than the Determination Date in the month immediately preceding the
Distribution Date on which the Certificates will be retired; provided, however,
that the Terminator may elect to purchase all of the Mortgage Loans and each REO
Property remaining in REMIC I pursuant to clause (i) above only if the aggregate
Stated Principal Balance of the Mortgage Loans and each REO Property remaining
in the Trust Fund at the time of such election is reduced to less than 10% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date. By acceptance of the Residual Certificates, the Holder of the Residual
Certificates agrees, in connection with any termination hereunder, to assign and
transfer any amounts in excess of par, and to the extent received in respect of
such termination, to pay any such amounts to the Holders of the Class CE
Certificates.

                                      -117-

<PAGE>

        (c) Notice of the liquidation of the Certificates shall be given
promptly by the Trustee by letter to Certificateholders mailed (a) in the event
such notice is given in connection with the purchase of the Mortgage Loans and
each REO Property by the Terminator, not earlier than the 10th day and not later
than the 20th day of the month next preceding the month of the final
distribution on the Certificates or (b) otherwise during the month of such final
distribution on or before the Determination Date in such month, in each case
specifying (i) the Distribution Date upon which the Trust Fund will terminate
and the final payment in respect of the REMIC I Regular Interests, the REMIC II
Regular Interests and the Certificates will be made upon presentation and
surrender of the related Certificates at the office of the Trustee therein
designated, (ii) the amount of any such final payment, (iii) that no interest
shall accrue in respect of the REMIC I Regular Interests, the REMIC II Regular
Interests or the Certificates from and after the Interest Accrual Period
relating to the final Distribution Date therefor and (iv) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Trustee. In the event such notice is given in connection with the purchase
of all of the Mortgage Loans and each REO Property remaining in REMIC I by the
Terminator, the Terminator shall deliver to the Trustee for deposit in the
Distribution Account not later than the last Business Day of the month next
preceding the month of the final distribution on the Certificates an amount in
immediately available funds equal to the above-described purchase price. The
Trustee shall remit to the Master Servicer from such funds deposited in the
Distribution Account (i) any amounts which the Master Servicer would be
permitted to withdraw and retain from the Collection Account pursuant to Section
3.11 and (ii) any other amounts otherwise payable by the Trustee to the Master
Servicer from amounts on deposit in the Distribution Account pursuant to the
terms of this Agreement, in each case prior to making any final distributions
pursuant to Section 10.01(d) below. Upon certification to the Trustee by a
Servicing Officer of the making of such final deposit, the Trustee shall
promptly release to the Terminator the Mortgage Files for the remaining Mortgage
Loans, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.

        (d) Upon presentation of the Certificates by the Certificateholders on
the final Distribution Date, the Trustee shall distribute to each
Certificateholder so presenting and surrendering its Certificates the amount
otherwise distributable on such Distribution Date in accordance with Section
4.01 in respect of the Certificates so presented and surrendered. Any funds not
distributed to any Holder or Holders of Certificates being retired on such
Distribution Date because of the failure of such Holder or Holders to tender
their Certificates shall, on such date, be set aside and held in trust and
credited to the account of the appropriate non-tendering Holder or Holders. If
any Certificates as to which notice has been given pursuant to this Section 9.01
shall not have been surrendered for cancellation within six months after the
time specified in such notice, the Trustee shall mail a second notice to the
remaining non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trustee shall, directly or through an
agent, mail a final notice to the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the trust funds. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Salomon Smith Barney Inc. all such
amounts, and all rights of non-tendering Certificateholders in or to such
amounts shall thereupon cease. No

                                      -118-

<PAGE>

interest shall accrue or be payable to any Certificateholder on any amount held
in trust by the Trustee as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with this
Section 9.01. Any such amounts held in trust by the Trustee shall be held in an
Eligible Account and the Trustee may direct any depository institution
maintaining such account to invest the funds in one or more Permitted
Investments. All income and gain realized from the investment of funds deposited
in such accounts held in trust by the Trustee shall be for the benefit of the
Trustee; provided, however, that the Trustee shall deposit in such account the
amount of any loss of principal incurred in respect of any such Permitted
Investment made with funds in such accounts immediately upon the realization of
such loss.

        Immediately following the deposit of funds in trust hereunder in respect
of the Certificates, the Trust Fund shall terminate.

        SECTION 9.02       Additional Termination Requirements.

        (a) In the event that the Terminator purchases all the Mortgage Loans
and each REO Property or the final payment on or other liquidation of the last
Mortgage Loan or REO Property remaining in REMIC I pursuant to Section 9.01, the
Trust Fund shall be terminated in accordance with the following additional
requirements:

          (i) The Trustee shall specify the first day in the 90-day liquidation
        period in a statement attached to REMIC I's, REMIC II's and REMIC III's
        final Tax Return pursuant to Treasury regulation Section 1.860F-1 and
        shall satisfy all requirements of a qualified liquidation under Section
        860F of the Code and any regulations thereunder, as evidenced by an
        Opinion of Counsel obtained at the expense of the Terminator;

         (ii) During such 90-day liquidation period and, at or prior to the time
        of making of the final payment on the Certificates, the Trustee shall
        sell all of the assets of REMIC I to the Terminator for cash; and

        (iii) At the time of the making of the final payment on the
        Certificates, the Trustee shall distribute or credit, or cause to be
        distributed or credited, to the Holders of the Residual Certificates all
        cash on hand in the Trust Fund (other than cash retained to meet
        claims), and the Trust Fund shall terminate at that time.

        (b) At the expense of the requesting Terminator (or, if the Trust Fund
is being terminated as a result of the occurrence of the event described in
clause (ii) of the first paragraph of Section 9.01, at the expense of the
Trustee without the right of reimbursement from the Trust Fund), the Trustee
shall prepare or cause to be prepared the documentation required in connection
with the adoption of a plan of liquidation of each of REMIC I, REMIC II and
REMIC III pursuant to this Section 9.02.

        (c) By their acceptance of Certificates, the Holders thereof hereby
agree to authorize the Trustee to specify the 90-day liquidation period for each
of REMIC I, REMIC II and REMIC III, which authorization shall be binding upon
all successor Certificateholders.

                                      -119-

<PAGE>

                                    ARTICLE X

                                REMIC PROVISIONS

        SECTION 10.01.     REMIC Administration.

        (a) The Trustee shall elect to treat each of REMIC I, REMIC II and REMIC
III, as a REMIC under the Code and, if necessary, under applicable state law.
Each such election will be made by the Trustee on Form 1066 or other appropriate
federal tax or information return or any appropriate state return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC election in respect of
REMIC I, the REMIC I Regular Interests shall be designated as the Regular
Interests in REMIC I and the Class R-I Certificates shall be designated as the
Residual Interests in REMIC I. The REMIC II Regular Interests shall be
designated as the Regular Interests in REMIC II and the Class R-II Certificates
shall be designated as the Residual Interests in REMIC II. The Class A
Certificates, the Mezzanine Certificates, the Class A-IO Certificates, the Class
CE Certificates and the Class P Certificates shall be designated as the Regular
Interests in REMIC III and the Class R-III Certificates shall be designated as
the Residual Interests in REMIC III. The Trustee shall not permit the creation
of any "interests" in REMIC I, REMIC II or REMIC III (within the meaning of
Section 860G of the Code) other than the REMIC I Regular Interests, the REMIC II
Regular Interests and the interests represented by the Certificates.

        (b) The Closing Date is hereby designated as the "Startup Day" of REMIC
I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of the Code.

        (c) The Trustee shall be reimbursed for any and all expenses relating to
any tax audit of the Trust Fund (including, but not limited to, any professional
fees or any administrative or judicial proceedings with respect to REMIC I,
REMIC II or REMIC III that involve the Internal Revenue Service or state tax
authorities), including the expense of obtaining any tax related Opinion of
Counsel except as specified herein. The Trustee, as agent for REMIC I's, REMIC
II's and REMIC III's tax matters person shall (i) act on behalf of the Trust
Fund in relation to any tax matter or controversy involving any of REMIC I,
REMIC II or REMIC III and (ii) represent the Trust Fund in any administrative or
judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The holder of the largest Percentage
Interest of each Class of Residual Certificates shall be designated, in the
manner provided under Treasury regulations section 1.860F-4(d) and Treasury
regulations section 301.6231(a)(7)-1, as the tax matters person of the related
REMIC created hereunder. By their acceptance thereof, the holder of the largest
Percentage Interest of the Residual Certificates hereby agrees to irrevocably
appoint the Trustee or an Affiliate as its agent to perform all of the duties of
the tax matters person for the Trust Fund.

        (d) The Trustee shall prepare, sign and file all of the Tax Returns in
respect of each REMIC created hereunder. The expenses of preparing and filing
such returns shall be borne by the Trustee without any right of reimbursement
therefor.

        (e) The Trustee shall perform on behalf of each of REMIC I, REMIC II and
REMIC III all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, as required by the Code, the REMIC

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<PAGE>

Provisions or other such compliance guidance, the Trustee shall provide (i) to
any Transferor of a Residual Certificate such information as is necessary for
the application of any tax relating to the transfer of a Residual Certificate to
any Person who is not a Permitted Transferee, (ii) to the Certificateholders
such information or reports as are required by the Code or the REMIC Provisions
including reports relating to interest, original issue discount and market
discount or premium (using the Prepayment Assumption as required) and (iii) to
the Internal Revenue Service the name, title, address and telephone number of
the person who will serve as the representative of REMIC I, REMIC II and REMIC
III. The Depositor shall provide or cause to be provided to the Trustee, within
ten (10) days after the Closing Date, all information or data that the Trustee
reasonably determines to be relevant for tax purposes as to the valuations and
issue prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flow of the Certificates.

        (f) The Trustee shall take such action and shall cause each REMIC
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions. The Trustee
shall not take any action or cause the Trust Fund to take any action or fail to
take (or fail to cause to be taken) any action that, under the REMIC Provisions,
if taken or not taken, as the case may be, could (i) endanger the status of
REMIC I, REMIC II or REMIC III as a REMIC or (ii) result in the imposition of a
tax upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee has received an Opinion of
Counsel, addressed to the Trustee (at the expense of the party seeking to take
such action but in no event at the expense of the Trustee) to the effect that
the contemplated action will not, with respect to any of REMIC I, REMIC II or
REMIC III, endanger such status or result in the imposition of such a tax, nor
shall the Master Servicer take or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that it
has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action; provided that the Master Servicer may
conclusively rely on such Opinion of Counsel and shall incur no liability for
its action or failure to act in accordance with such Opinion of Counsel. In
addition, prior to taking any action with respect to any of REMIC I, REMIC II or
REMIC III or the respective assets of each, or causing REMIC I, REMIC II or
REMIC III to take any action, which is not contemplated under the terms of this
Agreement, the Master Servicer will consult with the Trustee or its designee, in
writing, with respect to whether such action could cause an Adverse REMIC Event
to occur with respect to REMIC I, REMIC II or REMIC III and the Master Servicer
shall not take any such action or cause REMIC I, REMIC II or REMIC III to take
any such action as to which the Trustee has advised it in writing that an
Adverse REMIC Event could occur; provided that the Master Servicer may
conclusively rely on such writing and shall incur no liability for its action or
failure to act in accordance with such writing. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement, but in no
event shall such cost be an expense of the Trustee. At all times as may be
required by the Code, the Trustee will ensure that substantially all of the
assets of REMIC I and REMIC II will consist of "qualified mortgages" as defined
in Section 860G(a)(3) of the Code and "permitted investments" as defined in
Section 860G(a)(5) of the Code, to the extent such obligations are within the
Trustee's control and not otherwise inconsistent with the terms of this
Agreement.

                                      -121-

<PAGE>

        (g) In the event that any tax is imposed on "prohibited transactions" of
any REMIC created hereunder as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" of such REMIC as defined in Section
860G(c) of the Code, on any contributions to any such REMIC after the Startup
Day therefor pursuant to Section 860G(d) of the Code, or any other tax is
imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trustee pursuant to Section 10.03 hereof,
if such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article X, (ii) to the Master Servicer pursuant to
Section 10.03 hereof, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under Article III or this Article X,
or (iii) against amounts on deposit in the Distribution Account and shall be
paid by withdrawal therefrom.

        (h) On or before April 15 of each calendar year, commencing April 15,
2002, the Trustee shall deliver to each Rating Agency an Officer's Certificate
of the Trustee stating the Trustee's compliance with this Article X.

        (i) The Trustee shall, for federal income tax purposes, maintain books
and records with respect to each of REMIC I, REMIC II and REMIC III on a
calendar year and on an accrual basis.

        (j) Following the Startup Day, neither the Master Servicer nor the
Trustee shall accept any contributions of assets to any of REMIC I, REMIC II or
REMIC III other than in connection with any Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03 unless it shall have received an
Opinion of Counsel to the effect that the inclusion of such assets in the Trust
Fund will not cause the related REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.

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

        SECTION 10.02.     Prohibited Transactions and Activities.

        None of the Depositor, the Master Servicer or the Trustee shall sell,
dispose of or substitute for any of the Mortgage Loans (except in connection
with (i) the foreclosure of a Mortgage Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of REMIC I, (iii) the termination of REMIC I
pursuant to Article IX of this Agreement, (iv) a substitution pursuant to
Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), nor acquire any assets for any of REMIC I,
REMIC II or REMIC III (other than REO Property acquired in respect of a
defaulted Mortgage Loan), nor sell or dispose of any investments in the
Collection Account or the Distribution Account for gain, nor accept any
contributions to any of REMIC I, REMIC II or REMIC III after the Closing Date
(other than a Qualified Substitute Mortgage Loan delivered in accordance with
Section 2.03), unless it has received an Opinion of Counsel, addressed to the
Trustee (at the expense of the party seeking to cause such sale, disposition,
substitution, acquisition or contribution but in no event

                                      -122-

<PAGE>

at the expense of the Trustee) that such sale, disposition, substitution,
acquisition or contribution will not (a) affect adversely the status of any of
REMIC I, REMIC II or REMIC III as a REMIC or (b) cause any of REMIC I, REMIC II
or REMIC III to be subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions.

        SECTION 10.03.     Master Servicer and Trustee Indemnification.

        (a) The Trustee agrees to indemnify the Trust Fund, the Depositor and
the Master Servicer for any taxes and costs including, without limitation, any
reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Depositor or the Master Servicer as a result of a breach of the Trustee's
covenants set forth in this Article X.

        (b) The Master Servicer agrees to indemnify the Trust Fund, the
Depositor and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor or the Trustee as a result of a breach of the Master Servicer's
covenants set forth in Article III or this Article X.

                                      -123-

<PAGE>

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

        SECTION 11.01.     Amendment.

         This Agreement may be amended from time to time by the Depositor, the
Master Servicer and the Trustee without the consent of any of the
Certificateholders, (i) to cure any ambiguity or defect, (ii) to correct, modify
or supplement any provisions herein (including to give effect to the
expectations of Certificateholders), or (iii) to make any other provisions with
respect to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement, provided that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Trustee
adversely affect in any material respect the interests of any Certificateholder.
No amendment shall be deemed to adversely affect in any material respect the
interests of any Certificateholder who shall have consented thereto, and no
Opinion of Counsel shall be required to address the effect of any such amendment
on any such consenting Certificateholder.

         This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner, other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing at least 66% of the Voting Rights
allocated to such Class, or (iii) modify the consents required by the
immediately preceding clauses (i) and (ii) without the consent of the Holders of
all Certificates then outstanding. Notwithstanding any other provision of this
Agreement, for purposes of the giving or withholding of consents pursuant to
this Section 11.01, Certificates registered in the name of the Depositor or the
Master Servicer or any Affiliate thereof shall be entitled to Voting Rights with
respect to matters affecting such Certificates.

        Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel to the effect that such amendment will not result
in the imposition of any tax on any of REMIC I, REMIC II or REMIC III pursuant
to the REMIC Provisions or cause any of REMIC I, REMIC II or REMIC III to fail
to qualify as a REMIC at any time that any Certificates are outstanding.

        Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Certificateholder.

        It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the

                                      -124-

<PAGE>

authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.

        The cost of any Opinion of Counsel to be delivered pursuant to this
Section 11.01 shall be borne by the Person seeking the related amendment, but in
no event shall such Opinion of Counsel be an expense of the Trustee.

        The Trustee may, but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.

        SECTION 11.02.     Recordation of Agreement; Counterparts.

        To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Certificateholders, but only upon
direction of the Trustee accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.

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

        SECTION 11.03.     Limitation on Rights of Certificateholders.

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

        No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

        No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered

                                      -125-

<PAGE>

to the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee, for
15 days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding. It
is understood and intended, and expressly covenanted by each Certificateholder
with every other Certificateholder and the Trustee, that no one or more Holders
of Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

        SECTION 11.04.     Governing Law.

        This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

        SECTION 11.05.     Notices.

        All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when received if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
or delivered in any other manner specified herein, to (a) in the case of the
Depositor, 390 Greenwich Street, 4th Floor, New York, New York, Attention:
Mortgage Finance (telecopy number (212) 723-8604), or such other address or
telecopy number as may hereafter be furnished to the Master Servicer and the
Trustee in writing by the Depositor, (b) in the case of the Master Servicer,
1675 Palm Beach Lakes Blvd., Suite 10A, West Palm Beach, Florida 33401,
Attention: Secretary (telecopy number: (561) 682-8177), or such other address or
telecopy number as may hereafter be furnished to the Trustee and the Depositor
in writing by the Master Servicer and (c) in the case of the Trustee, 180 East
Fifth Street, St. Paul, Minnesota, 55101, Attention: Structured Finance/SBMSVII
2001-NC1 (telecopy number (612) 244-0089), or such other address or telecopy
number as may hereafter be furnished to the Master Servicer and the Depositor in
writing by the Trustee. Any notice required or permitted to be given to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the manner
set forth above.

                                      -126-

<PAGE>

        SECTION 11.06.     Severability of Provisions.

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

        SECTION 11.07.     Notice to Rating Agencies.

        The Trustee shall use its best efforts promptly to provide notice to the
Rating Agencies with respect to each of the following of which it has actual
knowledge:

        1.  Any material change or amendment to this Agreement;

        2.  The occurrence of any Master Servicer Event of Default that has not
            been cured or waived;

        3.  The resignation or termination of the Master Servicer or the
            Trustee;

        4.  The repurchase or substitution of Mortgage Loans pursuant to or as
            contemplated by Section 2.03;

        5.  The final payment to the Holders of any Class of Certificates;

        6.  Any change in the location of the Collection Account or the
            Distribution Account;

        7.  Any event that would result in the inability of the Trustee to make
            advances regarding delinquent Mortgage Loans; and

        8.  The filing of any claim under any Master Servicer's blanket bond and
            errors and omissions insurance policy required by Section 3.14 or
            the cancellation or material modification of coverage under any such
            instrument.

        In addition, the Trustee shall promptly furnish to each Rating Agency
copies of each report to Certificateholders described in Section 4.02 and the
Master Servicer shall promptly furnish to each Rating Agency copies of the
following:

        1.  Each annual statement as to compliance described in Section 3.20;
            and

        2.  Each annual independent public accountants' servicing report
            described in Section 3.21.

        Any such notice pursuant to this Section 11.07 shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first class mail, postage prepaid, or by express delivery service to Fitch,
Inc., One State Street, 32nd Floor, New York, New York 10004 and to Standard &
Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc., 55 Water

                                      -127-

<PAGE>

Street, New York, New York 10007 or such other addresses as the Rating Agencies
may designate in writing to the parties hereto.

        SECTION 11.08.     Article and Section References.

        All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.

        SECTION 11.09.     Grant of Security Interest.

        It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Depositor to the Trustee, be, and be construed as, a
sale of the Mortgage Loans by the Depositor and not a pledge of the Mortgage
Loans to secure a debt or other obligation of the Depositor. However, in the
event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Depositor, then, (a) it is the
express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obligations described in clause (3) of the preceding
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.

