Document:

Code of Ethics and Business Conduct

Exhibit 10.22 
 
URANIUM RESOURCES, INC. 
 
CODE OF ETHICS AND BUSINESS CONDUCT 
 
March 2003 
 
PURPOSE 
 
The Code of Ethics and Business Conduct of Uranium Resources, Inc. contains the specific Corporate Policies adopted by the Board of
Directors that relate to the legal and ethical standards of conduct of employees and agents of the Company and set forth the Company’s expectations as to the legal and ethical nature of conduct of the Company’s employees and agents while
acting on the Company’s behalf. 
 
It is
designed, implemented and enforced so as to be effective in preventing and detecting criminal conduct. 
 
DEFINITIONS 
 
As used in the Code of Ethics and Business Conduct: 
 
“Company” means Uranium Resources, Inc., a Delaware corporation, its divisions, subsidiaries and successors. 
 
“High Level Personnel” means individuals who have
substantial control over the Company or who have a substantial role in policy-making within the Company, including directors, executive officers and individuals in charge of a major business or functional unit of the Company, such as sales,
administration or finance. 
 
“Laws”
means laws, rules and regulations of governmental agencies and authorities. 
 
“Board” means the Board of Directors of the Company. 
 
POLICY 
 
A. Standards of Conduct. 
 
It is the Company’s policy to observe and comply with all Laws applicable to it or the conduct of its business wherever located. In some situations, the applicable Law of the United States may
conflict with the applicable Law of another country. In such cases, the Company will endeavor to resolve such conflict following the guidance of its legal counsel. Where such a conflict cannot be resolved, the applicable Law of the United States
will be observed and complied with by the Company. 
 
The Code of Ethics and Business Conduct applies to agents of the Company as well as its employees. The Code of Ethics and Business Conduct sets forth specific Corporate Policies governing the conduct of the business of the
Company. These policies were developed and are intended to be applied in good faith with reasonable business judgment to enable the Company to achieve its operating and financial goals within the framework of the Law. It is the personal
responsibility of each employee and agent of the Company to adhere to the standards and restrictions, whether imposed by Law or the Code of Ethics and Business Conduct, applicable to his or her assigned duties and responsibilities and to conduct
himself or herself accordingly. Such 

standards and restrictions require each employee and agent to avoid any activities that would involve the Company in any practice that is not
in compliance with the Code of Ethics and Business Conduct. Any employee or agent who does not adhere to such standards and restrictions is acting outside the scope of his or her employment or agency. Beyond legal compliance, all Company employees
and agents are expected to observe high standards of business and personal ethics in the discharge of their assigned duties and responsibilities. This requires the practice of honesty and integrity in every aspect of dealing with other Company
employees, the public, the business community, stockholders, customers, suppliers and governmental and regulatory authorities. 
 
IT IS THE POLICY OF THE COMPANY NOT TO DISCRIMINATE AGAINST EMPLOYEES, STOCKHOLDERS, DIRECTORS, OFFICERS, CUSTOMERS OR SUPPLIERS ON ACCOUNT OF RACE,
COLOR, AGE, SEX, RELIGION OR NATIONAL ORIGIN EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW. ALL OF SUCH PERSONS SHALL BE TREATED WITH DIGNITY AND RESPECT AND THEY SHALL NOT BE UNREASONABLY INTERFERED WITH IN THE CONDUCT OF THEIR DUTIES AND
RESPONSIBILITIES. 
 
B. Administration of Code of
Ethics and Business Conduct. 
 
The Code of Ethics and Business Conduct of the Company shall be administered as follows: 
 
1. Scope of Code of Ethics and Business Conduct. 
 
The Board shall, periodically, in light of the experience of the Company, review the Code of
Business Conduct, and when necessary or desirable, make appropriate changes (i) to ensure its continued conformance to applicable Law, (ii) to ensure that it meets or exceeds industry standards, and (iii) to ensure that any weaknesses revealed
through monitoring, auditing and reporting systems are eliminated or corrected. 
 
2. Allocations of Responsibility. 
 
The Board shall be responsible for the administration of the Code of Ethics and Business Conduct. The Board shall
establish such procedures as it shall deem necessary or desirable in order to discharge this responsibility. Such procedures shall provide for obtaining advice of legal counsel where appropriate. In discharging these responsibilities, the Board may
delegate authority to such committees, officers and other employees and may engage such agents and advisors as it shall deem necessary or desirable. 
 
3. Delegation of Substantial Discretionary Authority. 
 
No employee of the Company shall delegate substantial discretionary authority to any
individual who such employee knows, or through the exercise of due diligence should know, has a propensity to engage in illegal activities. 
 
a. For this purpose, persons with “substantial discretionary authority” include (i) High Level Personnel, (ii)
individuals who exercise substantial supervisory authority, such as a plant manager or a sales manager, and (iii) any other individuals who, although not a part of the Company’s management, nevertheless exercise substantial discretion when
acting within the scope of their authority (for example, an individual with authority to negotiate or set price levels or an individual authorized to negotiate or approve significant contracts). 

 
b. The Board, in administering the Code of Business Conduct, shall consider, adopt and promulgate guidelines regarding procedures to ascertain a “propensity to engage in illegal activities.” 
 
4. Communication of Policies. 
 
To ensure the continued dissemination and
communication of the Code of Ethics and Business Conduct, the Board shall take, or cause to be taken, reasonable steps to communicate effectively the standards and procedures included in the Code of Business Conduct to employees and agents of the
Company. 
 
5. Monitoring and
Auditing. 
 
The Board shall take
reasonable steps to monitor and audit compliance with the Code of Business Conduct, including the establishment of monitoring and auditing systems that are reasonably designed to detect conduct in violation of the Code of Ethics and Business Conduct
by employees and agents of the Company. 
 
a. The information developed by the Company’s independent accountants in performing their engagement by the Company and by its internal auditors in the performance of their assigned responsibilities shall be made available to
the Board in its capacity as administrator of the Code of Business Conduct as a means of monitoring and auditing compliance with the Code of Ethics and Business Conduct. 
 
b. The results of the periodic health, safety and environmental audits of the Company’s
facilities shall be made available to the Board in its capacity as the administrator of the Code of Ethics and Business Conduct as a means to monitor and audit compliance with the Code of Ethics and Business Conduct. 
 
6. Board Committees. 
 
Legal counsel shall report to the Audit
Committee of the Board of Directors, at least once each year, regarding the general effectiveness of the Code of Ethics and Business Conduct. The Chief Health, Safety and Environmental Officer shall report to the Environment, Health and Safety
Committee of the Board of Directors at least once each year regarding the environmental, health and safety performance of the Company as it relates to the Code of Ethics and Business Conduct. 
 
7. Reporting System. 
 
The Board shall establish a reporting system
that will allow violations of the Code of Ethics and Business Conduct to be reported and acted upon by officers or other employees of the Company with sufficient authority to deal objectively with the reported matters. The existence and nature of
the reporting system shall be communicated to all employees and, to the extent appropriate, to agents of the Company. It shall be a violation of this Corporate Policy to intimidate or impose any form of retribution on any employee or agent who
utilizes such reporting system in good faith to report suspected violations (except that appropriate action may be taken against such employee or agent if such individual is one of the wrongdoers). 
 
8. Investigation of Violations. 
 
If, through operation of the Company’s
compliance monitoring and auditing systems or its violation reporting systems or otherwise, the Company receives information regarding an alleged violation of the Code of Ethics and Business Conduct, the person or 

persons authorized by the Board to investigate alleged violations of the Code of Ethics and Business Conduct shall, as appropriate, in
accordance with procedures established by the Board: 
 
a. evaluate such information as to gravity and credibility; 
 
b. initiate an informal inquiry or a formal investigation with respect thereto; 
 
c. prepare a report of the results of such
inquiry or investigation, including recommendations as to the disposition of such matter; 
 
d. make the results of such inquiry or investigation available to the Board of Directors for action (including
disciplinary action by the Board); and 
 
e. recommend changes in the Code of Ethics and Business Conduct necessary or desirable to prevent further similar violations. 
 
The Company may disclose the results of investigations to law enforcement agencies. 
 
9. Disciplinary Measures. 
 
The Company shall consistently enforce its
Code of Ethics and Business Conduct through appropriate means of discipline. Pursuant to procedures adopted by it, the Board shall determine whether violations of the Code of Ethics and Business Conduct have occurred and, if so, shall determine the
disciplinary measures to be taken against any employee or agent of the Company who has so violated the Code of Ethics and Business Conduct. The disciplinary measures, which may be invoked at the discretion of the Board, include, but are not limited
to, counseling, oral or written reprimands, warnings, probation or suspension without pay, demotions, reductions in salary, termination of employment and restitution. 
 
Persons subject to disciplinary measures shall include, in addition to the violator, others
involved in the wrongdoing such as (i) persons who fail to use reasonable care to detect a violation, (ii) persons who if requested to divulge information withhold material information regarding a violation, and (iii) supervisors who approve or
condone the violations or attempt to retaliate against employees or agents for reporting violations or violators. 
 
10. Documentation. 
 
Subject to the applicable document retention program, the Company shall document its compliance efforts and results to
evidence its commitment to comply with the standards and procedures set forth above. 
 

4EXECUTION COPY

                        RESIDENTIAL FUNDING CORPORATION,

                               as Master Servicer

                        HOME EQUITY LOAN TRUST 2003-HS1,

                                    as Issuer

                                       and

                               JPMORGAN CHASE BANK

                              as Indenture Trustee

                               SERVICING AGREEMENT

                           Dated as of March 27, 2003

                                Home Equity Loans

<PAGE>

               This  Servicing  Agreement,  dated as of March  27,  2003,  among
Residential Funding  Corporation (the "Master  Servicer"),  the Home Equity Loan
Trust  2003-HS1  (the  "Issuer"),   and  JPMorgan  Chase  Bank  (the  "Indenture
Trustee").

                                W I T N E S S E T H  T H A T:

               WHEREAS,  pursuant  to  the  terms  of  the  Purchase  Agreement.
Residential  Funding  Corporation  (in its  capacity as Seller) will sell to the
Depositor  the  Group I Loans  and  Group II  Loans  together  with the  Related
Documents  on the Closing Date and  thereafter  all  Additional  Balances on the
Group II Loans  created  on or after  the  Cut-off  Date  (except  as set  forth
herein);

               WHEREAS,  the Depositor  will sell the Group I Loans and Group II
Loans and all of its rights under the Purchase Agreement to the Issuer, together
with the Related  Documents on the Closing Date,  and  thereafter all Additional
Balances on the Group II Loans  created on or after the Cut-off  Date (except as
set forth herein);

               WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer
will  issue  and  transfer  to  or  at  the  direction  of  the  Depositor,  the
Certificates;

     WHEREAS,  pursuant to the terms of the Indenture, the Issuer will issue and
transfer to or at the direction of the Depositor, the Notes; and

               WHEREAS,  pursuant to the terms of this Servicing Agreement,  the
Master  Servicer  will service the Home Equity Loans  directly or through one or
more Subservicers;

               NOW,  THEREFORE,  in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

Section 1.01 DEFINITIONS.  For all purposes of this Servicing Agreement,  except
as otherwise expressly provided herein or unless the context otherwise requires,
capitalized  terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions  contained in Appendix A to the Indenture dated
the date hereof (the  "Indenture"),  between the Issuer and JPMorgan Chase Bank,
as indenture  trustee,  which is  incorporated  by reference  herein.  All other
capitalized terms used herein shall have the meanings specified herein.

Section  1.02  OTHER  DEFINITIONAL  PROVISIONS.  (a) All terms  defined  in this
Servicing Agreement shall have the defined meanings when used in any certificate
or other document made or delivered  pursuant  hereto unless  otherwise  defined
therein.

(b) _____ As used in this  Servicing  Agreement and in any  certificate or other
document  made or delivered  pursuant  hereto or thereto,  accounting  terms not
defined  in  this  Servicing  Agreement  or in any  such  certificate  or  other
document,  and accounting terms partly defined in this Servicing Agreement or in

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any such  certificate or other document,  to the extent not defined,  shall have
the  respective  meanings  given to them  under  generally  accepted  accounting
principles.  To the extent  that the  definitions  of  accounting  terms in this
Servicing   Agreement  or  in  any  such   certificate  or  other  document  are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.