                                      -128-

<PAGE>

        IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, in each case as of the day and year first above
written.

                                             SALOMON BROTHERS MORTGAGE
                                             SECURITIES VII, INC.
                                             as Depositor

                                             By:         /s/Matthew R. Bollo
                                                         -----------------------
                                             Name:       Matthew R. Bollo
                                             Title:

                                             OCWEN FEDERAL BANK FSB
                                             as Master Servicer

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

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:         /s/Eve D. Kaplan
                                                         -----------------------
                                             Name:       Eve D. Kaplan
                                             Title:      Vice President

<PAGE>

STATE OF _____________        )
                              ) ss.:
COUNTY OF ___________         )

        On the __th day of May 2001, before me, a notary public in and for said
State, personally appeared ________________, known to me to be an Assistant Vice
President of Salomon Brothers Mortgage Securities VII, Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

        IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                             ___________________________
                                             Notary Public

[Notarial Seal]

<PAGE>

STATE OF ______________  )
                         ) ss.:
COUNTY OF _________      )

        On the ____ day of May 2001, before me, a notary public in and for said
State, personally appeared _____________________, known to me to be
__________________ of Ocwen Federal Bank FSB, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

        IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                             ___________________________
                                             Notary Public

[Notarial Seal]

<PAGE>

STATE OF MINNESOTA  )
                    ) ss.:
COUNTY OF RAMSEY    )

        On the ____day of May 2001, before me, a notary public in and for said
State, personally appeared Eve D. Kaplan, known to me to be a Vice President of
U.S. Bank National Association, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

        IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

                                             ___________________________
                                             Notary Public

[Notarial Seal]

<PAGE>

                                   EXHIBIT A-1
                                   -----------

                           FORM OF CLASS A CERTIFICATE

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT," AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
       860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

Series 2001-NC1, Class A                Aggregate Certificate Principal Balance
                                        of the Class A Certificates as of the
Pass-Through Rate: Variable             Issue Date: $[__]

Cut-off Date:  June 1, 2001             Denomination: $_____________

Date of Pooling and Servicing           Master Servicer: Ocwen Federal Bank FSB
Agreement: May 30, 2001
                                        Trustee: U.S. Bank National Association
First Distribution Date:
June 20, 2001                           Issue Date: May __, 2001

No. ___                                 CUSIP: [__]

       DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
       OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
       ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
       AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
       DENOMINATION OF THIS CERTIFICATE.

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class A Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class A Certificates in REMIC III created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Salomon Brothers
Mortgage Securities VII, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class A Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class A
Certificates, or otherwise by check mailed by first class mail to the address of
the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

<PAGE>

                                       -3-

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of (i) One-Month LIBOR plus 0.29%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One- Month LIBOR plus 0.58% per annum, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass-Through Rate for such Distribution
Date.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

          The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As

<PAGE>

                                       -4-

provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.

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

          The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee nor any such agent shall be
affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

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

Dated:  May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class A Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:______________________________
                                                    Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -      Custodian
                                                              ------------------
TEN ENT - as tenants by the entireties                       (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
            if survivorship and not as                    _______________
            tenants in common                                 (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         ______________________________________
                                         Signature by or on behalf of assignor

                                         ______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                   EXHIBIT A-2
                                   -----------

                          FORM OF CLASS M-1 CERTIFICATE

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT," AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
       860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

       THIS  CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES  AND
       THE  CLASS  A-IO  CERTIFICATES  TO THE  EXTENT  DESCRIBED  IN THE
       POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

Series 2001-NC1, Class M-1              Aggregate Certificate Principal Balance
                                        of the Class M-1 Certificates as of the
Pass-Through Rate: Variable             Issue Date: $[__]

Cut-off Date:  June 1, 2001             Denomination: $_____________

Date of Pooling and Servicing           Master Servicer:
Agreement: May 30, 2001                 Ocwen Federal Bank FSB

First Distribution Date:                Trustee: U.S. Bank National Association
June 20, 2001
                                        Issue Date: May __, 2001
No. ___
                                        CUSIP: [__]

       DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
       OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
       ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
       AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
       DENOMINATION OF THIS CERTIFICATE.

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class M-1 Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class M-1 Certificates in REMIC III created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Salomon Brothers
Mortgage Securities VII, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-1 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class M-1 Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class
M-1 Certificates, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register. Notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Trustee of the pendency of
such distribution and

<PAGE>

                                       -3-

only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of (i) One-Month LIBOR plus 0.70%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One- Month LIBOR plus 1.05% per annum, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass-Through Rate for such Distribution
Date.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

<PAGE>

                                       -4-

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

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

          The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee nor any such agent shall be
affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

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

Dated: May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                   This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:______________________________
                                                     Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

                   The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -     Custodian
                                                             ----------------
TEN ENT - as tenants by the entireties                      (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
            if survivorship and not as                    _________________
            tenants in common                                   (State)

    Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         ______________________________________
                                         Signature by or on behalf of assignor

                                         ______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                   EXHIBIT A-3
                                   -----------

                          FORM OF CLASS M-2 CERTIFICATE

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT," AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
       860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

       THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES,  THE
       CLASS A-IO  CERTIFICATES  AND THE CLASS M-1  CERTIFICATES  TO THE
       EXTENT DESCRIBED IN THE POOLING AND SERVICING  AGREEMENT REFERRED
       TO HEREIN.

Series 2001-NC1, Class M-2              Aggregate Certificate Principal Balance
                                        of the Class M-2 Certificates as of the
Pass-Through Rate: Variable             Issue Date: $[__]

Cut-off Date:  June 1, 2001             Denomination: $_____________

Date of Pooling and Servicing           Master Servicer:
Agreement: May 30, 2001                 Ocwen Federal Bank FSB

First Distribution Date:                Trustee: U.S. Bank National Association
June 20, 2001
                                        Issue Date: May __, 2001
No. ___
                                        CUSIP: [__]

       DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
       OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
       ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
       AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
       DENOMINATION OF THIS CERTIFICATE.

<PAGE>

                 ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class M-2 Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class M-2 Certificates in REMIC III created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Salomon Brothers
Mortgage Securities VII, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-2 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class M-2 Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class
M-2 Certificates, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register. Notwithstanding the above, the final distribution on
this

<PAGE>

                                       -3-

Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

          The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of (i) One-Month LIBOR plus 1.10%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One- Month LIBOR plus 1.65% per annum, in the case of any Distribution
Date thereafter and (ii) the Net WAC Pass-Through Rate for such Distribution
Date.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

<PAGE>

                                       -4-

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

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

          The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee nor any such agent shall be
affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

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

Dated: May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

                   The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -      Custodian
                                                             -------------------
TEN ENT - as tenants by the entireties                        (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
          if survivorship and not as                     _________________
          tenants in common                                   (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         ______________________________________
                                         Signature by or on behalf of assignor

                                         ______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                   EXHIBIT A-4
                                   -----------

                          FORM OF CLASS M-3 CERTIFICATE

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT," AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
       860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

       THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES,  THE
       CLASS A-IO CERTIFICATES, THE CLASS M-1 CERTIFICATES AND THE CLASS
       M-2  CERTIFICATES  TO THE EXTENT  DESCRIBED  IN THE  POOLING  AND
       SERVICING AGREEMENT REFERRED TO HEREIN.

Series 2001-NC1, Class M-3              Aggregate Certificate Principal Balance
                                        of the Class M-3 Certificates as of the
Pass-Through Rate: [__]%                Issue Date: $[__]

Cut-off Date:  June 1, 2001             Denomination: $_____________

Date of Pooling and Servicing           Master Servicer:
Agreement: May 30, 2001                 Ocwen Federal Bank FSB

First Distribution Date:                Trustee: U.S. Bank National Association
June 20, 2001
                                        Issue Date: May __, 2001
No. ___
                                        CUSIP: [__]

       DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
       OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
       ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
       AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
       DENOMINATION OF THIS CERTIFICATE.

<PAGE>

                 ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class M-3 Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class M-3 Certificates in REMIC III created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Salomon Brothers
Mortgage Securities VII, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class M-3 Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class M-3 Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class
M-3 Certificates, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register. Notwithstanding the above, the final distribution on
this

<PAGE>

                                       -3-

Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

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

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

<PAGE>

                                       -4-

governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.

          The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee nor any such agent shall be
affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

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

Dated: May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class M-3 Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                     Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

                   The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -      Custodian
                                                              -----------------
TEN ENT - as tenants by the entireties                        (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
          if survivorship and not as                    _________________
          tenants in common                                  (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         ______________________________________
                                         Signature by or on behalf of assignor

                                         ______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                   EXHIBIT A-5
                                   -----------

                          FORM OF CLASS CE CERTIFICATE

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT", AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
       860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

       THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES,  THE
       CLASS A-IO  CERTIFICATES,  THE CLASS M-1 CERTIFICATES,  THE CLASS
       M-2  CERTIFICATES  AND THE CLASS M-3  CERTIFICATES  TO THE EXTENT
       DESCRIBED  IN THE POOLING  AND  SERVICING  AGREEMENT  REFERRED TO
       HEREIN.

       THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
       THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
       ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
       REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
       TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
       UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
       IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
       AGREEMENT.

       NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
       OTHER RETIREMENT  ARRANGEMENT  SUBJECT TO THE EMPLOYEE RETIREMENT
       INCOME  SECURITY  ACT OF 1974,  AS  AMENDED,  OR THE CODE WILL BE
       REGISTERED  EXCEPT IN COMPLIANCE  WITH THE  PROCEDURES  DESCRIBED
       HEREIN.

<PAGE>

Series 2001-NC1, Class CE               Aggregate Certificate Principal Balance
                                        of the Class CE Certificates as of the
Cut-off Date:  June 1, 2001             Issue Date: $[__]

Date of Pooling and Servicing           Denomination: $_____________
Agreement: May 30, 2001
                                        Master Servicer: Ocwen Federal Bank FSB
First Distribution Date:
June 20, 2001                           Trustee: U.S. Bank National Association

No. ___                                 Issue Date: May __, 2001

Aggregate Notional Amount of the Class
CE Certificates as of the Issue Date:
$[__]

Notional Amount: $_________________

       DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
       OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
       ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
       AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
       DENOMINATION OF THIS CERTIFICATE.

<PAGE>

                 ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that NC Residual II Corporation is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class CE
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class CE Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class CE Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class
CE Certificates, or otherwise by check mailed by first class mail to the address
of the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and

<PAGE>

                                       -4-

only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

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

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is

<PAGE>

                                       -5-

made in a transaction that does not require such registration or qualification.
In the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Master Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. Neither the Depositor nor the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

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

          The Depositor, the Master Servicer or the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee nor any such agent shall be
affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the

<PAGE>

                                       -6-

Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

                                       -7-

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

Dated:  May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Signatory

<PAGE>

                                       -8-

                                 ABBREVIATIONS
                                 -------------

                   The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -      Custodian
                                                             ------------------
TEN ENT - as tenants by the entireties                        (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
          if survivorship and not as                   _________________
          tenants in common                                 (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         ______________________________________
                                         Signature by or on behalf of assignor

                                         ______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                   EXHIBIT A-6
                                   -----------

                           FORM OF CLASS P CERTIFICATE

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT", AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
       860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

       THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
       THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
       ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
       REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
       TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
       UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
       IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
       AGREEMENT.

       NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
       OTHER  RETIREMENT  ARRANGEMENT  (EACH A  "PLAN")  SUBJECT  TO THE
       EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT OF 1974,  AS  AMENDED
       ("ERISA"),  OR THE CODE WILL BE  REGISTERED  EXCEPT IN COMPLIANCE
       WITH THE PROCEDURES DESCRIBED HEREIN.

<PAGE>

Series 2001-NC1, Class P                Aggregate Certificate Principal Balance
                                        of the Class P Certificates as of the
Cut-off Date:  June 1, 2001             Issue Date: $100.00

Date of Pooling and Servicing           Denomination: $100.00
Agreement: May 30, 2001
                                        Master Servicer:
First Distribution Date:                Ocwen Federal Bank FSB
June 20, 2001
                                        Trustee: U.S. Bank National Association
No. ___
                                        Issue Date: May __, 2001

       DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE  PRINCIPAL  BALANCE
       OF THIS  CERTIFICATE  MAY BE MADE  MONTHLY  AS SET FORTH  HEREIN.
       ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
       AT ANY  TIME  MAY BE LESS  THAN  THE  AMOUNT  SHOWN  ABOVE AS THE
       DENOMINATION OF THIS CERTIFICATE.

<PAGE>

                 ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that NC Residual II Corporation is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class P
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class P Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class P Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class P Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class P
Certificates, or otherwise by check mailed by first class mail to the address of
the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and

<PAGE>

                                       -4-

only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

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

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is

<PAGE>

                                       -5-

made in a transaction that does not require such registration or qualification.
In the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Master Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. Neither the Depositor nor the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

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

          The Depositor, the Master Servicer or the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer nor the Trustee nor any such agent shall be
affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the

<PAGE>

                                       -6-

Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

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

Dated: May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class P Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                     Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

                   The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -      Custodian
                                                             -------------------
TEN ENT - as tenants by the entireties                        (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
          if survivorship and not as                   _________________
          tenants in common                                 (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         ______________________________________
                                         Signature by or on behalf of assignor

                                         ______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                      -10-

                                   EXHIBIT A-7
                                   -----------

                         FORM OF CLASS A-IO CERTIFICATE

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "REGULAR  INTEREST"  IN A  "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT," AS THOSE TERMS ARE DEFINED,  RESPECTIVELY,  IN SECTIONS
       860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

Series 2001-NC1, Class A-IO             Aggregate Notional Amount of the Class
                                        A- IO Certificates as of the Issue Date:
Pass-Through Rate: Variable             $[__]

Cut-off Date:  June 1, 2001             Notional Amount: $_____________

Date of Pooling and Servicing           Master Servicer: Ocwen Federal Bank FSB
Agreement: May 30, 2001
                                        Trustee: U.S. Bank National Association
First Distribution Date:
June 20, 2001                           Issue Date: May __, 2001

No. ___                                 CUSIP: [__]

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Notional Amount of the Class A-IO Certificates as of the Issue Date)
in that certain beneficial ownership interest evidenced by all the Class A-IO
Certificates in REMIC III created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among Salomon Brothers Mortgage
Securities VII, Inc. (hereinafter called the "Depositor," which term includes
any successor entity under the Agreement), the Master Servicer and the Trustee,
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-IO Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class A-IO Certificates the aggregate initial Notional
Amount of which is in excess of the lesser of (i) $5,000,000 or (ii) two-thirds
of the aggregate initial Notional Amount of the Class A-IO Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon

<PAGE>

                                       -3-

presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose as provided in the Agreement.

          With respect to the June 2001 Distribution Date through the May 2002
Distribution Date, the Pass-Through Rate for the Class A-IO Certificates will be
the lesser of (i) 6.50% per annum and (ii) the weighted average of the Expense
Adjusted Mortgage Rates on the then outstanding Mortgage Loans, weighted based
on their Scheduled Principal Balances as of the first day of the calendar month
preceding the month in which the Distribution Date occurs. With respect to the
June 2002 Distribution Date through the May 2004 Distribution Date, the
Pass-Through Rate for the Class A-IO Certificates will be the lesser of (i)
5.50% per annum and (ii) the weighted average of the Expense Adjusted Mortgage
Rates on the then outstanding Mortgage Loans, weighted based on their Scheduled
Principal Balances as of the first day of the calendar month preceding the month
in which the Distribution Date occurs. After the May 2004 Distribution Date, the
Pass-Through Rate for the Class A-IO Certificates will be 0.00% per annum.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Notional
Amount of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by,

<PAGE>

                                       -4-

the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.

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

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

          The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee nor any such agent shall be
affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

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

Dated:  May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                     Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -      Custodian
                                                             -------------------
TEN ENT - as tenants by the entireties                        (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
            if survivorship and not as               _________________
            tenants in common                               (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor

                                         _______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                   EXHIBIT A-8
                                   -----------

                          FORM OF CLASS R-I CERTIFICATE

       THIS  CERTIFICATE  MAY NOT BE TRANSFERRED TO A NON-UNITED  STATES
       PERSON.

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "RESIDUAL  INTEREST"  IN A "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,  RESPECTIVELY, IN
       SECTIONS 860G AND 860D OF THE INTERNAL  REVENUE CODE OF 1986 (THE
       "CODE").

       ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
       BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
       THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

       THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
       THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
       ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
       REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
       TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
       UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
       IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
       AGREEMENT.

       NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
       OTHER RETIREMENT  ARRANGEMENT  SUBJECT TO THE EMPLOYEE RETIREMENT
       INCOME  SECURITY  ACT OF 1974,  AS  AMENDED,  OR THE CODE WILL BE
       REGISTERED  EXCEPT IN COMPLIANCE  WITH THE  PROCEDURES  DESCRIBED
       HEREIN.

       ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
       BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
       TO THE  TRUSTEE  THAT (A) SUCH  TRANSFEREE  IS NOT (1) THE UNITED
       STATES  OR  ANY  POSSESSION  THEREOF,   ANY  STATE  OR  POLITICAL
       SUBDIVISION  THEREOF,  ANY FOREIGN GOVERNMENT,  ANY INTERNATIONAL
       ORGANIZATION,  OR ANY  AGENCY  OR  INSTRUMENTALITY  OF ANY OF THE
       FOREGOING,   (2)  ANY  ORGANIZATION  (OTHER  THAN  A  COOPERATIVE
       DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX
       IMPOSED  BY CHAPTER 1 OF THE CODE  UNLESS  SUCH  ORGANIZATION  IS
       SUBJECT TO THE TAX  IMPOSED BY SECTION  511 OF THE CODE,  (3) ANY
       ORGANIZATION

<PAGE>

       DESCRIBED IN SECTION  1381(A)(2)(C)  OF THE CODE (ANY SUCH PERSON
       DESCRIBED  IN  THE  FOREGOING  CLAUSES  (1),  (2)  OR  (3)  SHALL
       HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED  ORGANIZATION")  OR
       (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF
       SUCH  TRANSFER IS TO IMPEDE THE  ASSESSMENT OR COLLECTION OF TAX,
       AND (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL  CONDITIONS
       RELATING TO THE FINANCIAL  CONDITION OF THE PROPOSED  TRANSFEREE.
       NOTWITHSTANDING  THE REGISTRATION IN THE CERTIFICATE  REGISTER OF
       ANY TRANSFER,  SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
       DISQUALIFIED   ORGANIZATION   OR  AN  AGENT  OF  A   DISQUALIFIED
       ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL
       FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
       BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,  INCLUDING, BUT
       NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
       EACH HOLDER OF THIS  CERTIFICATE  BY  ACCEPTANCE  HEREOF SHALL BE
       DEEMED TO HAVE  CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND
       THE  PROVISIONS  OF SECTION  5.02(D) OF THE POOLING AND SERVICING
       AGREEMENT  REFERRED TO HEREIN.  ANY PERSON THAT IS A DISQUALIFIED
       ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
       THIS CERTIFICATE.

Series 2001-NC1, Class R-I              Aggregate Percentage Interest of the
                                        Class R-I Certificates as of the Issue
Cut-off Date:  June 1, 2001             Date: 100.00%

Date of Pooling and Servicing           Master Servicer: Ocwen Federal Bank FSB
Agreement: May 30, 2001
                                        Trustee: U.S. Bank National Association
First Distribution Date:
June 20, 2001                           Issue Date: May __, 2001

No. ___

<PAGE>

                 ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that NC Residual II Corporation is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class R-I
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class R-I Certificates in REMIC I created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-I Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class R-I Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class
R-I Certificates, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register. Notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Trustee of the pendency of
such distribution and

<PAGE>

                                       -4-

only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

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

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is

<PAGE>

                                       -5-

made in a transaction that does not require such registration or qualification.
In the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Master Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. Neither the Depositor nor the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

          Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-I Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-I Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

          The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to cease
to qualify as a REMIC or cause the imposition of a tax upon the REMIC.