(c) _____ The words "hereof," "herein,"  "hereunder" and words of similar import
when used in this Servicing Agreement shall refer to this Servicing Agreement as
a whole and not to any particular provision of this Servicing Agreement; Section
and Exhibit references  contained in this Servicing  Agreement are references to
Sections  and  Exhibits  in or to  this  Servicing  Agreement  unless  otherwise
specified;  the term "including" shall mean "including without limitation";  and
the term "proceeds" shall have the meaning ascribed thereto in the UCC.

(d) _____ The definitions  contained in this Servicing  Agreement are applicable
to the singular as well as the plural  forms of such terms and to the  masculine
as well as the feminine and neuter genders of such terms.

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

Section 1.03 INTEREST CALCULATIONS;  SERVICING FEE. All calculations of interest
hereunder  that are made in respect of the Loan  Balance of a Home  Equity  Loan
shall be made in  accordance  with the  method of  calculation  set forth in the
related  Mortgage Note. All calculations of interest on the Class I Notes (other
than the  Class  A-I-1  Notes)  shall be made on the  basis  of a  360-day  year
consisting of twelve 30-day months.  All  calculations  of interest on the Class
A-I-1 and the Class II Notes shall be made on the basis of the actual  number of
days in an  Interest  Period and a year  assumed  to  consist  of 360 days.  The
calculation  of the  Servicing  Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day  months.  All dollar  amounts  calculated  hereunder
shall be rounded to the nearest  penny with  one-half of one penny being rounded
up.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

Section 2.01 REPRESENTATIONS AND WARRANTIES  REGARDING THE MASTER SERVICER.  The
Master Servicer represents and warrants to the Issuer and for the benefit of the
Indenture Trustee, as pledgee of the Home Equity Loans, as of the Closing Date:

(a) _____ The Master Servicer is a corporation duly organized,  validly existing
and in good  standing  under  the  laws of the  State  of  Delaware  and has the
corporate  power to own its assets and to transact  the  business in which it is
currently  engaged.  The Master  Servicer is duly  qualified to do business as a
foreign  corporation  and is in good standing in each  jurisdiction in which the

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<PAGE>

character of the business  transacted by it or properties  owned or leased by it
requires such  qualification and in which the failure to so qualify would have a
material  adverse  effect on the  business,  properties,  assets,  or  condition
(financial or other) of the Master Servicer;

(b) _____ The Master  Servicer  has the power and  authority  to make,  execute,
deliver  and  perform  this  Servicing  Agreement  and  all of the  transactions
contemplated  under  this  Servicing  Agreement,  and has  taken  all  necessary
corporate  action to authorize the execution,  delivery and  performance of this
Servicing Agreement.  When executed and delivered, this Servicing Agreement will
constitute  the legal,  valid and  binding  obligation  of the  Master  Servicer
enforceable  in accordance  with its terms,  except as enforcement of such terms
may  be  limited  by  bankruptcy,  insolvency  or  similar  laws  affecting  the
enforcement of creditors'  rights generally and by the availability of equitable
remedies;

(c) _____ The Master Servicer is not required to obtain the consent of any other
Person or any consent,  license, approval or authorization from, or registration
or declaration with, any governmental authority,  bureau or agency in connection
with the execution,  delivery,  performance,  validity or enforceability of this
Servicing   Agreement,   except  for  such   consent,   license,   approval   or
authorization,  or registration  or declaration,  as shall have been obtained or
filed, as the case may be;

(d) _____  The  execution  and  delivery  of this  Servicing  Agreement  and the
performance of the transactions  contemplated hereby by the Master Servicer will
not violate any  provision  of any existing  law or  regulation  or any order or
decree of any court  applicable  to the Master  Servicer or any provision of the
Certificate of Incorporation  or Bylaws of the Master Servicer,  or constitute a
material breach of any mortgage, indenture, contract or other agreement to which
the Master Servicer is a party or by which the Master Servicer may be bound;

(e) _____ No  litigation  or  administrative  proceeding of or before any court,
tribunal or governmental body is currently  pending,  or to the knowledge of the
Master Servicer threatened, against the Master Servicer or any of its properties
or with  respect to this  Servicing  Agreement  or the  Securities  which in the
opinion of the Master  Servicer  has a reasonable  likelihood  of resulting in a
material  adverse  effect on the  transactions  contemplated  by this  Servicing
Agreement; and

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

        The  foregoing   representations   and  warranties   shall  survive  any
termination of the Master Servicer hereunder.

Section 2.02  REPRESENTATIONS  AND  WARRANTIES OF THE ISSUER.  The Issuer hereby
represents  and  warrants  to the  Master  Servicer  and for the  benefit of the
Indenture Trustee, as pledgee of the Home Equity Loans, as of the Closing Date:

(a) _____ The Issuer is a statutory trust duly formed and in good standing under
the laws of the State of Delaware and has full power,  authority and legal right
to execute and deliver this Servicing  Agreement and to perform its  obligations

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<PAGE>

under this Servicing Agreement,  and has taken all necessary action to authorize
the execution, delivery and performance by it of this Servicing Agreement; and

(b) _____ The execution and delivery by the Issuer of this  Servicing  Agreement
and the  performance  by the  Issuer of its  obligations  under  this  Servicing
Agreement will not violate any provision of any law or regulation  governing the
Issuer or any  order,  writ,  judgment  or decree of any  court,  arbitrator  or
governmental  authority or agency applicable to the Issuer or any of its assets.
Such  execution,  delivery  and  performance  will not  require  the  consent or
approval of, the giving of notice to, the filing or  registration  with,  or the
taking of any action, other than such actions that have already been taken, with
respect to, any  governmental  authority or agency  regulating the activities of
limited  liability  companies.  Such  execution,  delivery,  authentication  and
performance  will not conflict  with, or result in a breach or violation of, any
mortgage,  deed of trust,  lease or other  agreement or  instrument to which the
Issuer is bound.

Section 2.03 ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES. The Master Servicer,
on behalf of and subject to the direction of the Indenture  Trustee,  as pledgee
of the Home Equity Loans, or the Issuer,  shall enforce the  representations and
warranties of the Seller pursuant to the Purchase Agreement.  Upon the discovery
by the Seller, the Depositor,  the Master Servicer,  the Indenture Trustee,  the
Credit  Enhancer,  the  Issuer,  or  any  Custodian  of a  breach  of any of the
representations and warranties made in the Purchase Agreement, in respect of any
Home Equity Loan,  which  materially and adversely  affects the interests of the
Securityholders  or the Credit  Enhancer  in that Home  Equity  Loan,  the party
discovering  such breach shall give prompt  written  notice to the other parties
(any Custodian being so obligated under a Custodial Agreement); provided that in
the event of a breach of representation set forth in Section  3.1(b)(xxv) of the
Purchase  Agreement,  notice shall be given within five days of  discovery.  The
Master  Servicer  shall  promptly  notify the Seller of such  breach and request
that,  pursuant to the terms of the Purchase  Agreement,  the Seller  either (i)
cure such  breach in all  material  respects  within 45 days (with  respect to a
breach of the representations and warranties  contained in Section 3.1(a) of the
Purchase  Agreement) or 90 days (with respect to a breach of the representations
and warranties contained in Section 3.1(b) and 3.1(c) of the Purchase Agreement)
from the date the Seller was notified of such breach or, in the case of a breach
of  the  representation  set  forth  in  Section  3.1(b)(xxv)  of  the  Purchase
Agreement,  within 90 days  after  the  discovery  thereof  by the  Seller,  the
Depositor,  the Master Servicer, the Indenture Trustee, the Credit Enhancer, the
Issuer or the  Purchaser or (ii)  purchase such Home Equity Loan from the Issuer
at the price,  during the time, and in the manner set forth in Section 3.1(d) of
the Purchase  Agreement;  provided that the Seller shall,  subject to compliance
with all the conditions set forth in the Purchase Agreement,  have the option to
substitute  an  Eligible  Substitute  Loan or Loans for such Home  Equity  Loan,
provided  that  in  the  case  of the  substitution  of a  Group  I  Loan,  such
substitution  occurs  within two years  following the Closing Date. In the event
that the Seller  elects to  substitute  one or more  Eligible  Substitute  Loans
pursuant to Section 3.1(b) or 3.1(c) of the Purchase Agreement, the Seller shall
deliver to the  Issuer  with  respect to such  Eligible  Substitute  Loans,  the
original Loan Agreement,  the Mortgage,  and such other documents and agreements
as are required by the Purchase Agreement. Payments due with respect to Eligible
Substitute  Loans in the month of  substitution  shall not be transferred to the
Issuer and will be retained by the Master  Servicer  and  remitted by the Master
Servicer to the Seller on the next succeeding Payment Date provided a payment at
least equal to the applicable  Minimum  Monthly Payment has been received by the
Issuer  for such month in respect of the Home  Equity  Loan to be  removed.  The
Master Servicer shall amend or cause to be amended the Home Equity Loan Schedule

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<PAGE>

to reflect  the removal of such Home  Equity  Loan and the  substitution  of the
Eligible  Substitute  Loans and the Master  Servicer shall promptly  deliver the
amended  Home  Equity  Loan  Schedule  to the Owner  Trustee  and the  Indenture
Trustee.

        It is  understood  and agreed that the  obligation of the Seller to cure
such breach or purchase or substitute for such Home Equity Loan as to which such
a breach  has  occurred  and is  continuing  shall  constitute  the sole  remedy
respecting  such breach  available to the Issuer and the Indenture  Trustee,  as
pledgee of the Home Equity Loans,  against the Seller.  In  connection  with the
purchase of or  substitution  for any such Home  Equity Loan by the Seller,  the
Issuer  shall  assign to the  Seller  all of its right,  title and  interest  in
respect of the Purchase  Agreement  applicable  to such Home Equity  Loan.  Upon
receipt of the Repurchase  Price, or upon completion of such  substitution,  the
Master  Servicer shall notify the Custodian and then the Custodian shall deliver
the  Mortgage  Files  to  the  Master  Servicer,   together  with  all  relevant
endorsements and assignments prepared by the Master Servicer which the Indenture
Trustee shall execute.

                                  ARTICLE III

                ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS

Section 3.01   THE MASTER SERVICER.

(a) _____ The Master Servicer shall service and administer the Home Equity Loans
in a manner  generally  consistent  with the terms of the Program Guide and in a
manner  consistent  with the terms of this Servicing  Agreement,  following such
procedures as it would employ in its good faith business  judgment and which are
normal and usual in its general mortgage  servicing  activities,  and shall have
full power and authority,  acting alone or through a Subservicer,  to do any and
all things which it may deem  necessary or  desirable  in  connection  with such
servicing and  administration,  it being  understood,  however,  that the Master
Servicer  shall at all times remain  responsible to the Issuer and the Indenture
Trustee,  as pledgee of the Home Equity Loans, for the performance of its duties
and  obligations  hereunder in accordance  with the terms hereof and the Program
Guide.  In addition,  the Master  Servicer shall perform the  obligations of the
Master Servicer and REMIC  Administrator  (for so long as the Master Servicer is
the REMIC Administrator) set forth in the Indenture and the Trust Agreement.

        Without  limiting the generality of the foregoing,  the Master  Servicer
shall  continue,  and is hereby  authorized  and empowered by the Issuer and the
Indenture Trustee,  as pledgee of the Home Equity Loans, to execute and deliver,
on behalf of itself,  the Issuer,  the Indenture Trustee or any of them, any and
all instruments of satisfaction or cancellation,  or of partial or full release,
or discharge,  or of consent to assumption or  modification in connection with a
proposed  conveyance,  or of  assignment  of any Mortgage  and Mortgage  Note in
connection  with the  repurchase of a Home Equity Loan and all other  comparable
instruments,  or with respect to the  modification or re-recording of a Mortgage
for the purpose of correcting the Mortgage,  the  subordination  of the lien, as
permitted  pursuant  to this  Agreement,  of the  Mortgage  in favor of a public
utility company or government agency or unit with powers of eminent domain,  the
taking  of a deed in lieu  of  foreclosure,  the  commencement,  prosecution  or
completion  of  judicial  or  non-judicial  foreclosure,  the  conveyance  of  a

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Mortgaged  Property to the related  insurer,  the  acquisition  of any  property
acquired  by  foreclosure  or deed in lieu of  foreclosure,  or the  management,
marketing and conveyance of any property acquired by foreclosure or deed in lieu
of  foreclosure  with  respect to the Home Equity  Loans and with respect to the
Mortgaged Properties.