<PAGE>

                                       -6-

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

          The Depositor, the Master Servicer and the Trustee and any agent of
the Depositor, the Master Servicer or the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Master Servicer, the Trustee nor any such agent shall
be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

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

Dated:  May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                   This is one of the Class R-I Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                     Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

          The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -      Custodian
                                                             -------------------
TEN ENT - as tenants by the entireties                        (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
          if survivorship and not as                  _________________
          tenants in common                                (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor

                                         _______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                   EXHIBIT A-9
                                   -----------

                         FORM OF CLASS R-II CERTIFICATE

       THIS  CERTIFICATE  MAY NOT BE TRANSFERRED TO A NON-UNITED  STATES
       PERSON.

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "RESIDUAL  INTEREST"  IN A "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,  RESPECTIVELY, IN
       SECTIONS 860G AND 860D OF THE INTERNAL  REVENUE CODE OF 1986 (THE
       "CODE").

       THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
       THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
       ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
       REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
       TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
       UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
       IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
       AGREEMENT.

       ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
       BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
       THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

       NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
       OTHER RETIREMENT  ARRANGEMENT  SUBJECT TO THE EMPLOYEE RETIREMENT
       INCOME  SECURITY  ACT OF 1974,  AS  AMENDED,  OR THE CODE WILL BE
       REGISTERED  EXCEPT IN COMPLIANCE  WITH THE  PROCEDURES  DESCRIBED
       HEREIN.

       ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
       BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
       TO THE  TRUSTEE  THAT (A) SUCH  TRANSFEREE  IS NOT (1) THE UNITED
       STATES  OR  ANY  POSSESSION  THEREOF,   ANY  STATE  OR  POLITICAL
       SUBDIVISION  THEREOF,  ANY FOREIGN GOVERNMENT,  ANY INTERNATIONAL
       ORGANIZATION,  OR ANY  AGENCY  OR  INSTRUMENTALITY  OF ANY OF THE
       FOREGOING,   (2)  ANY  ORGANIZATION  (OTHER  THAN  A  COOPERATIVE
       DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX
       IMPOSED  BY CHAPTER 1 OF THE CODE  UNLESS  SUCH  ORGANIZATION  IS
       SUBJECT TO THE TAX  IMPOSED BY SECTION  511 OF THE CODE,  (3) ANY
       ORGANIZATION  DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY
       SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3)

<PAGE>

       SHALL   HEREINAFTER   BE   REFERRED   TO   AS   A   "DISQUALIFIED
       ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND
       (B) NO PURPOSE OF SUCH  TRANSFER IS TO IMPEDE THE  ASSESSMENT  OR
       COLLECTION  OF TAX, AND (II) SUCH  TRANSFEREE  SATISFIES  CERTAIN
       ADDITIONAL  CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
       PROPOSED  TRANSFEREE.  NOTWITHSTANDING  THE  REGISTRATION  IN THE
       CERTIFICATE  REGISTER OF ANY TRANSFER,  SALE OR OTHER DISPOSITION
       OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF
       A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO
       BE OF NO LEGAL FORCE OR EFFECT  WHATSOEVER  AND SUCH PERSON SHALL
       NOT  BE  DEEMED  TO  BE  A  CERTIFICATEHOLDER   FOR  ANY  PURPOSE
       HEREUNDER,   INCLUDING,  BUT  NOT  LIMITED  TO,  THE  RECEIPT  OF
       DISTRIBUTIONS   ON  THIS   CERTIFICATE.   EACH   HOLDER  OF  THIS
       CERTIFICATE  BY  ACCEPTANCE   HEREOF  SHALL  BE  DEEMED  TO  HAVE
       CONSENTED TO THE  PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS
       OF  SECTION  5.02(D)  OF  THE  POOLING  AND  SERVICING  AGREEMENT
       REFERRED   TO  HEREIN.   ANY  PERSON   THAT  IS  A   DISQUALIFIED
       ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
       THIS CERTIFICATE.

Series 2001-NC1, Class R-II             Aggregate Percentage Interest of the
                                        Class R-II Certificates as of the Issue
Cut-off Date:  June 1, 2001             Date: 100.00%

Date of Pooling and Servicing           Master Servicer: Ocwen Federal Bank FSB
Agreement: May 30, 2001
                                        Trustee: U.S. Bank National Association
First Distribution Date:
June 20, 2001                           Issue Date: May __, 2001

No. ___

<PAGE>

                 ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that NC Residual II Corporation is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class R-II
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class R-II Certificates in REMIC I created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-II Certificates on such Distribution
Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class R-II Certificates the aggregate initial
Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Certificate Principal
Balance of the Class R-II Certificates, or otherwise by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and

<PAGE>

                                       -4-

only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

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

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is

<PAGE>

                                       -5-

made in a transaction that does not require such registration or qualification.
In the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Master Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. Neither the Depositor nor the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

          Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-II Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-II Certificates. Notwithstanding the
registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.

          The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to cease
to qualify as a REMIC or cause the imposition of a tax upon the REMIC.

<PAGE>

                                       -6-

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

          The Depositor, the Master Servicer and the Trustee and any agent of
the Depositor, the Master Servicer or the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Master Servicer, the Trustee nor any such agent shall
be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

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

Dated:  May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class R-II Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

                   The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -      Custodian
                                                             -------------------
TEN ENT - as tenants by the entireties                       (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
            if survivorship and not as                  __________________
            tenants in common                                 (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor

                                         _______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                  EXHIBIT A-10
                                  ------------

                        FORM OF CLASS R-III CERTIFICATE

       THIS  CERTIFICATE  MAY NOT BE TRANSFERRED TO A NON-UNITED  STATES
       PERSON.

       SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,  THIS CERTIFICATE IS
       A  "RESIDUAL  INTEREST"  IN A "REAL  ESTATE  MORTGAGE  INVESTMENT
       CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,  RESPECTIVELY, IN
       SECTIONS 860G AND 860D OF THE INTERNAL  REVENUE CODE OF 1986 (THE
       "CODE").

       ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
       BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
       THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

       THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE REGISTERED  UNDER
       THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
       ANY  STATE  AND MAY NOT BE  RESOLD  OR  TRANSFERRED  UNLESS IT IS
       REGISTERED   PURSUANT  TO  SUCH  ACT  AND  LAWS  OR  IS  SOLD  OR
       TRANSFERRED  IN  TRANSACTIONS  THAT ARE EXEMPT FROM  REGISTRATION
       UNDER SUCH ACT AND UNDER  APPLICABLE STATE LAW AND IS TRANSFERRED
       IN  ACCORDANCE  WITH  THE  PROVISIONS  OF  SECTION  5.02  OF  THE
       AGREEMENT.

       NO TRANSFER OF THIS  CERTIFICATE  TO AN EMPLOYEE  BENEFIT PLAN OR
       OTHER RETIREMENT  ARRANGEMENT  SUBJECT TO THE EMPLOYEE RETIREMENT
       INCOME  SECURITY  ACT OF 1974,  AS  AMENDED,  OR THE CODE WILL BE
       REGISTERED  EXCEPT IN COMPLIANCE  WITH THE  PROCEDURES  DESCRIBED
       HEREIN.

       ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
       BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
       TO THE  TRUSTEE  THAT (A) SUCH  TRANSFEREE  IS NOT (1) THE UNITED
       STATES  OR  ANY  POSSESSION  THEREOF,   ANY  STATE  OR  POLITICAL
       SUBDIVISION  THEREOF,  ANY FOREIGN GOVERNMENT,  ANY INTERNATIONAL
       ORGANIZATION,  OR ANY  AGENCY  OR  INSTRUMENTALITY  OF ANY OF THE
       FOREGOING,   (2)  ANY  ORGANIZATION  (OTHER  THAN  A  COOPERATIVE
       DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX
       IMPOSED  BY CHAPTER 1 OF THE CODE  UNLESS  SUCH  ORGANIZATION  IS
       SUBJECT TO THE TAX  IMPOSED BY SECTION  511 OF THE CODE,  (3) ANY
       ORGANIZATION

<PAGE>

       DESCRIBED IN SECTION  1381(A)(2)(C)  OF THE CODE (ANY SUCH PERSON
       DESCRIBED  IN  THE  FOREGOING  CLAUSES  (1),  (2)  OR  (3)  SHALL
       HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED  ORGANIZATION")  OR
       (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF
       SUCH  TRANSFER IS TO IMPEDE THE  ASSESSMENT OR COLLECTION OF TAX,
       AND (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL  CONDITIONS
       RELATING TO THE FINANCIAL  CONDITION OF THE PROPOSED  TRANSFEREE.
       NOTWITHSTANDING  THE REGISTRATION IN THE CERTIFICATE  REGISTER OF
       ANY TRANSFER,  SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
       DISQUALIFIED   ORGANIZATION   OR  AN  AGENT  OF  A   DISQUALIFIED
       ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL
       FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
       BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,  INCLUDING, BUT
       NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
       EACH HOLDER OF THIS  CERTIFICATE  BY  ACCEPTANCE  HEREOF SHALL BE
       DEEMED TO HAVE  CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND
       THE  PROVISIONS  OF SECTION  5.02(D) OF THE POOLING AND SERVICING
       AGREEMENT  REFERRED TO HEREIN.  ANY PERSON THAT IS A DISQUALIFIED
       ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
       THIS CERTIFICATE.

Series 2001-NC1, Class R-III            Aggregate Percentage Interest of the
                                        Class R-III Certificates as of the Issue
Cut-off Date:  June 1, 2001             Date: 100.00%

Date of Pooling and Servicing           Master Servicer: Ocwen Federal Bank FSB
Agreement: May 30, 2001
                                        Trustee: U.S. Bank National Association
First Distribution Date:
June 20, 2001                           Issue Date: May __, 2001

No. ___

<PAGE>

                 ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family,
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                 SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.

       THIS  CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
       IN SALOMON  BROTHERS  MORTGAGE  SECURITIES  VII, INC., THE MASTER
       SERVICER,  THE  TRUSTEE  OR ANY OF THEIR  RESPECTIVE  AFFILIATES.
       NEITHER THIS  CERTIFICATE  NOR THE UNDERLYING  MORTGAGE LOANS ARE
       GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

          This certifies that NC Residual II Corporation is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class R-III
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class R-III Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

          Pursuant to the terms of the Agreement, distributions will be made on
the 20th day of each month or, if such 20th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R-III Certificates on such
Distribution Date pursuant to the Agreement.

          All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class R-III Certificates the aggregate initial
Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Certificate Principal
Balance of the Class R-III Certificates, or otherwise by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and

<PAGE>

                                       -4-

only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

          This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.

          The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

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

          No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is

<PAGE>

                                       -5-

made in a transaction that does not require such registration or qualification.
In the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee or
the Master Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate desiring
to effect the transfer and/or such Holder's prospective transferee upon which
such Opinion of Counsel is based. None of the Depositor or the Trustee is
obligated to register or qualify the Class of Certificates specified on the face
hereof under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.

          No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.

          Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R-III Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R-III Certificates. Notwithstanding the
registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.

          The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to cease
to qualify as a REMIC or cause the imposition of a tax upon the REMIC.

<PAGE>

                                       -6-

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

          The Depositor, the Master Servicer and the Trustee and any agent of
the Depositor, the Master Servicer or the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Master Servicer, the Trustee nor any such agent shall
be affected by notice to the contrary.

          The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by the Trustee and required to be paid to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan remaining in REMIC I and
(ii) the purchase by the party designated in the Agreement at a price determined
as provided in the Agreement from REMIC I of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from REMIC I
all the Mortgage Loans and all property acquired in respect of any Mortgage Loan
at a price determined as provided in the Agreement. The exercise of such right
will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of purchase being less than 10% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.

          The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

<PAGE>

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

Dated:  May __, 2001

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

          This is one of the Class R-III Certificates referred to in the
within-mentioned Agreement.

                                             U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                             By:_______________________________
                                                     Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

                   The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:

TEN COM - as tenants in common           UNIF GIFT MIN ACT -      Custodian
                                                              -----------------
TEN ENT - as tenants by the entireties                        (Cust)    (Minor)
                                                             under Uniform Gifts
JT TEN  - as joint tenants with right                        to Minors Act
          if survivorship and not as                  _________________
          tenants in common                                (State)

     Additional abbreviations may also be used though not in the above list.

                                   ASSIGNMENT
                                   ----------

          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificates and hereby authorize(s) the registration of transfer
of such interest to assignee on the Certificate Register of the Trust Fund.

          I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: _________________________________________
_______________________________________________________________________________.

Dated:

                                         _______________________________________
                                         Signature by or on behalf of assignor

                                         _______________________________________
                                         Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

          The assignee should include the following for purposes of
distribution:

          Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________ for the account
of _______________________________, account number ____________________________,
or, if mailed by check, to ____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or ________________________________________, as its agent.

<PAGE>

                                    EXHIBIT B
                                    ---------

                                   [Reserved]

<PAGE>

                                   EXHIBIT C-1
                                   -----------

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                                     [Date]

Salomon Brothers Mortgage
  Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, NY 10013

[Master Servicer]
___________________________
___________________________

          Re:  Pooling and Servicing Agreement, dated as of May 30, 2001,
               among Salomon Brothers Mortgage Securities VII, Inc., Ocwen
               Federal Bank FSB and U.S. Bank National Association, Asset
               Backed Pass-Through Certificates, Series 2001-NC1
               -----------------------------------------------------------

Ladies and Gentlemen:

     Attached is the Trustee's preliminary exceptions in accordance with Section
2.02 of the referenced Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"). Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Pooling and Servicing Agreement.

     The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in the Mortgage File of any of the Mortgage Loans identified
on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan, or (iii) whether any
Mortgage File included any of the documents specified in clause (v) of Section
2.01 of the Pooling and Servicing Agreement.

                                         U.S. BANK NATIONAL ASSOCIATION

                                         By:______________________________
                                         Name:
                                         Title:

<PAGE>

                                   EXHIBIT C-2
                                   -----------

                      FORM OF TRUSTEE'S FINAL CERTIFICATION

                                                     [Date]

Salomon Brothers Mortgage
  Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, NY 10013

[Master Servicer]
___________________________
___________________________

               Re:  Pooling and Servicing Agreement, dated as of May 30,
                    2001, among Salomon Brothers Mortgage Securities VII,
                    Inc., Ocwen Federal Bank FSB and U.S. Bank National
                    Association, Asset Backed Pass-Through Certificates,
                    Series 2001-NC1
                    ----------------------------------------------------

Ladies and Gentlemen:

     In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attachment hereto), it or a
Custodian on its behalf has received:

          (i) the original recorded Mortgage, and the original recorded
     power of attorney, if the Mortgage was executed pursuant to a power of
     attorney, or a certified copy thereof in those instances where the
     public recording office retains the original or where the original has
     been lost; and

          (ii) an original Assignment in recordable form or a recorded
     Assignment to the Trustee together with the original recorded
     Assignment or Assignments showing a complete chain of assignment from
     the originator, or a certified copy of such Assignments in those
     instances where the public recording retains the original or where
     original has been lost; and

          (iii) the original lender's title insurance policy.

     The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in
the above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in the
Mortgage

<PAGE>

File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan.

     Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                         U.S. BANK NATIONAL ASSOCIATION

                                         By:________________________________
                                         Name:
                                         Title:

<PAGE>

                                    EXHIBIT D
                                    ---------

                    FORM OF MORTGAGE LOAN PURCHASE AGREEMENT

<PAGE>

                        MORTGAGE LOAN PURCHASE AGREEMENT

                   This is a Mortgage Loan Purchase Agreement (this
"Agreement"), dated May 29, 2001, among NC Capital Corporation, a California
corporation (the "Seller"), Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation (the "Purchaser") and New Century Mortgage Corporation, a
California corporation (the "Originator").

                              Preliminary Statement
                              ---------------------

                   The Seller intends to sell the Mortgage Loans (as hereinafter
identified) to the Purchaser on the terms and subject to the conditions set
forth in this Agreement. The Purchaser intends to deposit the Mortgage Loans
into a mortgage pool comprising the Trust Fund. The Trust Fund will be evidenced
by a single series of mortgage pass-through certificates designated as Series
2001-NC1 (the "Certificates"). The Certificates will consist of ten classes of
certificates. The Class CE Certificates, the Class P Certificates, the Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates
(collectively, the "NC Residual Certificates") will be delivered to NC Residual
II Corporation ("NC Residual"), a wholly-owned bankruptcy remote entity of the
Seller, as partial consideration for the Mortgage Loans as further described
below. The Certificates will be issued pursuant to a Pooling and Servicing
Agreement for Series 2001-NC1, dated as of May 30, 2001 (the "Pooling and
Servicing Agreement"), among the Depositor as depositor, Ocwen Federal Bank FSB
as master servicer (the "Master Servicer") and U.S. Bank National Association as
trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings set forth in the Pooling and Servicing Agreement.

                   The parties hereto agree as follows:

                   SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell
and the Purchaser agrees to purchase, on or before May 30, 2001 (the "Closing
Date"), certain fixed-rate and adjustable-rate conventional, one- to
four-family, adjustable-rate residential mortgage loans (the "Mortgage Loans"),
having an aggregate principal balance as of the close of business on June 1,
2001, (the "Cut-off Date") of approximately $380,241,713 (the "Closing
Balance"), after giving effect to all payments due on the Mortgage Loans on or
before the Cut-off Date, whether or not received including the right to any
Prepayment Charges payable by the related Mortgagors in connection with any
Principal Prepayments on the Mortgage Loans.

                   SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the
Seller have agreed upon which of the mortgage loans owned by the Seller are to
be purchased by the Purchaser pursuant to this Agreement and the Seller will
prepare or cause to be prepared on or prior to the Closing Date a final schedule
(the "Closing Schedule") that shall describe such Mortgage Loans and set forth
all of the Mortgage Loans to be purchased under this Agreement, including the
Prepayment Charges. The Closing Schedule will conform to the requirements set
forth in this Agreement and to the definition of "Mortgage Loan Schedule" under
the Pooling and Servicing Agreement. The Closing Schedule shall be used as the
Mortgage Loan Schedule under the Pooling and Servicing Agreement.

<PAGE>

                                       -2-

                   SECTION 3.        CONSIDERATION.

                   (a) In consideration for the Mortgage Loans to be purchased
hereunder, the Purchaser shall, as described in Section 8, (i) pay to or upon
the order of the Seller in immediately available funds an amount (the "Purchase
Price") equal to the net sale proceeds of the Class A Certificates, the Class
A-IO Certificates, the Class M-1 Certificates, the Class M-2 Certificates and
the Class M-3 Certificates and (ii) will have delivered to NC Residual, upon the
order of the Seller, the NC Residual Certificates.

                   (b) The Purchaser or any assignee, transferee or designee of
the Purchaser shall be entitled to all scheduled payments of principal due after
the Cut-off Date and all unscheduled payments of principal received after May
15, 2001, all other payments of principal due and collected after the Cut-off
Date, and all payments of interest on the Mortgage Loans allocable to the period
after the Cut-off Date. All scheduled payments of principal and interest due on
or before the Cut-off Date and collected after the Cut-off Date shall belong to
the Seller.

                   (c) Pursuant to the Pooling and Servicing Agreement, the
Purchaser will assign all of its right, title and interest in and to the
Mortgage Loans, together with its rights under this Agreement, to the Trustee
for the benefit of the Certificateholders.

                   SECTION 4.        TRANSFER OF THE MORTGAGE LOANS.