        The Issuer,  the Indenture  Trustee and the  Custodian,  as  applicable,
shall  furnish  the  Master  Servicer  with any  powers  of  attorney  and other
documents  necessary or appropriate  to enable the Master  Servicer to carry out
its servicing and  administrative  duties  hereunder.  On the Closing Date,  the
Indenture  Trustee  shall  deliver  to the Master  Servicer  a limited  power of
attorney  substantially  in the form of  Exhibit B hereto.  In  connection  with
servicing and  administering  the Home Equity Loans, the Master Servicer and any
Affiliate of the Master  Servicer may perform  services such as  appraisals  and
brokerage  services that are not  customarily  provided by servicers of mortgage
loans, and shall be entitled to reasonable  compensation  therefor in accordance
with Section 3.03. In addition,  the Master  Servicer may, at its own discretion
and on behalf of the Indenture Trustee, obtain credit information in the form of
a  Credit  Score  from a credit  repository.  The  Master  Servicer  is  further
authorized and empowered by the Issuer and the Indenture  Trustee,  on behalf of
the Noteholders and the Indenture Trustee, in its own name or in the name of the
Subservicer,  when the Master Servicer or the  Subservicer,  as the case may be,
believes it appropriate in its best judgment to register any Home Equity Loan on
the MERS(R)  System,  or cause the  removal  from the  registration  of any Home
Equity Loan on the MERS(R)  System,  to execute  and  deliver,  on behalf of the
Indenture Trustee and the Noteholders or any of them, any and all instruments of
assignment and other  comparable  instruments with respect to such assignment or
re-recording  of a  Mortgage  in the name of MERS,  solely  as  nominee  for the
Indenture  Trustee and its  successors  and assigns.  Any  expenses  incurred in
connection with the actions  described in the preceding  sentence shall be borne
by the Master Servicer, with no right of reimbursement.

        Notwithstanding  anything in this  Servicing  Agreement to the contrary,
subject  to  Section   3.02(a),   the  Master  Servicer  shall  not  permit  any
modification  with respect to any Group I Loan that would both constitute a sale
or exchange of such Group I Loan within the meaning of Section  1001 of the Code
and any proposed,  temporary or final  regulations  promulgated  thereunder  and
cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC  under
the Code or, except as provided in Section 11.01(f) of the Indenture,  cause the
imposition of a tax upon any of the REMICs (including but not limited to the tax
on prohibited  transactions as defined in Section 860F(a)(2) of the Code and the
tax on contributions to a REMIC set forth in Section 860G(d) of the Code).

(b) _____ If the  Mortgage  relating  to a Home  Equity Loan did not have a lien
senior to the Home  Equity  Loan on the  related  Mortgaged  Property  as of the
Cut-off Date, then the Master Servicer, in such capacity, may not consent to the
placing  of a lien  senior  to that of the  Mortgage  on the  related  Mortgaged
Property.  If the Mortgage  relating to a Group II Loan had a lien senior to the
Group II Loan on the related Mortgaged Property as of the Cut-off Date, then the
Master Servicer,  in such capacity,  may consent to the refinancing of the prior
senior lien, provided that the following requirements are met:

                                       6
<PAGE>

(i)  _____  (A)  the  Mortgagor's   debt-to-income  ratio  resulting  from  such
refinancing is less than the original  debt-to-income  ratio as set forth on the
Home Equity Loan  Schedule;  provided,  however,  that in no instance  shall the
resulting Combined  Loan-to-Value  Ratio of such Home Equity Loan be higher than
that permitted by the Program Guide; or (B) the resulting Combined Loan-to-Value
Ratio of such Group II Loan is no higher than the Combined  Loan-to-Value  Ratio
prior to such refinancing;  provided,  however, if such refinanced mortgage loan
is a "rate and term" mortgage loan (meaning,  the Mortgagor does not receive any
cash from the refinancing), the Combined Loan-to-Value Ratio may increase to the
extent of either (a) the reasonable closing costs of such refinancing or (b) any
decrease in the value of the related Mortgaged Property,  if the Mortgagor is in
good standing as defined by the Program Guide;

(ii) ____ the interest  rate,  or, in the case of an  adjustable  rate  existing
senior lien, the maximum  interest rate, for the loan  evidencing the refinanced
senior lien is no more than 2.0% higher  than the  interest  rate or the maximum
interest rate, as the case may be, on the loan  evidencing  the existing  senior
lien immediately prior to the date of such refinancing;  provided,  however, (a)
if the loan evidencing the existing senior lien prior to the date of refinancing
has an adjustable rate and the loan evidencing the refinanced  senior lien has a
fixed rate, then the current interest rate on the loan evidencing the refinanced
senior lien may be up to 2.0% higher than the then-current loan rate of the loan
evidencing the existing  senior lien and (b) if the loan evidencing the existing
senior  lien  prior to the  date of  refinancing  has a fixed  rate and the loan
evidencing the refinanced  senior lien has an adjustable  rate, then the maximum
interest rate on the loan  evidencing the  refinanced  senior lien shall be less
than or  equal to (x) the  interest  rate on the loan  evidencing  the  existing
senior lien prior to the date of refinancing plus (y) 2.0%; and

(iii) the loan evidencing the refinanced  senior lien is not subject to negative
amortization.

        The Master  Servicer  may also,  without  prior  approval  of the Rating
Agencies  or the Credit  Enhancer,  increase  the Credit  Limits on the Group II
Loans  (a  "Credit  Limit  Increase"),  provided  that  (i) a new  appraisal  is
obtained,  (ii) the new Combined  Loan-to-Value  Ratio of any such Group II Loan
after  giving  effect to such  increase  is less  than or equal to the  Combined
Loan-to-Value  Ratio of the  Group II Loan as of the  Cut-off  Date,  (iii)  the
Master  Servicer  receives  verbal  verification  of  employment  of the related
Mortgagor  and (iv) the payment  history of the related  Mortgagor is within the
underwriting  parameters of the Program Guide. In addition,  the Master Servicer
may  increase  the  Credit  Limits  on  Group  II Loans  without  obtaining  new
appraisals  provided that clauses  (iii) and (iv) of the preceding  sentence are
satisfied,  the Combined  Loan-to-Value Ratio of the Group II Loan following the
Credit Limit Increase will be limited to 100% and at no time shall the aggregate
Loan  Balance of such Group II Loans  exceed 5% of the current  Pool Balance for
the Group II Loans;  provided,  further,  however,  that for Group II Loans with
original  Combined   Loan-to-Value   Ratios  in  excess  of  80%,  the  Combined
Loan-to-Value  Ratio resulting from such Credit Limit Increase must be less than
or equal to the original Combined  Loan-to-Value  Ratio and at no time shall the
aggregate  Loan  Balance of such Group II Loans  exceed 5% of the  current  Pool
Balance for the Group II Loans.

                                       7
<PAGE>

        In connection with servicing the Group II Loans, the Master Servicer may
take  reasonable  actions  to  encourage  or  effect  the  termination  of  Loan
Agreements that have become dormant.

        The  relationship  of the Master  Servicer  (and of any successor to the
Master Servicer as servicer under this Servicing  Agreement) to the Issuer under
this Servicing Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.

        All  costs  incurred  by  the  Master  Servicer  or by  Subservicers  in
effecting the timely payment of taxes and assessments on the properties  subject
to the Home Equity  Loans  shall not,  for the  purpose of  calculating  monthly
distributions  to  Certificateholders,  be added to the amount  owing  under the
related Home Equity  Loans,  notwithstanding  that the terms of such Home Equity
Loan so permit,  and such costs shall be recoverable to the extent  permitted by
Section 3.03.

(c) _____ The  Master  Servicer  may enter  into  Subservicing  Agreements  with
Subservicers for the servicing and  administration of certain of the Home Equity
Loans.  Any  Subservicing  Agreement  that may be  entered  into  and any  other
transactions  or  services  relating  to  the  Home  Equity  Loans  involving  a
Subservicer in its capacity as such and not as an originator  shall be deemed to
be between  the  Subservicer  and the Master  Servicer  alone and the  Indenture
Trustee and  Securityholders  shall not be deemed parties thereto and shall have
no  claims,  rights,  obligations,  duties or  liabilities  with  respect to the
Subservicer  in its capacity as such except as set forth in Section  7.02.  Each
Subservicer  of a Home Equity  Loan shall be entitled to receive and retain,  as
provided in the related Subservicing  Agreement and in Section 3.02, the related
Subservicing  Fee from  payments of  interest  received on such Home Equity Loan
after payment of all amounts  required to be remitted to the Master  Servicer in
respect  of  such  Home  Equity  Loan.  For  any  Home  Equity  Loan  that  is a
nonsubserviced  Home  Equity  Loan,  the Master  Servicer  shall be  entitled to
receive  and retain an amount  equal to the  Subservicing  Fee from  payments of
interest. References in this Servicing Agreement to actions taken or to be taken
by the Master  Servicer in servicing the Home Equity Loans include actions taken
or to be taken by a Subservicer on behalf of the Master  Servicer and any amount
actually  received by such Subservicer in respect of a Home Equity Loan shall be
deemed to have been  received  by the Master  Servicer  whether or not  actually
received by the Master Servicer.  Each Subservicing  Agreement will be upon such
terms and conditions as are not inconsistent  with this Servicing  Agreement and
as the Master Servicer and the Subservicer have agreed. With the approval of the
Master  Servicer,  a  Subservicer  may delegate  its  servicing  obligations  to
third-party  servicers,  but such  Subservicers  will remain obligated under the
related  Subservicing  Agreements.  The Master  Servicer and the Subservicer may
enter into amendments to the related Subservicing Agreements; provided, however,
that any such amendments shall not cause the Home Equity Loans to be serviced in
a manner that would be materially  inconsistent  with the standards set forth in
this Servicing Agreement. The Master Servicer shall be entitled to terminate any
Subservicing  Agreement in accordance with the terms and conditions  thereof and
without any limitation by virtue of this Servicing Agreement; provided, however,
that in the event of  termination  of any  Subservicing  Agreement by the Master
Servicer or the Subservicer, the Master Servicer shall either act as servicer of
the  related  Home  Equity Loan or enter into a  Subservicing  Agreement  with a
successor  Subservicer  which  will  be  bound  by  the  terms  of  the  related
Subservicing  Agreement.  If the Master Servicer or any Affiliate of Residential
Funding acts as servicer,  it will not assume liability for the  representations
and  warranties of the  Subservicer  which it replaces.  If the Master  Servicer
enters into a Subservicing  Agreement with a successor  Subservicer,  the Master

                                       8
<PAGE>

Servicer shall use reasonable  efforts to have the successor  Subservicer assume
liability  for  the  representations  and  warranties  made  by  the  terminated
Subservicer in respect of the related Home Equity Loans and, in the event of any
such  assumption by the successor  Subservicer,  the Master Servicer may, in the
exercise of its  business  judgment,  release the  terminated  Subservicer  from
liability for such representations and warranties.

        As part of its servicing activities hereunder,  the Master Servicer, for
the benefit of the Securityholders and the Credit Enhancer, shall use reasonable
efforts  to  enforce  the  obligations  of each  Subservicer  under the  related
Subservicing  Agreement,  to the  extent  that the  non-performance  of any such
obligation  would have a material  adverse  effect on a Home Equity  Loan.  Such
enforcement,  including,  without  limitation,  the legal prosecution of claims,
termination  of  Subservicing  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 Home Equity 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 Home Equity Loan or (ii) from a specific recovery of costs,  expenses or
attorneys fees against the party against whom such enforcement is directed.

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

        In the event the Master  Servicer  shall for any reason no longer be the
master  servicer  (including  by reason of a Servicing  Default),  the Indenture
Trustee,  its designee or the successor servicer for the Indenture Trustee shall
be deemed to have assumed all of the Master  Servicer's  interest therein and to
have replaced the Master  Servicer as a party to the  Subservicing  Agreement to
the same  extent  as if the  Subservicing  Agreement  had been  assigned  to the
assuming party, except that the Master Servicer shall not thereby be relieved of
any liability or obligations  under the  Subservicing  Agreement,  nor shall the
Indenture  Trustee be responsible  for any  obligations or liabilities  prior to
such  replacement.  The  Indenture  Trustee  shall  not be  responsible  for any
representations  and  warranties  made by the Master  Servicer  pursuant to such
Subservicing Agreement.