                   (a) POSSESSION OF MORTGAGE FILES. The Seller does hereby
sell, transfer, assign, set over and convey to the Purchaser, without recourse
but subject to the terms of this Agreement, all of its right, title and interest
in, to and under the Mortgage Loans, including the related Prepayment Charges.
The contents of each Mortgage File not delivered to the Purchaser or to any
assignee, transferee or designee of the Purchaser on or prior to the Closing
Date are and shall be held in trust by the Seller for the benefit of the
Purchaser or any assignee, transferee or designee of the Purchaser. Upon the
sale of the Mortgage Loans, the ownership of each Mortgage Note, the related
Mortgage and the other contents of the related Mortgage File is vested in the
Purchaser and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or that come into the possession of the Seller
on or after the Closing Date shall immediately vest in the Purchaser and shall
be delivered immediately to the Purchaser or as otherwise directed by the
Purchaser.

                   (b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller will, on
or prior to the Closing Date, deliver or cause to be delivered to the Purchaser
or any assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:

                            (i) the original Mortgage Note, endorsed in blank or
          in the following form: "Pay to the order of U.S. Bank National
          Association, as Trustee under the applicable

<PAGE>

                                       -3-

          agreement, without recourse," with all prior and intervening
          endorsements showing a complete chain of endorsement from the
          originator to the Person so endorsing to the Trustee;

                            (ii) the original Mortgage with evidence of
          recording thereon, and the original recorded power of attorney, if the
          Mortgage was executed pursuant to a power of attorney, with evidence
          of recording thereon;

                            (iii) an original Assignment in blank;

                            (iv) the original recorded Assignment or Assignments
          showing a complete chain of assignment from the originator to the
          Person assigning the Mortgage to the Trustee as contemplated by the
          immediately preceding clause (iii);

                            (v) the original or copies of each assumption,
          modification, written assurance or substitution agreement, if any; and

                            (vi) the original lender's title insurance policy,
          together with all endorsements or riders that were issued with or
          subsequent to the issuance of such policy, insuring the priority of
          the Mortgage as a first lien on the Mortgaged Property represented
          therein as a fee interest vested in the Mortgagor, or in the event
          such original title policy is unavailable, a written commitment or
          uniform binder or preliminary report of title issued by the title
          insurance or escrow company.

                   The Seller promptly shall (within sixty Business Days
following the later of the Closing Date and the date of the receipt by the
Seller of the recording information for a Mortgage but in no event later than
ninety days following the Closing Date) submit or cause to be submitted for
recording, at no expense to the Purchaser (or the Trust Fund or the Trustee
under the Pooling and Servicing Agreement), in the appropriate public office for
real property records, each Assignment referred to in clauses (b)(iii) and
(b)(iv) of this Section 4 and shall execute each original Assignment in the
following form: "U.S. Bank National Association, as Trustee under the applicable
agreement." In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Seller promptly shall prepare a substitute
Assignment or cure such defect, as the case may be, and thereafter cause each
such Assignment to be duly recorded.

                   With respect to a maximum of approximately 2.0% of the
Mortgage Loans, by outstanding principal balance of the Mortgage Loans as of the
Cut-off Date, if any original Mortgage Note referred to in Section 4(b)(i) above
cannot be located, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon delivery to the Purchaser of a photocopy of such
Mortgage Note, if available, with a lost note affidavit substantially in the
form of Exhibit I to the Pooling and Servicing Agreement. If any of the original
Mortgage Notes for which a lost note affidavit was delivered to the Purchaser is
subsequently located, such original Mortgage Note shall be delivered to the
Purchaser within three Business Days. If any of the documents referred to in

<PAGE>

                                       -4-

Sections 4(b)(ii), (iii) or (iv) above has, as of the Closing Date, been
submitted for recording but either (x) has not been returned from the applicable
public recording office or (y) has been lost or such public recording office has
retained the original of such document, the obligations of the Seller to deliver
such documents shall be deemed to be satisfied upon (1) delivery to the
Purchaser of a copy of each such document certified by the Originator in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the Originator, delivery to the
Seller promptly upon receipt thereof of either the original or a copy of such
document certified by the applicable public recording office to be a true and
complete copy of the original. Notice shall be provided to the Trustee and the
Rating Agencies by the Originator if delivery pursuant to clause (2) above will
be made more than 180 days after the Closing Date. If the original lender's
title insurance policy was not delivered pursuant to Section 4(b)(vi) above, the
Seller shall deliver or cause to be delivered to the Purchaser, promptly after
receipt thereof, the original lender's title insurance policy. The Seller shall
deliver or cause to be delivered to the Purchaser promptly upon receipt thereof
any other original documents constituting a part of a Mortgage File received
with respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.

                   Each original document relating to a Mortgage Loan which is
not delivered to the Purchaser or its assignee, transferee or designee, if held
by the Seller, shall be so held for the benefit of the Purchaser, its assignee,
transferee or designee.

                   (c) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered
pursuant to Section 4(b) hereof shall be reviewed by the Purchaser or any
assignee, transferee or designee of the Purchaser at any time before or after
the Closing Date (and with respect to each document permitted to be delivered
after the Closing Date, within seven days of its delivery) to ascertain that all
required documents have been executed and received and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule.

                   (d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the
right to assign its interest under this Agreement, in whole or in part, to the
Trustee, as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller, and the assignee shall succeed to
the rights and obligations hereunder of the Purchaser. Any expense reasonably
incurred by or on behalf of the Purchaser or the Trustee in connection with
enforcing any obligations of the Seller under this Agreement will be promptly
reimbursed by the Seller.

                   (e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date,
the Seller shall either (i) deliver in escrow to the Purchaser, or to any
assignee, transferee or designee of the Purchaser for examination, the Mortgage
File pertaining to each Mortgage Loan or (ii) make such Mortgage Files available
to the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser or the Trustee, and
their respective designees, upon reasonable notice to the Seller during normal
business hours before the Closing Date

<PAGE>

                                       -5-

and within 60 days after the Closing Date. If any such person makes such
examination prior to the Closing Date and identifies any Mortgage Loans that do
not conform to the requirements of the Purchaser as described in this Agreement,
such Mortgage Loans shall be deleted from the Closing Schedule. The Purchaser
may, at its option and without notice to the Seller, purchase all or part of the
Mortgage Loans without conducting any partial or complete examination. The fact
that the Purchaser or any person has conducted or has failed to conduct any
partial or complete examination of the Mortgage Files shall not affect the
rights of the Purchaser or any assignee, transferee or designee of the Purchaser
to demand repurchase or other relief as provided herein or under the Pooling and
Servicing Agreement.

                   SECTION 5.        REPRESENTATIONS, WARRANTIES AND COVENANTS
                                     OF THE SELLER AND THE ORIGINATOR.

                   (a) The Seller hereby represents and warrants to the
Originator and the Purchaser, as of the date hereof and as of the Closing Date,
and covenants, that:

                            (i) The Seller is duly organized, validly existing
and in good standing as a corporation under the laws of the State of California
with full corporate power and authority to conduct its business as presently
conducted by it to the extent material to the consummation of the transactions
contemplated herein. The Seller has the full corporate power and authority to
own the Mortgage Loans and to transfer and convey the Mortgage Loans to the
Purchaser and has the full corporate power and authority to execute and deliver,
engage in the transactions contemplated by, and perform and observe the terms
and conditions of this Agreement.

                            (ii) The Seller has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Originator and the Purchaser, constitutes a legal, valid and
binding obligation of the Seller, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization or by general principles of equity.

                            (iii) The execution, delivery and performance of
this Agreement by the Seller (x) does not conflict and will not conflict with,
does not breach and will not result in a breach of and does not constitute and
will not constitute a default (or an event, which with notice or lapse of time
or both, would constitute a default) under (A) any terms or provisions of the
articles of incorporation or by-laws of the Seller, (B) any term or provision of
any material agreement, contract, instrument or indenture, to which the Seller
is a party or by which the Seller or any of its property is bound or (C) any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Seller or any of its
property and (y) does not create or impose and will not result in the creation
or imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans.

<PAGE>

                                       -6-

                            (iv) No consent, approval, authorization or order
of, registration or filing with, or notice on behalf of the Seller to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Seller of, or compliance by the Seller with, this Agreement or the consummation
by the Seller of any other transaction contemplated hereby and by the Pooling
and Servicing Agreement; provided, however, that the Seller makes no
representation or warranty regarding federal or state securities laws in
connection with the sale or distribution of the Certificates.

                            (v) This Agreement does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements contained herein not misleading. The written statements, reports
and other documents prepared and furnished or to be prepared and furnished by
the Seller pursuant to this Agreement or in connection with the transactions
contemplated hereby taken in the aggregate do not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements contained therein not misleading.

                            (vi) The Seller is not in violation of, and the
execution and delivery of this Agreement by the Seller and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over the
Seller or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Seller or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder.

                            (vii) The Seller does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement.

                            (viii) Immediately prior to the sale of the Mortgage
Loans to the Purchaser as herein contemplated, the Seller will be the owner of
the related Mortgage and the indebtedness evidenced by the related Mortgage
Note, and, upon the payment to the Seller of the Purchase Price, in the event
that the Seller retains or has retained record title, the Seller shall retain
such record title to each Mortgage, each related Mortgage Note and the related
Mortgage Files with respect thereto in trust for the Purchaser as the owner
thereof from and after the date hereof.

                            (ix) There are no actions or proceedings against, or
investigations known to it of, the Seller before any court, administrative or
other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by the Seller or the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the Seller
of its obligations under, or validity or enforceability of, this Agreement.

<PAGE>

                                       -7-

                            (x) The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Seller, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller are not subject to the bulk transfer or any similar
statutory provisions.

                            (xi) [intentionally omitted]

                            (xii) The Seller has not dealt with any broker,
investment banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans (except that an entity that previously
financed the Seller's ownership of the Mortgage Loans may be entitled to a fee
to release its security interest in the Mortgage Loans, which fee shall have
been paid and which security interest shall have been released on or prior to
the Closing Date).

                            (xiii) There is no litigation currently pending or,
to the best of the Seller's knowledge without independent investigation,
threatened against the Seller that would reasonably be expected to adversely
affect the transfer of the Mortgage Loans, the issuance of the Certificates or
the execution, delivery, performance or enforceability of this Agreement, or
that would result in a material adverse change in the financial condition of the
Seller.

                   (b) The Originator hereby represents and warrants to the
Seller and the Purchaser, as of the date hereof and as of the Closing Date, and
covenants, that:

                            (i) The Originator is duly organized, validly
existing and in good standing as a corporation under the laws of the State of
California with full corporate power and authority to conduct its business as
presently conducted by it to the extent material to the consummation of the
transactions contemplated herein. The Originator had the full corporate power
and authority to own the Mortgage Loans and to transfer and convey the Mortgage
Loans to the Seller and has the full corporate power and authority to execute
and deliver, engage in the transactions contemplated by, and perform and observe
the terms and conditions of this Agreement.

                            (ii) The Originator has duly authorized the
execution, delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Seller and the Purchaser, constitutes a legal,
valid and binding obligation of the Originator, enforceable against it in
accordance with its terms except as enforceability thereof may be limited by
bankruptcy, insolvency or reorganization or by general principles of equity.

                            (iii) The execution, delivery and performance of
this Agreement by the Originator (x) does not conflict and will not conflict
with, does not breach and will not result in a breach of and does not constitute
and will not constitute a default (or an event, which with notice or lapse of
time or both, would constitute a default) under (A) any terms or provisions of
the articles

<PAGE>

                                       -8-

of incorporation or by-laws of the Originator, (B) any term or provision of any
material agreement, contract, instrument or indenture, to which the Originator
is a party or by which the Originator or any of its property is bound or (C) any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Originator or any of its
property and (y) does not create or impose and will not result in the creation
or imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans.

                            (iv) No consent, approval, authorization or order
of, registration or filing with, or notice on behalf of the Originator to any
governmental authority or court is required, under federal laws or the laws of
the State of California, for the execution, delivery and performance by the
Originator of, or compliance by the Originator with, this Agreement or the
consummation by the Originator of any other transaction contemplated hereby and
by the Pooling and Servicing Agreement; provided, however, that the Originator
makes no representation or warranty regarding federal or state securities laws
in connection with the sale or distribution of the Certificates.

                            (v) In this Agreement the Originator has not made
any untrue statement of material fact or omit to state a material fact necessary
to make the statements contained herein not misleading. The written statements,
reports and other documents prepared and furnished or to be prepared and
furnished by the Originator pursuant to this Agreement or in connection with the
transactions contemplated hereby taken in the aggregate do not contain any
untrue statement of material fact or omit to state a material fact necessary to
make the statements contained therein not misleading.

                            (vi) The Originator is not in violation of, and the
execution and delivery of this Agreement by the Originator and its performance
and compliance with the terms of this Agreement will not constitute a violation
with respect to, any order or decree of any court or any order or regulation of
any federal, state, municipal or governmental agency having jurisdiction over
the Originator or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Originator or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder.

                            (vii) The Originator is a HUD approved mortgagee
pursuant to Section 203 and Section 211 of the National Housing Act. No event
has occurred, including but not limited to a change in insurance coverage, that
would make the Originator unable to comply with HUD eligibility requirements or
that would require notification to HUD.

                            (viii) The Originator does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement.

<PAGE>

                                       -9-

                            (ix) Immediately prior to the sale of the Mortgage
Loans to the Seller, the Originator will be the owner of the related Mortgage
and the indebtedness evidenced by the related Mortgage Note, and, upon the
payment to the Originator of the Purchase Price, in the event that the
Originator retains or has retained record title, the Originator shall retain
such record title to each Mortgage, each related Mortgage Note and the related
Mortgage Files with respect thereto in trust for the Seller as the owner thereof
from and after the date hereof.

                            (x) There are no actions or proceedings against, or
investigations known to it of, the Originator before any court, administrative
or other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by the Originator or the
consummation of the transactions contemplated by this Agreement or (C) that
might prohibit or materially and adversely affect the performance by the
Originator of its obligations under, or validity or enforceability of, this
Agreement.

                            (xi) The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Originator, and the transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Originator are not subject to the bulk transfer or any
similar statutory provisions.

                            (xii) The information delivered by the Originator to
the Seller with respect to the Originator's loan loss, foreclosure and
delinquency experience on mortgage loans is true and correct in all material
respects.

                            (xiii) The Originator has not dealt with any broker,
investment banker, agent or other person, except for the Seller or any of its
affiliates, that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans (except that an entity that previously
financed the Originator's ownership of the Mortgage Loans may be entitled to a
fee to release its security interest in the Mortgage Loans, which fee shall have
been paid and which security interest shall have been released on or prior to
the Closing Date).

                            (xiv) There is no litigation currently pending or,
to the best of the Originator's knowledge without independent investigation,
threatened against the Originator that would reasonably be expected to adversely
affect the transfer of the Mortgage Loans, the issuance of the Certificates or
the execution, delivery, performance or enforceability of this Agreement, or
that would result in a material adverse change in the financial condition of the
Originator.

                   SECTION 6.        REPRESENTATIONS AND WARRANTIES OF THE
                                     ORIGINATOR RELATING TO THE MORTGAGE LOANS.

                   REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE
LOANS. The Originator hereby represents and warrants to the Purchaser that as to
each Mortgage Loan as of the Closing Date:

<PAGE>

                                      -10-

                   (i) The information set forth in the Mortgage Loan Schedule,
including the field concerning any related Prepayment Charge, is complete, true
and correct as of the Cut-off Date;

                   (ii) The Mortgage Loan is in compliance with all requirements
set forth on Exhibit 6, and the characteristics of the Mortgage Loans as set
forth on Exhibit 6 are true and correct;

                   (iii) Except with respect to 0.33% of the Mortgage Loans, by
aggregate principal balance of the mortgage loans as of the Cut-off Date, (a)
all payments required to be made on or before the first day of the month prior
to the month of the Closing Date, with respect to such Mortgage Loan under the
terms of the Mortgage Note have been made; (b) the Originator has not advanced
funds, or induced, solicited or knowingly received any advance of funds from a
party other than the owner of the related Mortgaged Property, directly or
indirectly, for the payment of any amount required by the Mortgage Note or
Mortgage and (c) as of April 30, 2001, the payment required under any Mortgage
Loan will not and has not been 30 or more days delinquent more than once during
the last twelve months;

                   (iv) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums, leasehold payments,
including assessments payable in future installments or other outstanding
charges affecting the related Mortgaged Property;

                   (v) To the best knowledge of the Originator, the terms of the
Mortgage Note and the Mortgage have not been impaired, waived, altered or
modified in any respect, except by written instruments, recorded in the
applicable public recording office if necessary to maintain the lien priority of
the Mortgage; the substance of any such waiver, alteration or modification has
been approved by the title insurer, to the extent required by the related
policy, and is reflected on the Mortgage Loan Schedule. No instrument of waiver,
alteration or modification has been executed by the Originator or the Seller or
any other person in the chain of title from the Originator to the Seller, and no
Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the extent required by
the policy, and the terms of which are reflected in the Mortgage Loan Schedule;

                   (vi) Prior to the transfer to the Purchaser by the Seller,
the Mortgage Note and the Mortgage are not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Mortgage Note and the Mortgage, or the
exercise of any right thereunder, render the Mortgage unenforceable, in whole or
in part, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto;

                   (vii) All buildings upon the Mortgaged Property are insured
by a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the Mortgaged
Property is located, pursuant to insurance policies conforming to the
requirements of the Pooling and Servicing Agreement. All such insurance policies

<PAGE>

                                      -11-

contain a standard mortgagee clause naming the Originator, its successors and
assigns as mortgagee and all premiums thereon have been paid. If upon
origination of the Mortgage Loan, the Mortgaged Property was in an area
identified on a Flood Hazard Map or Flood Insurance Rate Map issued by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect which policy conforms to the requirements of Fannie Mae and Freddie
Mac. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and on the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;

                   (viii) Any and all requirements of any federal, state or
local law including, without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws applicable to the origination and servicing of the Mortgage Loan
have been complied with. Any and all statements or acknowledgments required to
be made by the Mortgagor relating to such requirements are and will remain in
the Mortgage File;

                   (ix) The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release;

                   (x) The Mortgage is a valid, existing and enforceable first
lien on the Mortgaged Property, including all improvements on the Mortgaged
Property subject only to (a) the lien of current real property taxes and
assessments not yet due and payable, (b) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of the date
of recording being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and which do not adversely affect the appraised
value of the Mortgaged Property and (c) other matters to which like properties
are commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, existing and enforceable first
lien and first priority security interest on the property described therein and,
as of the time it contributed the Mortgage Loan to the Seller, the Originator
had full right to contribute and assign the same to the Seller. The Mortgaged
Property was not, as of the date of origination of the Mortgage Loan, subject to
a mortgage, deed of trust, deed to secure debt or other security instrument
creating a lien subordinate to the lien of the Mortgage;

                   (xi) The Mortgage Note and the related Mortgage are genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms;

<PAGE>

                                      -12-

                   (xii) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been
duly and properly executed by such parties. The Mortgagor is a natural person
who is a party to the Mortgage Note and the Mortgage is in an individual
capacity or family trust that is guaranteed by a natural person;

                   (xiii) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation for
the Mortgagee to advance additional funds thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the Mortgagee pursuant to the Mortgage
Note or Mortgage;

                   (xiv) As of the Closing Date and prior to the sale of the
Mortgage Loan to the Purchaser, the Seller was the sole legal, beneficial and
equitable owner of the Mortgage Note and the Mortgage and has full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest;

                   (xv) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) in compliance
with any and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Mortgaged Property is located;

                   (xvi) The Mortgage Loan is covered by an ALTA lender's title
insurance policy, and with respect to each adjustable-rate Mortgage Loan, an
adjustable rate mortgage endorsement in an amount at least equal to the balance
of the Mortgage Loan as of the Cut-off Date, such endorsement substantially in
the form of ALTA Form 6.0 or 6.1, acceptable to Fannie Mae or Freddie Mac,
issued by a title insurer acceptable to Fannie Mae and Freddie Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring (subject to the exceptions contained in (x)(a) and (b) above) the
Originator, its successors and assigns as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan and against any
loss by reason of the invalidity or unenforceability of the lien resulting from
the provisions of the Mortgage providing for adjustment in the Mortgage Rate and
monthly payment. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress to and from the Mortgaged Property, and
against encroachments by or upon the Mortgaged Property or any interest therein.
The Originator is the sole insured of such lender's title insurance policy, and
such lender's title insurance policy is in full force and effect and will be in
full force and effect upon the consummation of the transactions contemplated by
this Agreement. No claims have been made under such lender's title insurance
policy, and no prior holder of the related Mortgage, including the Originator,
has done, by act or omission, anything which would impair the coverage of such
lender's title insurance policy;

<PAGE>

                                      -13-

                   (xvii) Other than as specified in paragraph (iii) above,
there is no default, breach, violation or event of acceleration existing under
the Mortgage or the Mortgage Note and no event which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration, and the Originator has
not waived any default, breach, violation or event of acceleration;

                   (xviii) There are no mechanics' or similar liens or claims
which have been filed for work, labor or material (and no rights are outstanding
that under law could give rise to such lien) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;

                   (xix) All improvements which were considered in determining
the appraised value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property. Each
appraisal has been performed in accordance with the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989;

                   (xx) The Mortgage Loan was (i) originated by the Originator
or by a savings and loan association, a savings bank, a commercial bank or
similar banking institution which is supervised and examined by a federal or
state authority, or by a mortgagee approved as such by the Secretary of HUD or
(ii) acquired by the Originator directly through loan brokers or correspondents
such that (a) the Mortgage Loan was originated in conformity with the
Originator's underwriting guidelines, (b) the Originator approved the Mortgage
Loan prior to funding and (c) the Originator provided the funds used to
originate the Mortgage Loan and acquired the Mortgage Loan on the date of
origination thereof;

                   (xxi) Principal payments on the Mortgage Loan commenced no
more than two months after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loan bears interest at the Mortgage Rate. With respect to the
adjustable-rate Mortgage Loans, the Mortgage Note is payable on the first day of
each month in Monthly Payments which are changed on each Adjustment Date to an
amount which will amortize the Stated Principal Balance of the Mortgage Loan
over its remaining term at the Mortgage Rate. Interest on the Mortgage Loan is
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The Mortgage Note does not permit negative amortization. The Mortgage Loan does
not permit the Mortgagor to convert the Mortgage Loan to a fixed rate Mortgage
Loan;

                   (xxii) The origination and collection practices used by the
Originator with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry. The Mortgage Loan has been serviced by the Originator
(directly or through a subservicer) and any predecessor servicer in accordance
with the terms of the Mortgage Note. With respect to escrow deposits and Escrow
Payments, if any, all such payments are in the possession of, or under the
control of, the Originator and there exist no

<PAGE>

                                      -14-

deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. No escrow deposits or Escrow Payments or
other charges or payments due the Originator have been capitalized under any
Mortgage or the related Mortgage Note;

                   (xxiii) The Mortgaged Property is free of damage and waste
and there is no proceeding pending for the total or partial condemnation
thereof;

                   (xxiv) The Mortgage and related Mortgage Note contain
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including, (a) in the
case of a Mortgage designated as a deed of trust, by trustee's sale and (b)
otherwise by judicial foreclosure. Since the date of origination of the Mortgage
Loan, the Mortgaged Property has not been subject to any bankruptcy proceeding
or foreclosure proceeding and the Mortgagor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage. The
Mortgagor has not notified the Originator and the Originator has no knowledge of
any relief requested or allowed to the Mortgagor under the Soldiers and Sailors
Civil Relief Act of 1940;

                   (xxv) The related Mortgaged Property is not a leasehold
estate or, if such Mortgaged Property is a leasehold estate, the remaining term
of such lease is at least ten (10) years greater than the remaining term of the
related Mortgage Note;

                   (xxvi) The Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;

                   (xxvii) The Mortgage File contains an appraisal of the
related Mortgaged Property made and signed, prior to the approval of the
Mortgage Loan application, by a qualified appraiser, approved by the Originator,
who had no interest, direct or indirect in the Mortgaged Property or in any loan
made on the security thereof, whose compensation is not affected by the approval
or disapproval of the Mortgage Loan and who met the minimum qualifications of
Fannie Mae and Freddie Mac;

                   (xxviii) In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Purchaser to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;

                   (xxix) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the

<PAGE>

                                      -15-

Originator, the Mortgagor, or anyone on behalf of the Mortgagor, (b) paid by any
source other than the Mortgagor or (c) contains any other similar provisions
which may constitute a "buydown" provision. The Mortgage Loans are not graduated
payment mortgage loans and the Mortgage Loans do not have shared appreciation or
other contingent interest features;

                   (xxx) With respect to the adjustable-rate Mortgage Loans, the
Mortgagor has executed a statement to the effect that the Mortgagor has received
all disclosure materials required by applicable law with respect to the making
of adjustable rate mortgage loans; and if the Mortgage Loan is a Refinanced
Mortgage Loan, the Mortgagor has received all disclosure and rescission
materials required by applicable law with respect to the making of a Refinanced
Mortgage Loan, and evidence of such receipt is and will remain in the Mortgage
File;

                   (xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;

                   (xxxii) The Mortgage Note, the Mortgage, the Assignment of
Mortgage and any other documents required to be delivered with respect to each
Mortgage Loan pursuant to the Pooling and Servicing Agreement, have been
delivered to the Trustee all in compliance with the specific requirements of the
Pooling and Servicing Agreement;

                   (xxxiii) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including but not limited to
certificates of occupancy, have been made or obtained from the appropriate
authorities;

                   (xxxiv) No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has taken place on
the part of any person, including, without limitation, the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan;

                   (xxxv) The Assignment of Mortgage is in recordable form and
is acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;

                   (xxxvi) Any principal advances made to the Mortgagor prior to
the Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
lien priority by a title insurance policy, an endorsement to the policy insuring
the mortgagee's

<PAGE>

                                      -16-

consolidated interest or by other title evidence acceptable to Fannie Mae and
Freddie Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;

                   (xxxvii) No Mortgage Loan has a balloon payment feature;

                   (xxxviii) If the Residential Dwelling on the Mortgaged
Property is a condominium unit or a unit in a planned unit development (other
than a de minimis planned unit development) such condominium or planned unit
development project meets the Fannie Mae's eligibility requirements;

                   (xxxix) Neither the Originator nor any affiliate of the
Originator has made a mortgage on any Mortgaged Property other than the Mortgage
Loan;

                   (xl) Any Mortgage Loan subject to the provisions of the
Homeownership and Equity Protection Act of 1994, P.L. 103-325, 108 Stat 2160 was
originated in compliance therewith;

                   (xli) The Mortgage Loan was not intentionally selected by the
Originator in a manner intended to adversely affect the interest of the
Purchaser;

                   (xlii) The Originator has not dealt with any broker or agent
or other Person who might be entitled to a fee, commission or compensation in
connection with the transaction contemplated by this Agreement other than the
Purchaser except as set forth in the parenthetical in Section 5(xiii) hereof;

                   (xliii) The Mortgaged Property consists of a parcel of real
property of not more than ten acres with a single family residence erected
thereon, or a two to four-family dwelling, or an individual condominium unit in
a low-rise or high-rise condominium project, or an individual unit in a planned
unit development. The Mortgaged Property is improved with a Residential
Dwelling. Without limiting the foregoing, the Mortgaged Property does NOT
consist of any of the following property types: (a) co-operative units, (b) log
homes, (c) earthen homes, (d) underground homes, (e) mobile homes and (f)
manufactured homes (as defined in the Fannie Mae Originator-Servicer's Guide),
except when the appraisal indicates that the home is of comparable construction
to a stick or beam construction home, is readily marketable, has been
permanently affixed to the site and is not in a mobile home "park." The
Mortgaged Property is either a fee simple estate or a long-term residential
lease. If the Mortgage Loan is secured by a long-term residential lease, unless
otherwise specifically disclosed in the Mortgage Loan Schedule, (A) the terms of
such lease expressly permit the mortgaging of the leasehold estate, the
assignment of the lease without the lessor's consent (or the lessor's consent
has been obtained and such consent is the Mortgage File) and the acquisition by
the holder of the Mortgage of the rights of the lessee upon foreclosure or
assignment in lieu of foreclosure or provide the holder of the Mortgage with
substantially similar protection; (B) the terms of such lease do not (x) allow
the termination thereof upon the lessee's default without the holder of the
Mortgage being entitled to receive written notice of, and opportunity to cure,
such default or (y)

<PAGE>

                                      -17-

prohibit the holder of the Mortgage from being insured under the hazard
insurance policy relating to the Mortgaged Property; (C) the original term of
such lease is not less than 15 years; (D) the term of such lease does not
terminate earlier than ten years after the maturity date of the Mortgage Note;
and (E) the Mortgaged Property is located in a jurisdiction in which the use of
leasehold estates for residential properties is an accepted practice;

                   (xliv) At the time of origination, the Loan-To-Value Ratio of
the Mortgage Loan will not be greater than 100%;

                   (xlv) The Mortgage, and if required by applicable law the
related Mortgage Note, contains a provision for the acceleration of the payment
of the unpaid principal balance of the Mortgage Loan in the event that the
Mortgaged Property is sold or transferred without the prior written consent of
the Mortgagee, at the option of the Mortgagee;

                   (xlvi) The Mortgage Loan either contains a customary
due-on-sale clause or may be assumed by a creditworthy purchaser of the related
Mortgaged Property; and

                   (xlvii) As of any Adjustment Date for such adjustable-rate
Mortgage Loan, the Index applicable to the determination of the Mortgage Rate on
such Mortgage Loan will be the average of the interbank offered rates for
six-month United States dollar deposits in the London market, generally as
published in THE WALL STREET JOURNAL and as most recently available as of either
(i) the first business day 45 days prior to such Adjustment Date or (ii) the
first business day of the month preceding the month of such Adjustment Date, as
specified in the related Mortgage Note.

                   (xlviii) Each Mortgage Loan is an obligation that is
principally secured by real property;

                   (xvlix) None of the Mortgage Loans are "high cost mortgages"
pursuant to Section 226.32 of the Truth-in-Lending Act, as amended; and

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

<PAGE>

                                      -18-

               SECTION 7.     REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION
                              AND FOR BREACH OF REPRESENTATION AND WARRANTY.

               (a) The representations and warranties contained in Section 6
shall not be impaired by any review and examination of loan files or other
documents evidencing or relating to the Mortgage Loans or any failure on the
part of the Seller or the Purchaser to review or examine such documents and
shall inure to the benefit of any assignee, transferee or designee of the
Purchaser, including the Trustee for the benefit of holders of the Certificates.
With respect to the representations and warranties contained herein as to which
the Originator has no knowledge, if it is discovered that the substance of any
such representation and warranty was inaccurate as of the date such
representation and warranty was made or deemed to be made, and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan or the
interest therein of the Purchaser or the Purchaser's assignee, transferee or
designee, then notwithstanding the lack of knowledge by the Originator with
respect to the substance of such representation and warranty being inaccurate at
the time the representation and warranty was made, the Originator shall take
such action described in the following paragraph in respect of such Mortgage
Loan.

               Upon discovery by the Seller, the Purchaser or any assignee,
transferee or designee of the Purchaser of any materially defective document in,
or that any material document was not transferred by the Seller (as listed on
the Trustee's Preliminary Exception Report) as part of any Mortgage File, or of
a breach of any of the representations and warranties contained in Section 6
that materially and adversely affects the value of any Mortgage Loan or the
interest therein of the Purchaser or the Purchaser's assignee, transferee or
designee, the party discovering such breach shall give prompt written notice to
the Originator. Within sixty (60) days of its discovery or its receipt of notice
of any such missing documentation that was not transferred by the Seller as
described above, or of materially defective documentation, or of any such breach
of a representation and warranty, the Originator promptly shall deliver such
missing document or cure such defect or breach in all material respects or, in
the event the Originator cannot deliver such missing document or cannot cure
such defect or breach, the Originator shall, within ninety (90) days of its
discovery or receipt of notice, either (i) repurchase the affected Mortgage Loan
at the Purchase Price (as such term is defined in the Pooling and Servicing
Agreement) or (ii) pursuant to the provisions of the Pooling and Servicing
Agreement, cause the removal of such Mortgage Loan from the Trust Fund and
substitute one or more Qualified Substitute Mortgage Loans. The Originator shall
amend the Closing Schedule to reflect the withdrawal of such Mortgage Loan from
the terms of this Agreement and the Pooling and Servicing Agreement. The
Originator shall deliver to the Purchaser such amended Closing Schedule and
shall deliver such other documents as are required by this Agreement or the
Pooling and Servicing Agreement within five (5) days of any such amendment. Any
repurchase pursuant to this Section 7(a) shall be accomplished by transfer to an
account designated by the Purchaser of the amount of the Purchase Price in
accordance with Section 2.03 of the Pooling and Servicing Agreement. Any
repurchase required by this Section shall be made in a manner consistent with
Section 2.03 of the Pooling and Servicing Agreement.

<PAGE>

                                      -19-

        Notwithstanding the foregoing, within 90 days of the earlier of
discovery by the Originator or receipt of notice by the Originator of the breach
of the representation or covenant of the Originator set forth in Section 6(l)
above which materially and adversely affects the interests of the Holders of the
Class P Certificates in any Prepayment Charge, the Originator shall remedy such
breach as follows: the Originator must pay the amount of the scheduled
Prepayment Charge, for the benefit of the holder of the Class P Certificate, by
remitting such amount to the Master Servicer for deposit into the Collection
Account, net of any amount previously collected by the Master Servicer or paid
by the Master Servicer, for the benefit of the Holders of the Class P
Certificates, in respect of such Prepayment Charge.

               (b) It is understood and agreed that the obligations of the
Originator set forth in this Section 7 to cure or repurchase a defective
Mortgage Loan constitute the sole remedies of the Purchaser against the
Originator respecting a missing document or a breach of the representations and
warranties contained in Section 6.

               SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The closing
of the purchase and sale of the Mortgage Loans shall be held at the New York
City office of Thacher Proffitt & Wood at 10:00 a.m. New York City time on the
Closing Date.

               The closing shall be subject to each of the following conditions:

               (a)     All of the representations and warranties of the Seller
                       under this Agreement shall be true and correct in all
                       material respects as of the date as of which they are
                       made and no event shall have occurred which, with notice
                       or the passage of time, would constitute a default under
                       this Agreement;

               (b)     All of the representations and warranties of the
                       Originator under this Agreement shall be true and correct
                       in all material respects as of the date as of which they
                       are made and no event shall have occurred which, with
                       notice or the passage of time, would constitute a default
                       under this Agreement;

               (c)     The Purchaser shall have received, or the attorneys of
                       the Purchaser shall have received in escrow (to be
                       released from escrow at the time of closing), all Closing
                       Documents as specified in Section 9 of this Agreement, in
                       such forms as are agreed upon and acceptable to the
                       Purchaser, duly executed by all signatories other than
                       the Purchaser as required pursuant to the respective
                       terms thereof;

               (d)     The Seller shall have delivered or caused to be delivered
                       and released to the Purchaser or to its designee, all
                       documents (including without limitation, the Mortgage
                       Loans) required to be so delivered by the Purchaser
                       pursuant to Section 2.01 of the Pooling and Servicing
                       Agreement; and

<PAGE>

                                      -20-

               (e)     All other terms and conditions of this Agreement and the
                       Pooling and Servicing Agreement shall have been complied
                       with.

               Subject to the foregoing conditions, the Purchaser shall deliver
or cause to be delivered to the Seller on the Closing Date, against delivery and
release by the Seller to the Trustee of all documents required pursuant to the
Pooling and Servicing Agreement, the consideration for the Mortgage Loans as
specified in Section 3 of this Agreement, by delivery to the Seller of the
Purchase Price in immediately available funds and delivery of the NC Residual
Certificates to NC Residual.

               SECTION 9. CLOSING DOCUMENTS. Without limiting the generality of
Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:

               (a)     An Officers' Certificate of the Seller, dated the Closing
                       Date, upon which the Originator, the Purchaser and
                       Salomon Smith Barney Inc. (the "Underwriter") may rely,
                       in the form of Exhibit 1 hereto, and attached thereto
                       copies of the certificate of incorporation, by-laws and
                       certificate of good standing of the Seller under the laws
                       of California;

               (b)     An Officers' Certificate of the Seller, dated the Closing
                       Date, upon which the Originator, the Purchaser and the
                       Underwriter may rely, in the form of Exhibit 2 hereto,
                       with respect to certain facts regarding the sale of the
                       Mortgage Loans by the Seller to the Purchaser;

               (c)     An Opinion of Counsel of the Seller, dated the Closing
                       Date and addressed to the Originator, the Purchaser and
                       the Underwriter, substantially in the form attached
                       hereto as Exhibit 3;

               (d)     An Officer's Certificate of the Originator, dated the
                       Closing Date, upon which the Seller, the Purchaser and
                       the Underwriter may rely, in the form of Exhibit 4
                       hereto, and attached thereto copies of the certificate of
                       incorporation, by- laws and certificate of good standing
                       of the Originator under the laws of its state of
                       incorporation;

               (e)     An opinion of Counsel of the Originator, dated the
                       Closing Date and addressed to the Seller, the Purchaser
                       and the Underwriter substantially in the form attached
                       hereto as Exhibit 5;

               (f)     Such opinions of counsel as the Rating Agencies or the
                       Trustee may request in connection with the sale of the
                       Mortgage Loans by the Seller to the Purchaser or the
                       Seller's execution and delivery of, or performance under,
                       this Agreement;

<PAGE>

                                      -21-

               (g)     (i) A letter from KPMG Peat Marwick, L.L.P., certified
                       public accountants, to the effect that they have
                       performed certain specified procedures as a result of
                       which they determined that certain information of an
                       accounting, financial or statistical nature set forth in
                       the Depositor's prospectus supplement for Series
                       2001-NC1, dated May 29, 2001 (the "Prospectus
                       Supplement") relating to the Offered Certificates
                       contained under the captions "Summary--The Mortgage
                       Loans," "Risk Factors," "The Mortgage Pool" (except with
                       respect to the information contained under the caption
                       "The Mortgage Pool--Underwriting Standards") agrees with
                       the records of the Seller and the information contained
                       under the captions "The Mortgage Pool--Underwriting
                       Standards" and "Pooling and Servicing Agreement-- The
                       Originator" agrees with the records of the Originator;

               (h)     Such further information, certificates, opinions and
                       documents as the Purchaser or the Underwriter may
                       reasonably request.

               SECTION 10. COSTS. The Seller shall pay (or shall reimburse the
Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording Assignments, the fees and expenses of the Seller's
accountants and attorneys, the costs and expenses incurred in connection with
producing the Master Servicer's or any Subservicer's loan loss, foreclosure and
delinquency experience, and the costs and expenses incurred in connection with
obtaining the documents referred to in Sections 9(d), 9(e) and 9(g), the costs
and expenses of printing (or otherwise reproducing) and delivering this
Agreement, the Pooling and Servicing Agreement, the Certificates, the prospectus
and Prospectus Supplement, and any private placement memorandum relating to the
Certificates and other related documents, the initial fees, costs and expenses
of the Trustee and the Trust Administrator, the fees and expenses of the
Purchaser's counsel in connection with the preparation of all documents relating
to the securitization of the Mortgage Loans, the filing fee charged by the
Securities and Exchange Commission for registration of the Certificates and the
fees charged by any rating agency to rate the Certificates. All other costs and
expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expense.