                                       9
<PAGE>

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

Section  3.02  COLLECTION  OF CERTAIN  HOME EQUITY LOAN  PAYMENTS.  (a) ____ The
Master Servicer shall make reasonable efforts to collect all payments called for
under the terms and  provisions  of the Home  Equity  Loans,  and shall,  to the
extent such  procedures  shall be consistent  with this Servicing  Agreement and
generally  consistent with the Program Guide, follow such collection  procedures
as it would employ in its good faith business  judgment and which are normal and
usual  in  its  general  mortgage  servicing  activities.  Consistent  with  the
foregoing,  and without  limiting the  generality of the  foregoing,  the Master
Servicer may in its discretion  waive any late payment charge,  penalty interest
or other fees which may be collected in the  ordinary  course of servicing  such
Home Equity Loan.  The Master  Servicer may also extend the Due Date for payment
due on a Home  Equity  Loan in  accordance  with the  Program  Guide,  provided,
however,  that the Master Servicer shall first determine that any such waiver or
extension  will not impair  the  coverage  of any  related  insurance  policy or
materially  adversely  affect  the  lien  of the  related  Mortgage  (except  as
described  below)  or  the  interests  of the  Securityholders  and  the  Credit
Enhancer.  Consistent with the terms of this Servicing  Agreement and subject to
Section 3.01(a) herein, the Master Servicer may also:

(i) _____  waive,  modify or vary any term of any Home  Equity  Loan  (including
reduce the Credit Limit or extend the period  during which a Draw may be made by
the Mortgagor pursuant to the Loan Agreement with respect to any Group II Loan);

(ii) ____ consent to the postponement of strict compliance with any such term or
in any manner grant indulgence to any Mortgagor;

(iii)  arrange  with a Mortgagor a schedule  for the  payment of  principal  and
interest due and unpaid;

(iv) ____ forgive any portion of the amounts  contractually  owed under the Home
Equity Loan;

(v) _____  capitalize  any past due  amounts  owed under the Home Equity Loan by
adding amounts in arrearage to the existing Loan Balance of the Home Equity Loan
(a "Capitalization Workout"),  provided, however, that the Master Servicer shall
not enter into a Capitalization  Workout unless the Combined Loan-to-Value Ratio
of the Home Equity Loan prior to the  Capitalization  Workout  equals or exceeds
80%; and

(vi) ____ reset the due date for the Home Equity Loan, or any combination of the
foregoing,

if  in  the  Master   Servicer's   determination   such  waiver,   modification,
postponement or indulgence, arrangement or other action referred to above is not
materially  adverse  to the  interests  of  the  Securityholders  or the  Credit
Enhancer and is generally  consistent with the Master  Servicer's  policies with
respect to home equity loans  similar to Home Equity Loans;  provided,  however,

                                       10
<PAGE>

that the Master  Servicer  may not,  except in the case of an  extension  of the
period during which a Draw may be made by the Mortgagor  with respect to a Group
II Loan,  pursuant to this Section  3.02,  modify or permit any  Subservicer  to
modify any Home Equity Loan, (including without limitation any modification that
would  change the Loan Rate,  forgive the payment of any  principal  or interest
(unless in  connection  with the  liquidation  of the related Home Equity Loan),
capitalize any arrearage for the related Home Equity Loan or extend the due date
any  payment)  unless such Home Equity Loan is in default or, in the judgment of
the Master Servicer, such default is reasonably foreseeable. Notwithstanding the
foregoing,  the final maturity date of any Home Equity Loan will not be extended
beyond the Final  Scheduled  Payment  Date.  The  general  terms of any  waiver,
modification,  postponement or indulgence with respect to any of the Home Equity
Loans will be included in the Servicing Certificate,  and such Home Equity Loans
will not be considered  "delinquent"  for the purposes of the Basic Documents so
long as the  Mortgagor  complies  with the terms of such  waiver,  modification,
postponement or indulgence. In addition, if a Group II Loan is in default or, in
the judgment of the Master Servicer, such default is reasonably foreseeable, the
Master Servicer may, through modification, convert such Group II Loan to a fully
amortizing closed-end loan.  Notwithstanding the foregoing,  with respect to the
Group II Loans,  the Master  Servicer in its sole  discretion (i) may permit the
Mortgagor  (or may enter  into a  modification  agreement  which  will allow the
Mortgagor)  to make monthly  payments,  with respect to any Billing Cycle during
the related Draw Period,  in a minimum  amount that will be equal to the related
finance  charge  for such  Billing  Cycle and (ii) may  reduce the amount of the
Credit  Limit (to an amount no less than the then  current  Loan Balance of such
Group II Loan) in connection  with any  refinancing of a senior lien pursuant to
Section 3.01(b) of this Agreement.  In connection with any Curtailment of a Home
Equity Loan, the Master Servicer,  to the extent not inconsistent with the terms
of the Mortgage Note and local law and practice, may permit the Home Equity Loan
to be reamortized  such that the Minimum  Monthly  Payment is recalculated as an
amount that will fully amortize the remaining Loan Balance  thereof by the Final
Scheduled  Payment Date based on the  original  Loan Rate;  provided,  that such
re-amortization any Group I Loan shall not be permitted if it would constitute a
reissuance of such Group I Loan for federal income tax purposes.