               SECTION 11.    [RESERVED].

               SECTION 12. INDEMNIFICATION. The Originator shall indemnify and
hold harmless each of (i) the Purchaser, (ii) the Underwriter, (iii) the Person,
if any, to which the Purchaser assigns its rights in and to a Mortgage Loan and
each of their respective successors and assigns and (iv) each person, if any,
who controls the Purchaser within the meaning of Section 15 of the Securities
Act of 1933, as amended (the "1933 Act") ((i) through (iv) collectively, the
"Indemnified Party") against any and all losses, claims, expenses, damages or
liabilities to which the Indemnified Party may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, expenses, damages

<PAGE>

                                      -22-

or liabilities (or actions in respect thereof) arise out of or are based upon
(a) any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus Supplement or any private placement memorandum
relating to the offering by the Purchaser or an affiliate thereof, of the Class
CE Certificates or the Class P Certificates, or the omission or the alleged
omission to state therein the material fact necessary in order to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with (i)
information furnished in writing to the Purchaser or any of its affiliates by
the Originator or any of its affiliates specifically for use therein, which
shall include, with respect to the Prospectus Supplement, the information set
forth under the captions "Risk Factors--The financial condition of the
originator may adversely affect the performance of the certificates," "The
Mortgage Pool--Underwriting Standards of the Originator and Representations
Concerning the Mortgage Loans" and "The Originator" and, with respect to any
private placement memorandum, any information of a comparable nature, or (ii)
the data files containing information with respect to the Mortgage Loans as
transmitted by modem to the Purchaser by the Originator or any of its affiliates
(as such transmitted information may have been amended in writing by the
Originator or any of its affiliates with the written consent of the Purchaser
subsequent to such transmission), (b) any representation, warranty or covenant
made by the Originator or any affiliate of the Originator herein or in the
Pooling and Servicing Agreement, on which the Purchaser has relied, being, or
alleged to be, untrue or incorrect or (c) any updated collateral information
provided by the Underwriter to a purchaser of the Certificates derived from the
data contained in clause (ii) and the Remittance Report or a current collateral
tape obtained from the Originator or an affiliate of the Originator, including
the current loan balances of the Mortgage Loans; provided, however, that to the
extent that any such losses, claims, expenses, damages or liabilities to which
the Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the
Originator described in clause (a), (b) or (c) above and (2) any other factual
basis, the Originator shall indemnify and hold harmless the Indemnified Party
only to the extent that the losses, claims, expenses, damages, or liabilities of
the person or persons asserting the claim are determined to rise from or be
based upon matters set forth in clause (1) above and do not result from the
gross negligence or willful misconduct of such Indemnified Party. This indemnity
shall be in addition to any liability that the Originator may otherwise have.

               The Seller shall indemnify and hold harmless each of (i) the
Purchaser, (ii) the Underwriter, (iii) the Person, if any, to which the
Purchaser assigns its rights in and to a Mortgage Loan and each of their
respective successors and assigns and (iv) each person, if any, who controls the
Purchaser within the meaning of Section 15 of the 1933 Act, as amended (the
"1933 Act") ((i) through (iv) collectively, the "Indemnified Party") against any
and all losses, claims, expenses, damages or liabilities to which the
Indemnified Party may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, expenses, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact contained in the Prospectus Supplement or
any private placement memorandum relating to the offering by the Purchaser or an
affiliate thereof, of the Class CE Certificates or the Class P Certificates, or
the omission or the alleged omission to state therein the material fact
necessary in

<PAGE>

                                      -23-

order to make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity with
(i) information furnished in writing to the Purchaser or any of its affiliates
by the Originator or any of its affiliates specifically for use therein, which
shall include, with respect to the Prospectus Supplement, the information set
forth under the captions "Summary--The Mortgage Loans," "Risk Factors" (to the
extent of information concerning the Mortgage Loans contained therein) and "The
Mortgage Pool" (other than with respect to information set forth under "The
Mortgage Pool--Underwriting Standards; Representations") and, with respect to
any private placement memorandum, any information of a comparable nature, or
(ii) the data files containing information with respect to the Mortgage Loans as
transmitted by modem to the Purchaser by the Seller or any of its affiliates (as
such transmitted information may have been amended in writing by the Seller or
any of its affiliates with the written consent of the Purchaser subsequent to
such transmission), (b) any representation, warranty or covenant made by the
Seller or any affiliate of the Seller herein or in the Pooling and Servicing
Agreement, on which the Purchaser has relied, being, or alleged to be, untrue or
incorrect or (c) any updated collateral information provided by the Underwriter
to a purchaser of the Certificates derived from the data contained in clause
(ii) and the Remittance Report or a current collateral tape obtained from the
Seller or an affiliate of the Seller, including the current loan balances of the
Mortgage Loans; provided, however, that to the extent that any such losses,
claims, expenses, damages or liabilities to which the Indemnified Party may
become subject arise out of or are based upon both (1) statements, omissions,
representations, warranties or covenants of the Seller described in clause (a),
(b) or (c) above and (2) any other factual basis, the Seller shall indemnify and
hold harmless the Indemnified Party only to the extent that the losses, claims,
expenses, damages, or liabilities of the person or persons asserting the claim
are determined to rise from or be based upon matters set forth in clause (1)
above and do not result from the gross negligence or willful misconduct of such
Indemnified Party. This indemnity shall be in addition to any liability that the
Seller may otherwise have.

               SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The
sale and delivery on the Closing Date of the Mortgage Loans described on the
Mortgage Loan Schedule in accordance with the terms and conditions of this
Agreement is mandatory. It is specifically understood and agreed that each
Mortgage Loan is unique and identifiable on the date hereof and that an award of
money damages would be insufficient to compensate the Purchaser for the losses
and damages incurred by the Purchaser in the event of the Seller's failure to
deliver the Mortgage Loans on or before the Closing Date. The Seller hereby
grants to the Purchaser a lien on and a continuing security interest in the
Seller's interest in each Mortgage Loan and each document and instrument
evidencing each such Mortgage Loan to secure the performance by the Seller of
its obligation hereunder, and the Seller agrees that it holds such Mortgage
Loans in custody for the Purchaser, subject to the Purchaser's (i) right, prior
to the Closing Date, to reject any Mortgage Loan to the extent permitted by this
Agreement, and (ii) obligation to deliver or cause to be delivered the
consideration for the Mortgage Loans pursuant to Section 8 hereof. Any Mortgage
Loans rejected by the Purchaser shall concurrently therewith be released from
the security interest created hereby. All rights and remedies of the Purchaser
under this Agreement are distinct from, and cumulative with,

<PAGE>

                                      -24-

any other rights or remedies under this Agreement or afforded by law or equity
and all such rights and remedies may be exercised concurrently, independently or
successively.

               Notwithstanding the foregoing, if on the Closing Date, each of
the conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Mortgage Loans, if delivery to
the Purchaser has occurred, and the security interest created by this Section 12
shall be deemed to have been released.

               SECTION 14. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by fax and, receipt of which is confirmed by telephone, if to the
Purchaser, addressed to the Purchaser at 390 Greenwich Street, 4th Floor, New
York, New York 10013, Attention: Mortgage Finance Group, or such other address
as may hereafter be furnished to the Seller and the Originator in writing by the
Purchaser; if to the Seller, addressed to the Seller at 18400 Von Karman, Suite
1000, Irvine, California 92612, fax (949) 440-7033, or to such other address as
the Seller may designate in writing to the Purchaser and the Originator; and if
to the Originator, addressed to the Originator at 18400 Von Karman, Suite 1000,
Irvine, California 92612, fax (949) 440-7033, or such other address as may
hereafter be furnished to the Seller and the Purchaser in writing by the
Originator.

               SECTION 15. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement that is prohibited or that is held
to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.

               SECTION 16. AGREEMENT OF PARTIES. The Originator, the Seller and
the Purchaser each agree to execute and deliver such instruments and take such
actions as either of the others may, from time to time, reasonably request in
order to effectuate the purpose and to carry out the terms of this Agreement and
the Pooling and Servicing Agreement.

               SECTION 17. SURVIVAL. (a) The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on its behalf, and that the representations,

<PAGE>

                                      -25-

warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery of and payment for the Mortgage
Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.
               (b) The Originator agrees that the representations, warranties
and agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller and
the Purchaser notwithstanding any investigation heretofore or hereafter made by
the Seller or the Purchaser or on the behalf of either of them, and that the
representations, warranties and agreements made by the Originator herein or in
any such certificate shall continue in full force and effect, notwithstanding
subsequent termination of this Agreement, the Pooling and Servicing Agreement or
the Trust Fund.

               SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND THAT THE
PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY
TO THIS AGREEMENT.

               SECTION 19. MISCELLANEOUS. This Agreement may be executed in two
or more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

               It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Seller to the Purchaser as provided in
Section 4 hereof be, and be construed as, a sale of the Mortgage Loans by the
Seller to the Purchaser and not as a pledge of the Mortgage Loans by the Seller
to the Purchaser to secure a debt or other obligation of the Seller. However, in
the event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then (a) it is the express
intent of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller and (b) (1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (2) the conveyance provided for in Section 4 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans and
all amounts payable to the

<PAGE>

                                      -26-

holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account whether in the form of cash, instruments, securities
or other property; (3) the possession by the Purchaser or its agent of Mortgage
Notes, the related Mortgages and such other items of property that constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the New York Uniform Commercial Code; and
(4) notifications to persons holding such property and acknowledgments, receipts
or confirmations from persons holding such property shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Purchaser for the
purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Purchaser pursuant to Section 4(d) hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Seller and the Purchaser shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement and the Pooling and Servicing Agreement.

<PAGE>

                                      -27-

               IN WITNESS WHEREOF, the Purchaser and the Seller have caused
their names to be signed by their respective officers thereunto duly authorized
as of the date first above written.

                                             SALOMON BROTHERS MORTGAGE
                                             SECURITIES VII, INC.

                                             By:________________________________
                                             Name:
                                             Title:

                                             NC CAPITAL CORPORATION

                                             By:________________________________
                                             Name:
                                             Title:

                                             NEW CENTURY MORTGAGE CORPORATION

                                             By:________________________________
                                             Name:
                                             Title:

<PAGE>

                                                                       EXHIBIT 1

                  [FORM OF OFFICER'S CERTIFICATE OF THE SELLER]

               I, __________________ hereby certify that I am the duly appointed
__________________ of NC Capital Corporation, a California corporation (the
"Company"), and further certify, on behalf of the Company, as follows:

               1. Attached hereto as Attachment I is a true and correct copy of
        the Articles of Incorporation and By-laws of the Company as in full
        force and effect on the date hereof. Attached hereto as Attachment II is
        a certificate of good standing, dated May __, 2001, issued by the State
        of California with respect to the Company. No event has occurred since
        the date thereof that has affected the good standing of the Company
        under the laws of the State of California.

               2. There are no actions, suits or proceedings pending or, to the
        best of my knowledge, threatened against or affecting the Company which,
        if adversely determined, individually or in the aggregate, would
        materially and adversely affect the Company's ability to perform its
        obligations under the Mortgage Loan Purchase Agreement, dated May 29,
        2001 (the "Mortgage Loan Purchase Agreement"), among the Company,
        Salomon Brothers Mortgage Securities VII, Inc. (the "Purchaser") and New
        Century Mortgage Corporation (the "Originator"). No proceedings looking
        toward merger, consolidation or liquidation, dissolution or bankruptcy
        of the Company are pending or contemplated.

               3. Each person who, as an officer or representative of the
        Company, signed the Mortgage Loan Purchase Agreement and any other
        document delivered prior hereto or on the date hereof in connection with
        the transactions contemplated by the Mortgage Loan Purchase Agreement
        was at the respective times of such signing and delivery, and is as of
        the date hereof, duly elected or appointed, qualified and acting as such
        officer or representative, and the signatures of such persons appearing
        on such documents are their genuine signatures.

               4. Attached hereto as Attachment III is a true and correct copy
        of the resolutions duly adopted by the Board of Directors of the Company
        on May [__], 2001 (the "Resolutions") with respect to the transactions
        contemplated by the Mortgage Loan Purchase Agreement said Resolutions
        have not been amended or modified, annulled or revoked and are in full
        force and effect on the date hereof.

               5. All of the representations and warranties of the Company
        contained in the Mortgage Loan Purchase Agreement are true and correct
        in all material respects as of the Closing Date, and no event has
        occurred which, with notice or the passage of time or both, would
        constitute a default under the Mortgage Loan Purchase Agreement.

<PAGE>

               6. The information set forth in the Mortgage Loan Schedule is
        true and correct in all material respects.

               7. The transactions contemplated in the Mortgage Loan Purchase
        Agreement will be reported as a sale in the Company's financial reports.

               8. The Company has performed all of its duties and has satisfied
        all of the material conditions on its part to be performed or satisfied
        prior to the Closing Date.

               9. The information contained in the Prospectus Supplement, dated
        May 29, 2001 relating to the Offered Certificates including, but not
        limited to, information contained in the data file, specifically for use
        in the preparation of each Prospectus Supplements, relating to the
        Mortgage Loans and its loan portfolio, specifically the information,
        under the captions "Summary--The Mortgage Loans," "Risk Factors " and
        "The Mortgage Pool" (other than with respect to information set forth
        under "The Mortgage Pool--Underwriting Standards; Representations") is
        true and accurate and does not contain any untrue statement of a
        material fact or omit to state a material fact required to be stated
        therein or necessary to make the statements therein, in light of the
        circumstances under which they were made, not misleading.

               10. Capitalized terms used but not defined herein shall have the
        meanings assigned in the Mortgage Loan Purchase Agreement.

<PAGE>

               IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Company.

Dated:   May  __, 2001

                                             By:________________________________
                                             Name:
[Seal]                                       Title:

               I, ____________________________, an [Assistant] Secretary of NC
Capital Corporation, hereby certify that __________________ is the duly
appointed, qualified and acting _______________________ of NC Capital
Corporation and that the signature appearing above is his genuine signature.

               IN WITNESS WHEREOF, I have hereunto signed my name.

Dated:   May __, 2001

                                             By:________________________________
                                             Name:
                                             Title:

<PAGE>

                                                                       EXHIBIT 2

      [FORM OF OFFICER'S CERTIFICATE OF THE SELLER WITH RESPECT TO CERTAIN
                 FACTS REGARDING THE SALE OF THE MORTGAGE LOANS]

                 Salomon Brothers Mortgage Securities VII, Inc.
                     Asset Backed Pass-Through Certificates
                                 Series 2001-NC1

        Reference is made to the sale of mortgage loans (the "Mortgage Loans")
by NC Capital Corporation ("NC Capital") to Salomon Brothers Mortgage Securities
VII, Inc. (the "Depositor") pursuant to the Mortgage Loan Purchase Agreement,
dated May 29, 2001 (the "Purchase Agreement"), among New Century Mortgage
Corporation (the "Originator"), the Depositor and NC Capital, and the
simultaneous issuance of Asset Backed Pass-Through Certificates, Series
2001-NC1, Class A, Class A-IO, Class M-1, Class M-2, Class M-3, Class CE, Class
P, Class R-I, Class R-II and Class R-III (the "Certificates"), pursuant to a
Pooling and Servicing Agreement, dated as of May 30, 2001 (the "Pooling and
Servicing Agreement"), among the Depositor as depositor, Ocwen Federal Bank FSB
as master servicer (in such capacity, the "Master Servicer") and U.S. Bank
National Association as trustee. In consideration for its purchase of the
Mortgage Loans, the Depositor will deliver to NC Capital immediately available
funds (the "Purchase Price") equal to the net sale proceeds of the Class A
Certificates, the Class A-IO Certificates, the Class M-1 Certificates, the Class
M-2 Certificates and the Class M-3 Certificates and will deliver to NC Residual
II Corporation upon the order of NC Capital the Class CE Certificates, the Class
P Certificates, the Class R-I Certificates, the Class R-II Certificates and the
Class R-III Certificates. The Depositor will sell the Class A Certificates, the
Class A-IO Certificates, the Class M-1 Certificates, the Class M-2 Certificates
and the Class M-3 Certificates to Salomon Smith Barney Inc. (the "Underwriter")
for offer and sale pursuant to the terms of an Underwriting Agreement, dated May
29, 2001 (the "Underwriting Agreement"), between the Depositor and the
Underwriter. The Purchase Agreement, the Pooling and Servicing Agreement and the
Underwriting Agreement are hereinafter collectively referred to as the
"Agreements." Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Agreements.

               The undersigned is a duly appointed ___________________ of NC
Capital and hereby certifies after reasonable investigation that:

        1.     The transfer of the Mortgage Loans by the undersigned pursuant to
               the Agreements was intended to be a sale and to be reported as
               such under generally accepted accounting principles ("GAAP") and
               for federal income tax purposes.

        2.     In connection with the sale of the Mortgage Loans by the
               undersigned pursuant to the Agreements, the undersigned (i) was
               solvent at all relevant times prior thereto and was not rendered
               insolvent thereby, (ii) after giving effect thereto, is able to
               pay its debts as they mature, (iii) was not left with
               unreasonably small capital for the business

<PAGE>

               in which it is engaged and proposes to be engaged, (iv) had and
               has no intention of commencing any bankruptcy, insolvency or
               similar proceeding, (v) did not and does not have any intent to
               hinder, delay or defraud any of the undersigned's creditors, (vi)
               had a valid business reason therefor and (vii) received new value
               and consideration constituting reasonably equivalent value and
               fair consideration.

        3.     The undersigned has not acquired, and will not acquire at any
               time, any direct or indirect ownership or other economic interest
               in, or other right or obligation with respect to, any Mortgage
               Loan, except as described in the Agreements.

        4.     The factual assumptions in the Opinion Letter are accurate,
               including without limitation the assumption that the Retained
               Certificates would be carried on its balance sheet at a value
               which in its determination is equal to an amount that is less
               than 10% of the Mortgage Loan Purchase Price as defined in the
               Opinion Letter.

               IN WITNESS WHEREOF, the undersigned has executed this Certificate
as of the __th day of May, 2001.

                                             NC CAPITAL CORPORATION

                                             By:________________________________
                                             Name:
                                             Title:

<PAGE>

                                                                       EXHIBIT 3

                   [FORM OF OPINION OF COUNSEL TO THE SELLER]

                                   SEE TAB __

<PAGE>

                                                                       EXHIBIT 4

                [FORM OF OFFICER'S CERTIFICATE OF THE ORIGINATOR]

               I, __________________ hereby certify that I am the duly appointed
__________________ of New Century Mortgage Corporation, a California corporation
(the "Company"), and further certify, on behalf of the Company, as follows:

               1. Attached hereto as Attachment I is a true and correct copy of
        the Articles of Incorporation and By-laws of the Company as in full
        force and effect on the date hereof. Attached hereto as Attachment II is
        a certificate of good standing, dated May __, 2001, issued by the State
        of California with respect to the Company. No event has occurred since
        the date thereof that has affected the good standing of the Company
        under the laws of the State of California.

               2. There are no actions, suits or proceedings pending or, to the
        best of my knowledge, threatened against or affecting the Company which,
        if adversely determined, individually or in the aggregate, would
        materially and adversely affect the Company's ability to perform its
        obligations under the Mortgage Loan Purchase Agreement, dated May 29,
        2001 (the "Mortgage Loan Purchase Agreement"), among the Company,
        Salomon Brothers Mortgage Securities VII, Inc. (the "Purchaser") and NC
        Capital Corporation (the "Seller"). No proceedings looking toward
        merger, consolidation or liquidation, dissolution or bankruptcy of the
        Company are pending or contemplated.

               3. Each person who, as an officer or representative of the
        Company, signed the Mortgage Loan Purchase Agreement and any other
        document delivered prior hereto or on the date hereof in connection with
        the transactions contemplated by the Mortgage Loan Purchase Agreement
        was at the respective times of such signing and delivery, and is as of
        the date hereof, duly elected or appointed, qualified and acting as such
        officer or representative, and the signatures of such persons appearing
        on such documents are their genuine signatures.

               4. Each of the Mortgage Loans referred to in the Mortgage Loan
        Purchase Agreement was originated in accordance with Section 6(xx) of
        the Mortgage Loan Purchase Agreement.

               5. Attached hereto as Attachment III is a true and correct copy
        of the resolutions duly adopted by the Board of Directors of the Company
        on May __, 2001 (the "Resolutions") with respect to the transactions
        contemplated by the Mortgage Loan Purchase Agreement; said Resolutions
        have not been amended or modified, annulled or revoked and are in full
        force and effect on the date hereof.

<PAGE>

               6. All of the representations and warranties of the Company
        contained in the Mortgage Loan Purchase Agreement are true and correct
        in all material respects as of the Closing Date, and no event has
        occurred which, with notice or the passage of time or both, would
        constitute a default under the Mortgage Loan Purchase Agreement.

               7. The information set forth in the Mortgage Loan Schedule is
         true and correct in all material respects.

               8. The information contained in the Prospectus Supplement, dated
        May 29, 2001 relating to the Offered Certificates including, but not
        limited to, information contained in the data file, specifically for use
        in the preparation of each Prospectus Supplements, relating to the
        Mortgage Loans and its loan portfolio, specifically the information,
        under the subheadings "The Mortgage Pool--Underwriting Standards;
        Representations" and "Pooling and Servicing Agreement--The Originator"
        is true and accurate and does not contain any untrue statement of a
        material fact or omit to state a material fact required to be stated
        therein or necessary to make the statements therein, in light of the
        circumstances under which they were made, not misleading.

               9. The Company has performed all of its duties and has satisfied
         all of the material conditions on its part to be performed or satisfied
         prior to the Closing Date.

               11. Capitalized terms used but not defined herein shall have the
         meanings assigned in the Mortgage Loan Purchase Agreement.

<PAGE>

               IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Company.

Dated:   May __, 2001

                                             By:________________________________
                                             Name:
[Seal]                                       Title:

               I, ____________________________, an [Assistant] Secretary of New
Century Mortgage Corporation, hereby certify that __________________ is the duly
appointed, qualified and acting _______________________ of New Century Mortgage
Corporation and that the signature appearing above is his genuine signature.

               IN WITNESS WHEREOF, I have hereunto signed my name.

Dated:   May __, 2001

                                             By:________________________________
                                             Name:
                                             Title:

<PAGE>

                                                                       EXHIBIT 5

                   [FORM OF OPINION OF COUNSEL FOR ORIGINATOR]

                                   SEE TAB __

<PAGE>

                                                                       EXHIBIT 6

        References to percentage of the Mortgage Loans as set forth in this
Exhibit 6, unless otherwise noted, are calculated based on the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

        On the Cut-off Date, the Mortgage Loans will comply with the following
conditions:

        (i) no less than approximately 47.13% of the Mortgage Loans have a risk
grade of A+ or A+MO; no less than approximately 24.39% of the Mortgage Loans
will have a risk category of A-or A-MO; no less than approximately 19.03% of the
Mortgage Loans will have a risk category of B; and no more than approximately
6.95% of such loans have a risk grade of C, C+, C- or C-HS;

        (ii) any Mortgage Loan with a risk grade of A+, A+MO, A-, A-MO or B has
a loan-to-value ratio between 4.55% and 100.00%;

        (iii) the weighted average loan-to-value ratio for the Mortgage Loans at
origination will not exceed approximately 78.49%; provided, however, the
weighted average loan-to-value ratio for each of the Delayed First Adjustment
Mortgage Loans at origination will not exceed approximately 79.24%;

        (iv) the maximum percentage concentration of Mortgage Loans secured by
mortgaged properties in any one zip code will be approximately 39.62%;

        (v) not less than approximately 82.95% of the Mortgage Loans provide for
payment by the mortgagor of a prepayment charge within a specified period as
provided in the related Mortgage Note not in excess of 5 years; provided,
however, not less than approximately 86.12% of the Delayed First Adjustment
Mortgage Loans provide for payment by the mortgagor of a prepayment charge
within a specified period as provided in the related Mortgage Note not in excess
of 5 years;

        (vi) the Mortgage Loans will have a weighted average Mortgage Rate equal
to approximately 9.862% per annum and a weighted average Gross Margin equal to
approximately 5.505% per annum, provided, however, the Delayed First Adjustment
Mortgage Loans to be purchased will have a weighted average Mortgage Rate equal
to approximately 9.812% per annum and a weighted average Gross Margin equal to
approximately 6.515% per annum. The Mortgage Loans are payable on the first day
of each month and with respect to the Adjustable-Rate Mortgage Loans, interest
on the Mortgage Loans and the monthly payments are subject to adjustment on each
Adjustment Date to equal the sum of the Index and the Gross Margin, rounded to
the next highest multiple of 0.125%, subject to the Periodic Rate Cap, the
Maximum Mortgage Rate and the Minimum Mortgage Rate. The Mortgage Loans are not
subject to negative amortization and do not provide for graduated payments. None
of the Adjustable Rate Mortgage Loans are convertible to a fixed Mortgage Rate.
None of the Mortgage Loans is subject to temporary buydown agreements. Each of
the Mortgage Loans is fully-amortizing and none of the Mortgage Loans provide
for the payment of a balloon payment.

<PAGE>

                                                                       EXHIBIT 7

Loan #: ____________
Borrower: _____________

                               LOST NOTE AFFIDAVIT
                               -------------------

               I, as ____________________ of ______________________, a
_______________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by NC Capital Corporation, a California corporation as
Seller on behalf of Salomon Brothers Mortgage Securities VII, Inc. (the
"Purchaser"), _____________________ (the "Deponent"), being duly sworn, deposes
and says that:

               1.      The Seller's address is :     _____________________
                                                     _____________________
                                                     _____________________

               2.      The Seller previously delivered to the Purchaser a signed
               Initial Certification with respect to such Mortgage and/or
               Assignment of Mortgage;

               3.      Such Mortgage Note and/or Assignment of Mortgage was
               assigned or sold to the Purchaser by ________________________, a
               ____________ corporation pursuant to the terms and provisions of
               a Mortgage Loan Purchase Agreement dated as of May 29, 2001;

               4.      Such Mortgage Note and/or Assignment of Mortgage is not
               outstanding pursuant to a request for release of Documents;

               5.      Aforesaid Mortgage Note and/or Assignment of Mortgage
               (the "Original") has been lost;

               6.      Deponent has made or caused to be made a diligent search
               for the Original and has been unable to find or recover same;

               7.      The Seller was the Seller of the Original at the time of
               the loss; and

               8.      Deponent agrees that, if said Original should ever come
               into Seller's possession, custody or power, Seller will
               immediately and without consideration surrender the Original to
               the Purchaser.

               9.      Attached hereto is a true and correct copy of (i) the
               Note, endorsed in blank by the Mortgagee and (ii) the Mortgage or
               Deed of Trust (strike one) which secures

<PAGE>

               the Note, which Mortgage or Deed of Trust is recorded in the
               county where the property is located.

               10.     Deponent hereby agrees that the Seller (a) shall
               indemnify and hold harmless the Purchaser, its successors and
               assigns, against any loss, liability or damage, including
               reasonable attorney's fees, resulting from the unavailability of
               any Notes, including but not limited to any loss, liability or
               damage arising from (i) any false statement contained in this
               Affidavit, (ii) any claim of any party that purchased a mortgage
               loan evidenced by the Lost Note or any interest in such mortgage
               loan, (iii) any claim of any borrower with respect to the
               existence of terms of a mortgage loan evidenced by the Lost Note
               on the related property to the fact that the mortgage loan is not
               evidenced by an original note and (iv) the issuance of a new
               instrument in lieu thereof (items (i) through (iv) above
               hereinafter referred to as the "Losses") and (b) if required by
               any Rating Agency in connection with placing such Lost Note into
               a Pass-Through Transfer, shall obtain a surety from an insurer
               acceptable to the applicable Rating Agency to cover any Losses
               with respect to such Lost Note.

               11.     This Affidavit is intended to be relied upon by the
               Purchaser, its successors and assigns. NC Capital Corporation, a
               California corporation represents and warrants that is has the
               authority to perform its obligations under this Affidavit of Lost
               Note.

Executed this __ day of _____, ____.

                                                     NC CAPITAL CORPORATION

                                                     By:______________________
                                                     Name:
                                                     Title:

               On this __ day of _______, ____, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.

Signature:

[Seal]

<PAGE>

                                   EXHIBIT E-1
                                   -----------

                               REQUEST FOR RELEASE
                             (for Trustee/Custodian)

Loan Information
----------------

        Name of Mortgagor:    __________________________________

        Master Servicer
        Loan No.:             __________________________________

Trustee/Custodian

        Name:                 __________________________________

        Address:              __________________________________
                              __________________________________

        Trustee/Custodian
        Mortgage File No.:    __________________________________

Depositor

        Name:                 SALOMON BROTHERS MORTGAGE
                              SECURITIES VII, INC.

        Address:              __________________________________
                              __________________________________

        Certificates:         Asset Backed Mortgage Pass-Through
                              Certificates, Series 2001-NC1.

<PAGE>

          The undersigned Master Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of Asset
Backed Pass-Through Certificates, Series 2001-NC1, the documents referred
to below (the "Documents"). All capitalized terms not otherwise defined in
this Request for Release shall have the meanings given them in the Pooling
and Servicing Agreement, dated as of May 30, 2001, among the Trustee, the
Depositor and the Master Servicer (the "Pooling and Servicing Agreement").

( )  Promissory Note dated _______________, 20__, in the original principal sum
     of $__________, made by _____________________, payable to, or endorsed to
     the order of, the Trustee.

( )  Mortgage recorded on _________________________ as instrument no.
     ____________________ in the County Recorder's Office of the County of
     _________________, State of __________________ in book/reel/docket
     _________________ of official records at page/image _____________.

( )  Deed of Trust recorded on ___________________ as instrument no.
     ________________ in the County Recorder's Office of the County of
     _________________, State of ____________________ in book/reel/docket
     _________________ of official records at page/image ______________.

( )  Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
     ___________________ as instrument no. _________ in the County Recorder's
     Office of the County of _______________, State of _______________________
     in book/reel/docket ____________ of official records at page/image
     ____________.

( )  Other documents, including any amendments, assignments or other assumptions
     of the Mortgage Note or Mortgage.

( )  _____________________________________________

( )  _____________________________________________

( )  _____________________________________________

( )  _____________________________________________

          The undersigned Master Servicer hereby acknowledges and agrees as
follows:

          (1) The Master Servicer shall hold and retain possession of the
     Documents in trust for the benefit of the Trustee, solely for the purposes
     provided in the Agreement.

          (2) The Master Servicer shall not cause or permit the Documents to
     become subject to, or encumbered by, any claim, liens, security interest,
     charges, writs of attachment or other impositions nor shall the Master
     Servicer assert or seek to assert any claims or rights of setoff to or
     against the Documents or any proceeds thereof.

<PAGE>

          (3) The Master Servicer shall return each and every Document
     previously requested from the Mortgage File to the Trustee when the need
     therefor no longer exists, unless the Mortgage Loan relating to the
     Documents has been liquidated and the proceeds thereof have been remitted
     to the Collection Account and except as expressly provided in the
     Agreement.

          (4) The Documents and any proceeds thereof, including any proceeds of
     proceeds, coming into the possession or control of the Master Servicer
     shall at all times be earmarked for the account of the Trustee, and the
     Master Servicer shall keep the Documents and any proceeds separate and
     distinct from all other property in the Master Servicer's possession,
     custody or control.

Dated:

                              OCWEN FEDERAL BANK FSB

                              By:__________________________
                              Name:
                              Title:

<PAGE>

                                   EXHIBIT E-2
                                   -----------

                               REQUEST FOR RELEASE
                          [Mortgage Loans Paid in Full]

                     OFFICER'S CERTIFICATE AND TRUST RECEIPT
                          ASSET BACKED MORTGAGE PASS-THROUGH CERTIFICATES
                                 SERIES 2001-NC1

____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH
BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:

WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:

ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN
MADE.

LOAN NUMBER: _________________           BORROWER'S NAME:______________________

COUNTY: ______________________

WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.

______________________________           DATED:______________________

/  /   VICE PRESIDENT

/  /   ASSISTANT VICE PRESIDENT

<PAGE>

                                   EXHIBIT F-1
                                   -----------

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                     [Date]

[Trustee]
______________________
______________________

          Re:  New Century  Home Equity Loan Trust,  Series  2001-NC1,
               Asset Backed Mortgage Pass-Through Certificates,  Class
               ___, representing a ___% Class ___ Percentage Interest
               ------------------------------------------------------

Ladies and Gentlemen:

          In connection with the transfer by ________________ (the "Transferor")
to ________________ (the "Transferee") of the captioned mortgage pass-through
certificates (the "Certificates"), the Transferor hereby certifies as follows:

          Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of May
30, 2001, among Salomon Brothers Mortgage Securities VII, Inc. as Depositor,
Ocwen Federal Bank FSB as Master Servicer and U.S. Bank National Association as
Trustee (the "Pooling and Servicing Agreement"), pursuant to which Pooling and
Servicing Agreement the Certificates were issued.

<PAGE>

          Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.

                                     Very truly yours,

                                     [Transferor]

                                     By:___________________________
                                     Name:
                                     Title:

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                            [Date]

[Trustee]
______________________
______________________

          Re:  New Century Home Equity Loan Trust, Series 2001-NC1,
               Asset Backed Mortgage Pass-Through Certificates, Class
               ___, representing a ___% Class ___ Percentage Interest
               ------------------------------------------------------

Ladies and Gentlemen:

          In connection with the purchase from ______________________ (the
"Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:

          1. The Transferee is a "qualified institutional buyer" as that term is
     defined in Rule 144A ("Rule 144A") under the Securities Act of 1933 (the
     "1933 Act") and has completed either of the forms of certification to that
     effect attached hereto as Annex 1 or Annex 2. The Transferee is aware that
     the sale to it is being made in reliance on Rule 144A. The Transferee is
     acquiring the Certificates for its own account or for the account of a
     qualified institutional buyer, and understands that such Certificate may be
     resold, pledged or transferred only (i) to a person reasonably believed to
     be a qualified institutional buyer that purchases for its own account or
     for the account of a qualified institutional buyer to whom notice is given
     that the resale, pledge or transfer is being made in reliance on Rule 144A,
     or (ii) pursuant to another exemption from registration under the 1933 Act.

          2. The Transferee has been furnished with all information regarding
     (a) the Certificates and distributions thereon, (b) the nature, performance
     and servicing of the Mortgage Loans, (c) the Pooling and Servicing
     Agreement referred to below, and (d) any credit enhancement mechanism
     associated with the Certificates, that it has requested.

<PAGE>

          All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of May 30, 2001, among Salomon Brothers Mortgage Securities VII, Inc.
as Depositor, Ocwen Federal Bank FSB as Master Servicer and U.S. Bank National
Association as Trustee, pursuant to which the Certificates were issued.

                                                [TRANSFEREE]

                                                By:__________________________
                                                Name:
                                                Title:

<PAGE>

                                                          ANNEX 1 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

          [For Transferees Other Than Registered Investment Companies]

          The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and U.S. Bank National Association, as Trustee, with respect
to the mortgage pass-through certificates (the "Certificates") described in the
Transferee Certificate to which this certification relates and to which this
certification is an Annex:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

          2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Transferee owned and/or
invested on a discretionary basis $______________________/1 in securities
(except for the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Transferee satisfies the criteria in the category
marked below.

     ___  CORPORATION, ETC. The Transferee is a corporation (other than a bank,
          savings and loan association or similar institution), Massachusetts or
          similar business trust, partnership, or any organization described in
          Section 501(c)(3) of the Internal Revenue Code of 1986.

     ___  BANK. The Transferee (a) is a national bank or banking institution
          organized under the laws of any State, territory or the District of
          Columbia, the business of which is substantially confined to banking
          and is supervised by the State or territorial banking commission or
          similar official or is a foreign bank or equivalent institution, and
          (b) has an audited net worth of at least $25,000,000 as demonstrated
          in its latest annual financial statements, a copy of which is attached
          hereto.

     ___  SAVINGS AND LOAN. The Transferee (a) is a savings and loan
          association, building and loan association, cooperative bank,
          homestead association or similar institution, which is supervised and
          examined by a State or Federal authority having supervision over any
          such institutions or is a foreign savings and loan association or
          equivalent institution and (b) has an audited net worth of at least

--------------------
1  Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.

<PAGE>

          $25,000,000 as demonstrated in its latest annual financial statements,
          A COPY OF WHICH IS ATTACHED HERETO.

     ___  BROKER-DEALER. The Transferee is a dealer registered pursuant to
          Section 15 of the Securities Exchange Act of 1934.

     ___  INSURANCE COMPANY. The Transferee is an insurance company whose
          primary and predominant business activity is the writing of insurance
          or the reinsuring of risks underwritten by insurance companies and
          which is subject to supervision by the insurance commissioner or a
          similar official or agency of a State, territory or the District of
          Columbia.

     ___  STATE OR LOCAL PLAN. The Transferee is a plan established and
          maintained by a State, its political subdivisions, or any agency or
          instrumentality of the State or its political subdivisions, for the
          benefit of its employees.

     ___  ERISA PLAN. The Transferee is an employee benefit plan within the
          meaning of Title I of the Employee Retirement Income Security Act of
          1974.

     ___  INVESTMENT ADVISOR. The Transferee is an investment advisor registered
          under the Investment Advisers Act of 1940.

          3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.

          4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the Transferee
used the cost of such securities to the Transferee and did not include any of
the securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Transferee may have included securities owned by
subsidiaries of the Transferee, but only if such subsidiaries are consolidated
with the Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However, such
securities were not included if the Transferee is a majority-owned, consolidated
subsidiary of another enterprise and the Transferee is not itself a reporting
company under the Securities Exchange Act of 1934.

          5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Transferee may be in reliance on Rule 144A.

<PAGE>

      ___      ___    Will the Transferee be purchasing the Certificates
      Yes      No     only for the Transferee's own account?

          6. If the answer to the foregoing question is "no", the Transferee
agrees that, in connection with any purchase of securities sold to the
Transferee for the account of a third party (including any separate account) in
reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.

          7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Certificates will
constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.

Dated:

                                        ____________________________________
                                        Print Name of Transferee

                                        By:_________________________________
                                        Name:
                                        Title:

<PAGE>

                                                          ANNEX 2 TO EXHIBIT F-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That Are Registered Investment Companies]

          The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and U.S. Bank National Association, as Trustee, with respect
to the mortgage pass- through certificates (the "Certificates") described in the
Transferee Certificate to which this certification relates and to which this
certification is an Annex:

          1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

          2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as defined in Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company Act
of 1940, and (ii) as marked below, the Transferee alone, or the Transferee's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year. For purposes of determining the amount of
securities owned by the Transferee or the Transferee's Family of Investment
Companies, the cost of such securities was used.

____      The Transferee owned $___________________ in securities (other than
          the excluded securities referred to below) as of the end of the
          Transferee's most recent fiscal year (such amount being calculated in
          accordance with Rule 144A).

____      The Transferee is part of a Family of Investment Companies which owned
          in the aggregate $______________ in securities (other than the
          excluded securities referred to below) as of the end of the
          Transferee's most recent fiscal year (such amount being calculated in
          accordance with Rule 144A).

          3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

          4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements,

<PAGE>

(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.

          5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.

          6. The undersigned will notify the parties to which this certification
is made of any changes in the information and conclusions herein. Until such
notice, the Transferee's purchase of the Certificates will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.

Dated:

                                           ____________________________________
                                           Print Name of Transferee or Advisor

                                           By:_________________________________
                                           Name:
                                           Title:

                                           IF AN ADVISER:

                                           ____________________________________
                                           Print Name of Transferee

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

          The undersigned hereby certifies on behalf of the purchaser named
below (the "Purchaser") as follows:

          1. I am an executive officer of the Purchaser.

          2. The Purchaser is a "qualified institutional buyer", as defined in
     Rule 144A, ("Rule 144A") under the Securities Act of 1933, as amended.

          3. As of the date specified below (which is not earlier than the last
     day of the Purchaser's most recent fiscal year), the amount of
     "securities", computed for purposes of Rule 144A, owned and invested on a
     discretionary basis by the Purchaser was in excess of $100,000,000.

Name of Purchaser ______________________________________________________________

By:    (Signature)______________________________________________________________

Name of Signatory ______________________________________________________________

Title __________________________________________________________________________

Date of this certificate _______________________________________________________

Date of information provided in paragraph 3 ____________________________________

<PAGE>

                                   EXHIBIT F-2
                                   -----------

                    FORM OF TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF NEW YORK   )
                        : ss.:
COUNTY OF NEW YORK  )

          __________________________, being duly sworn, deposes, represents and
warrants as follows:

    1.          I am a ______________________ of ____________________________
          (the "Owner") a corporation duly organized and existing under the laws
          of ______________, the record owner of New Century Home Equity Loan
          Trust, Series 2001-NC1, Asset Backed Mortgage Pass-Through
          Certificates, Series 2001-NC1, [Class R-I], [Class R-II] and [Class
          R-III] (the "Class R Certificates"), on behalf of whom I make this
          affidavit and agreement. Capitalized terms used but not defined herein
          have the respective meanings assigned thereto in the Pooling and
          Servicing Agreement pursuant to which the Class R Certificates were
          issued.

    2.          The Owner (i) is and will be a "Permitted Transferee" as of
          ____________________, 20___ and (ii) is acquiring the Class R
          Certificates for its own account or for the account of another Owner
          from which it has received an affidavit in substantially the same form
          as this affidavit. A "Permitted Transferee" is any person other than a
          "disqualified organization" or a possession of the United States. For
          this purpose, a "disqualified organization" means the United States,
          any state or political subdivision thereof, any agency or
          instrumentality of any of the foregoing (other than an instrumentality
          all of the activities of which are subject to tax and, except for the
          Federal Home Loan Mortgage Corporation, a majority of whose board of
          directors is not selected by any such governmental entity) or any
          foreign government, international organization or any agency or
          instrumentality of such foreign government or organization, any rural
          electric or telephone cooperative, or any organization (other than
          certain farmers' cooperatives) that is generally exempt from federal
          income tax unless such organization is subject to the tax on unrelated
          business taxable income.

    3.          The Owner is aware (i) of the tax that would be imposed on
          transfers of the Class R Certificates to disqualified organizations
          under the Internal Revenue Code of 1986 that applies to all transfers
          of the Class R Certificates after March 31, 1988; (ii) that such tax
          would be on the transferor or, if such transfer is through an agent
          (which person includes a broker, nominee or middleman) for a
          non-Permitted Transferee, on the agent; (iii) that the person
          otherwise liable for

<PAGE>

          the tax shall be relieved of liability for the tax if the transferee
          furnishes to such person an affidavit that the transferee is a
          Permitted Transferee and, at the time of transfer, such person does
          not have actual knowledge that the affidavit is false; and (iv) that
          each of the Class R Certificates may be a "noneconomic residual
          interest" within the meaning of proposed Treasury regulations
          promulgated under the Code and that the transferor of a "noneconomic
          residual interest" will remain liable for any taxes due with respect
          to the income on such residual interest, unless no significant purpose
          of the transfer is to impede the assessment or collection of tax.

    4.          The Owner is aware of the tax imposed on a "pass-through
          entity" holding the Class R Certificates if, at any time during the
          taxable year of the pass-through entity, a non-Permitted Transferee is
          the record holder of an interest in such entity. (For this purpose, a
          "pass-through entity" includes a regulated investment company, a real
          estate investment trust or common trust fund, a partnership, trust or
          estate, and certain cooperatives.)

    5.          The Owner is aware that the Trustee will not register the
          transfer of any Class R Certificate unless the transferee, or the
          transferee's agent, delivers to the Trustee, among other things, an
          affidavit in substantially the same form as this affidavit. The Owner
          expressly agrees that it will not consummate any such transfer if it
          knows or believes that any of the representations contained in such
          affidavit and agreement are false.

    6.          The Owner consents to any additional restrictions or
          arrangements that shall be deemed necessary upon advice of counsel to
          constitute a reasonable arrangement to ensure that the Class R
          Certificates will only be owned, directly or indirectly, by an Owner
          that is a Permitted Transferee.

    7.          The Owner's taxpayer identification number is _________________.

    8.          The Owner has reviewed the restrictions set forth on the face
          of the Class R Certificates and the provisions of Section 5.02(d) of
          the Pooling and Servicing Agreement under which the Class R
          Certificates were issued (in particular, clauses (iii)(A) and (iii)(B)
          of Section 5.02(d) which authorize the Trustee to deliver payments to
          a person other than the Owner and negotiate a mandatory sale by the
          Trustee in the event that the Owner holds such Certificate in
          violation of Section 5.02(d)); and that the Owner expressly agrees to
          be bound by and to comply with such restrictions and provisions.

    9.          The Owner is not acquiring and will not transfer the Class R
          Certificates in order to impede the assessment or collection of any
          tax.

    10.         The Owner anticipates that it will, so long as it holds the
          Class R Certificates, have sufficient assets to pay any taxes owed by
          the holder of such Class R Certificates, and hereby represents to and
          for the benefit of the person

<PAGE>

          from whom it acquired the Class R Certificates that the Owner intends
          to pay taxes associated with holding such Class R Certificates as they
          become due, fully understanding that it may incur tax liabilities in
          excess of any cash flows generated by the Class R Certificates.

    11.         The Owner has no present knowledge that it may become
          insolvent or subject to a bankruptcy proceeding for so long as it
          holds the Class R Certificates.

    12.         The Owner has no present knowledge or expectation that it
          will be unable to pay any United States taxes owed by it so long as
          any of the Certificates remain outstanding.

    13.         The Owner is not acquiring the Class R Certificates with the
          intent to transfer the Class R Certificates to any person or entity
          that will not have sufficient assets to pay any taxes owed by the
          holder of such Class R Certificates, or that may become insolvent or
          subject to a bankruptcy proceeding, for so long as the Class R
          Certificates remain outstanding.

    14.         The Owner will, in connection with any transfer that it makes
          of the Class R Certificates, obtain from its transferee the
          representations required by Section 5.02(d) of the Pooling and
          Servicing Agreement under which the Class R Certificate were issued
          and will not consummate any such transfer if it knows, or knows facts
          that should lead it to believe, that any such representations are
          false.

    15.         The Owner will, in connection with any transfer that it makes
          of the Class R Certificates, deliver to the Trustee an affidavit,
          which represents and warrants that it is not transferring the Class R
          Certificates to impede the assessment or collection of any tax and
          that it has no actual knowledge that the proposed transferee: (i) has
          insufficient assets to pay any taxes owed by such transferee as holder
          of the Class R Certificates; (ii) may become insolvent or subject to a
          bankruptcy proceeding for so long as the Class R Certificates remains
          outstanding; and (iii) is not a "Permitted Transferee".

    16.         The Owner is a citizen or resident of the United States, a
          corporation, partnership or other entity created or organized in, or
          under the laws of, the United States or any political subdivision
          thereof, or an estate or trust whose income from sources without the
          United States may be included in gross income for United States
          federal income tax purposes regardless of its connection with the
          conduct of a trade or business within the United States.

    17.         The Owner of the Class R-III Certificate, hereby agrees that
          in the event that the Trust Fund created by the Pooling and Servicing
          Agreement is terminated pursuant to Section 9.01 thereof, the
          undersigned shall assign and transfer to the Holders of the Class CE
          Certificates any amounts in excess of par received in connection with
          such termination. Accordingly, in the event of such termination, the
          Trustee is hereby authorized to withhold any such amounts in excess of
          par

<PAGE>

          and to pay such amounts directly to the Holders of the Class CE
          Certificates. This agreement shall bind and be enforceable against any
          successor, transferee or assigned of the undersigned in the Class
          R-III Certificate. In connection with any transfer of the Class R-III
          Certificate, the Owner shall obtain an agreement substantially similar
          to this clause from any subsequent owner.

<PAGE>

          IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
__________, 20__.

                                          [OWNER]

                                          By:__________________________
                                          Name:
                                          Title:   [Vice] President

ATTEST:

By:_________________________________
Name:
Title:     [Assistant] Secretary

          Personally appeared before me the above-named , known or proved to me
to be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.

          Subscribed and sworn before me this ____ day of __________, 20___.

                                            ____________________________
                                                     Notary Public

                                            County of __________________
                                            State of ___________________

                                            My Commission expires:

<PAGE>

                          FORM OF TRANSFEROR AFFIDAVIT

STATE OF NEW YORK           )
                                     : ss. :
COUNTY OF NEW YORK                   )

          __________________________, being duly sworn, deposes, represents and
warrants as follows:

1.   I am a ____________________ of ____________________________ (the "Owner"),
a corporation duly organized and existing under the laws of ______________, on
behalf of whom I make this affidavit.

          2. The Owner is not transferring the [Class R-I][Class R-II][Class
R-III] (the "Residual Certificates") to impede the assessment or collection of
any tax.

          3. The Owner has no actual knowledge that the Person that is the
proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

          4. The Owner understands that the Purchaser has delivered to the
Trustee a transfer affidavit and agreement in the form attached to the Pooling
and Servicing Agreement as Exhibit F-2. The Owner does not know or believe that
any representation contained therein is false.

          5. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically paid
its debts as they became due and has found no significant evidence to indicate
that the Purchaser will not continue to pay its debts as they become due in the
future. The Owner understands that the transfer of a Residual Certificate may
not be respected for United States income tax purposes (and the Owner may
continue to be liable for United States income taxes associated therewith)
unless the Owner has conducted such an investigation.

          6. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.

<PAGE>

          IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
___________, 20__.

                                         [OWNER]

                                         By:_____________________________
                                         Name:
                                         Title:     [Vice] President

ATTEST:

By:______________________________
Name:
Title:    [Assistant] Secretary

          Personally appeared before me the above-named , known or proved to me
to be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.

          Subscribed and sworn before me this ____ day of __________, 20___.

                                            ____________________________
                                                     Notary Public

                                            County of __________________
                                            State of ___________________

                                            My Commission expires:

<PAGE>

                                    EXHIBIT G
                                    ---------

            FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE

                                                   _____________, 20__

Salomon Brothers Mortgage Securities VII, Inc.
390 Greenwich Street, 4th Floor
New York, NY 10013

U.S. Bank National Association
______________________
______________________

Ocwen Federal Bank FSB
______________________
______________________

                   Re:   Salomon Brothers Mortgage Securities VII, Inc.
                         Asset Backed Mortgage Pass-Through
                         Certificates, Series 2001-NC1, Class ___
                         -----------------------------------------------

Dear Sirs:

          __________________________________ (the "Transferee") intends to
acquire from _____________________ (the "Transferor") $____________ Initial
Certificate Principal Balance of Salomon Brothers Mortgage Securities VII, Inc.,
Asset Backed Pass-Through Certificates, Series 2001-NC1, Class [CE] [P] [R] (the
"Certificates"), issued pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of May 30, 2001 among Salomon
Brothers Mortgage Securities VII, Inc. as depositor (the "Depositor"), Ocwen
Federal Bank FSB as master servicer (the "Master Servicer") and U.S. Bank
National Association as trustee (the "Trustee"). Capitalized terms used herein
and not otherwise defined shall have the meanings assigned thereto in the
Pooling and Servicing Agreement. The Transferee hereby certifies, represents and
warrants to, and covenants with the Depositor, the Trustee and the Master
Servicer the following:

          The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
other retirement arrangement, including individual retirement accounts and
annuities, Keogh plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), (ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL")

<PAGE>

regulation, 29 C.F.R.ss.2510.3-101, and (iii) will not be transferred to any
entity that is deemed to be investing in plan assets within the meaning of the
DOL regulation at 29 C.F.R.ss. 2510.3-101.

                                           Very truly yours,

                                           _______________________________

                                           By:____________________________
                                           Name:
                                           Title:

<PAGE>

                                    EXHIBIT H

                     FORM OF REPORT PURSUANT TO SECTION 4.06

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549

                                    Form 10-K

               Annualreport pursuant to Section 13 or 15(d) of the
               Securities Exchange Act of 1934 (Fee Required). For
                          fiscal year ended __________

                        Commission file number: 333-40426

                 Salomon Brothers Mortgage Securities VII, Inc.
        (AS DEPOSITOR UNDER THE POOLING AND SERVICING AGREEMENT DATED AS
                             OF____________________,
        PROVIDING FOR THE ISSUANCE OF MORTGAGE PASS-THROUGH CERTIFICATES
                                 SERIES _______)
--------------------------------------------------------------------------------

             (Exact name of registrant as specified in its charter)

                 Delaware                                 13-3439681
                 -------------                            ---------------
        (State or Other Jurisdiction                 (I.R.S. Employer
              of Incorporation                      Identification Number)

                         390 Greenwich Street, 4th Floor
                            New York, New York 10013
                     ---------------------------------------
                     (Address of Principal        (Zip Code)
                      Executive Offices)

                  Registrant's telephone number: (212) 816-6000

           Securities registered pursuant to Section 12(b) of the Act:

                                      None

           Securities registered pursuant to Section 12(g) of the Act:

                                      None

Indicate whether the Registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter

<PAGE>

period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                                               X  YES            No
                                              ----          ----
Item 1.  Business:

         Not applicable

Item 2.  Properties:

         Not applicable

Item 3.  Legal Proceedings:

         None

Item 4.  Submission of Matters to a Vote of Security-Holders

         None

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         To the best knowledge of the registrant there is no established public
         trading market for the certificates.

         There are approximately _____ holders of record as of the end of the
         reporting year.

Item 6.  Selected Financial Data.

         Not applicable.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

         Not applicable

Item 8.  Financial Statements and Supplementary Data.

         Not applicable.

Item 9.  Changes in and Disagreements With Accountants on Accounting and
         Financial Disclosure

         None

<PAGE>

Item 10.

         Not applicable

Item 11. Executive Compensation

         Not applicable

Item 12. Security Ownership of Certain Beneficial Owners and Management

         Not applicable

Item 13. Certain Relationships and Related Transactions

         Not applicable

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

         a)       The company filed on Form 8-K, separately for each
                  distribution date, the distribution of funds related to the
                  trust for each of the following distribution dates:

                        Distribution Date              Form 8-K Filing Date
                        -----------------              --------------------
                        _________________              ________________
                        _________________              ________________
                        _________________              ________________

         b)       99.1  Annual Report of Independent Public Accountants' as to
                        master servicing activities or servicing activities,
                        as applicable

                        (a)  Ocwen Federal Bank FSB, as master servicer <F1>

                  99.2  Annual Statement of Compliance with obligations
                        under the Pooling and Servicing Agreement or
                        servicing agreement, as applicable, of:

                        (a)  Ocwen Federal Bank FSB, as master servicer <F1>

<F1>     Such document (i) is not filed herewith since such document was not
         received by the Reporting Person at least three business days prior to
         the due date of this report; and (ii) will be included in an amendment
         to this report on Form 10-K/A to be filed within 30 days of the
         Reporting Person's receipt of such document.

<PAGE>

Signatures

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

Date: ___________

Salomon Brothers Mortgage Securities VII, Inc. by U.S. Bank National
Association, as Trustee for Salomon Brothers Mortgage Securities VII, Inc. Asset
Backed Pass-Through Certificates, Series 2001-NC1.

By:          /s/ Eve Kaplan
     --------------------------------------
Name:     Eve Kaplan
Title:       Vice President
Company:     U.S. Bank National Association

<PAGE>

                                    EXHIBIT I

                                   [RESERVED]

<PAGE>

                                    EXHIBIT J

                                   [RESERVED]

<PAGE>

                                   EXHIBIT K

                          FORM OF LOST NOTE AFFIDAVIT

Loan #: ____________
Borrower: _____________

                               LOST NOTE AFFIDAVIT

          I, as ____________________ of ______________________, a
_______________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by ____________________, a _________________ corporation
as Seller on behalf of Salomon Brothers Mortgage Securities VII, Inc. (the
"Purchaser"), _____________________ (the "Deponent"), being duly sworn, deposes
and says that:

          1. The Seller's address is:    _____________________
                                         _____________________
                                         _____________________

          2.     The Seller previously delivered to the Purchaser a signed
          Initial Certification with respect to such Mortgage and/or Assignment
          of Mortgage;

          3.     Such Mortgage Note and/or Assignment of Mortgage was assigned
          or sold to the Purchaser by ________________________, a ____________
          corporation pursuant to the terms and provisions of a Mortgage Loan
          Purchase Agreement dated as of __________ __, _____;

          4.     Such Mortgage Note and/or Assignment of Mortgage is not
          outstanding pursuant to a request for release of Documents;

          5.     Aforesaid Mortgage Note and/or Assignment of Mortgage (the
          "Original") has been lost;

          6.     Deponent has made or caused to be made a diligent search for
          the Original and has been unable to find or recover same;

          7.     The Seller was the Seller of the Original at the time of the
          loss; and

          8.     Deponent agrees that, if said Original should ever come into
          Seller's possession, custody or power, Seller will immediately and
          without consideration surrender the Original to the Purchaser.

          9.     Attached hereto is a true and correct copy of (i) the Note,
          endorsed in blank by the Mortgagee and (ii) the Mortgage or Deed of
          Trust (strike one) which

<PAGE>

          secures the Note, which Mortgage or Deed of Trust is recorded in the
          county where the property is located.

          10.     Deponent hereby agrees that the Seller (a) shall indemnify
          and hold harmless the Purchaser, its successors and assigns, against
          any loss, liability or damage, including reasonable attorney's fees,
          resulting from the unavailability of any Notes, including but not
          limited to any loss, liability or damage arising from (i) any false
          statement contained in this Affidavit, (ii) any claim of any party
          that has already purchased a mortgage loan evidenced by the Lost Note
          or any interest in such mortgage loan, (iii) any claim of any borrower
          with respect to the existence of terms of a mortgage loan evidenced by
          the Lost Note on the related property to the fact that the mortgage
          loan is not evidenced by an original note and (iv) the issuance of a
          new instrument in lieu thereof (items (i) through (iv) above
          hereinafter referred to as the "Losses") and (b) if required by any
          Rating Agency in connection with placing such Lost Note into a
          Pass-Through Transfer, shall obtain a surety from an insurer
          acceptable to the applicable Rating Agency to cover any Losses with
          respect to such Lost Note.

          11.     This Affidavit is intended to be relied upon by the
          Purchaser, its successors and assigns. _____________________, a
          ______________ corporation represents and warrants that is has the
          authority to perform its obligations under this Affidavit of Lost
          Note.

Executed this ____ day, of ___________ ______.

                                               SELLER

                                               By:______________________
                                               Name:
                                               Title:

          On this _____ day of ________, _____, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.

Signature:

[Seal]

<PAGE>

                                   Schedule 1
                                   ----------

                             MORTGAGE LOAN SCHEDULE

                                 FILED BY PAPER

<PAGE>

                                   Schedule 2

                         SCHEDULE OF PREPAYMENT CHARGES

                             AVAILABLE UPON REQUEST

<PAGE>

                                   Schedule 3

                         SCHEDULE OF PMI MORTGAGE LOANS

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