(b) _____ The Master Servicer shall establish a Custodial  Account,  which shall
be an Eligible Account in which the Master Servicer shall deposit or cause to be
deposited any amounts  representing  payments and  collections in respect of the
Home  Equity  Loans  received  by it on or after the  Cut-off  Date,  within one
Business  Day  following  receipt  thereof,  except  as  otherwise  specifically
provided herein,  including the following  payments and collections  received or
made by it (without duplication):

(i) _____ all payments on account of principal, (including Principal Prepayments
made by Mortgagors on the Home Equity Loans or from any REO Proceeds received in
connection with an REO Property for which an REO Disposition has occurred);

(ii) ____ All payments on account of interest at the Adjusted  Mortgage  Rate on
the Home Equity Loans,  or from any REO Proceeds  received in connection with an
REO Property for which an REO Disposition has occurred;

(iii) the aggregate  Repurchase  Price of the Home Equity Loans purchased by the
Master Servicer pursuant to Section 3.15;

                                       11
<PAGE>

(iv) ____ Net Liquidation Proceeds net of any related Foreclosure Profit;

(v) _____ all  proceeds  of any Home  Equity  Loans  repurchased  by the  Seller
pursuant to the Purchase  Agreement,  and all  Substitution  Adjustment  Amounts
required to be  deposited in  connection  with the  substitution  of an Eligible
Substitute Loan pursuant to the Purchase Agreement;

(vi) ____ Insurance  Proceeds,  other than Net Liquidation  Proceeds,  resulting
from any insurance policy maintained on a Mortgaged Property; and

(vii) amounts  required to be paid by the Master  Servicer  pursuant to Sections
3.04 and  8.08  and any  payments  or  collections  received  in the  nature  of
prepayment charges;

provided,  however,  that with  respect to each  Collection  Period,  the Master
Servicer  shall be permitted  to retain from  payments in respect of interest on
the Home Equity Loans, the Master Servicing Fee for such Collection  Period. The
foregoing  requirements   respecting  deposits  to  the  Custodial  Account  are
exclusive,  it being  understood  that,  without  limiting the generality of the
foregoing, the Master Servicer need not deposit in the Custodial Account amounts
representing  Foreclosure  Profits,  fees  (including  annual fees),  assumption
charges or late  charge  penalties  payable by  Mortgagors  (such  amounts to be
retained as additional  servicing  compensation  in accordance with Section 3.09
hereof),  or  amounts  received  by the  Master  Servicer  for the  accounts  of
Mortgagors for  application  towards the payment of taxes,  insurance  premiums,
assessments  and  similar  items.  In the event any  amount not  required  to be
deposited in the Custodial  Account is so deposited,  the Master Servicer may at
any time withdraw such amount from the Custodial  Account,  any provision herein
to the contrary  notwithstanding.  The Custodial  Account may contain funds that
belong to one or more  trusts  created  for the notes or  certificates  of other
series and may contain other funds  respecting  payments on home equity loans or
other  mortgage  loans  belonging  to the Master  Servicer or serviced or master
serviced by it on behalf of others.  Notwithstanding  such commingling of funds,
the Master  Servicer  shall keep  records that  accurately  reflect the funds on
deposit  in the  Custodial  Account  that  have been  identified  by it as being
attributable  to the Home  Equity  Loans and shall hold all  collections  in the
Custodial  Account to the extent they  represent  collections on the Home Equity
Loans for the  benefit  of the  Trust,  the  Securityholders  and the  Indenture
Trustee,  as their  interests may appear.  The Master  Servicer shall retain all
Foreclosure Profits as additional servicing compensation.

        With  respect to  Insurance  Proceeds,  Net  Liquidation  Proceeds,  REO
Proceeds and the  proceeds of the  purchase of any Home Equity Loan  received in
any calendar  month,  the Master  Servicer may elect to treat such amounts to be
deposited in the Custodial  Account for  distribution in accordance with Section
3.05 of the  Indenture  for  distribution  on the  Payment  Date in the month of
receipt,  but is not obligated to do so. If the Master Servicer so elects,  such
amounts will be deemed to have been  received (and any related  Liquidated  Loss
Amount  shall be deemed to have  occurred) on the last day of the month prior to
the receipt thereof.

        The Master Servicer may cause the institution  maintaining the Custodial
Account to invest any funds in the  Custodial  Account in Permitted  Investments
(including obligations of the Master Servicer or any of its Affiliates,  if such

                                       12
<PAGE>

obligations otherwise qualify as Permitted Investments),  which shall mature not
later than the  Business  Day  preceding  the next Payment Date and shall not be
sold or disposed of prior to its maturity.  Except as provided above, all income
and gain  realized  from any such  investment  shall inure to the benefit of the
Master  Servicer  and shall be subject to its  withdrawal  or order from time to
time.  The amount of any losses  incurred in respect of the principal  amount of
any such investments  shall be deposited in the Custodial  Account by the Master
Servicer out of its own funds immediately as realized.

(c) _____ The Master  Servicer will require each  Subservicer  to hold all funds
constituting collections on the Home Equity Loans, pending remittance thereof to
the Master  Servicer,  in one or more accounts  meeting the  requirements  of an
Eligible Account, and invested in Permitted Investments.

               (d)    [Reserved].

Section  3.03  PERMITTED  WITHDRAWALS  FROM THE  CUSTODIAL  ACCOUNT.  The Master
Servicer shall, from time to time as provided herein,  make withdrawals from the
Custodial  Account of amounts on deposit  therein  pursuant to Section 3.02 that
are attributable to the Home Equity Loans for the following purposes:

(a) _____ to deposit in the Payment  Account,  on the Business Day prior to each
Payment  Date,  an  amount  equal  to the  Interest  Collections  and  Principal
Collections  required to be distributed on such Payment Date and any payments or
collections  in the nature of  prepayment  charges  received  during the related
Collection Period;

(b) _____ prior to either an Amortization  Event or the Collection Period during
which  the  Revolving  Period  ends,  to pay to the  Seller,  the  amount of any
Additional  Balances as and when created during the related  Collection  Period,
provided,  that  the  aggregate  amount  so paid to the  Seller  in  respect  of
Additional  Balances at any time during any  Collection  Period shall not exceed
the amount of Principal  Collections  theretofore  received for such  Collection
Period;

(c) _____ to the extent deposited to the Custodial Account,  to reimburse itself
or the related  Subservicer  for previously  unreimbursed  expenses  incurred in
maintaining   individual   insurance  policies  pursuant  to  Section  3.04,  or
Liquidation  Expenses  paid  pursuant to Section 3.07 or otherwise  reimbursable
pursuant  to the terms of this  Servicing  Agreement  (to the extent not payable
pursuant  to Section  3.09),  such  withdrawal  right  being  limited to amounts
received on  particular  Home Equity Loans (other than any  Repurchase  Price in
respect  thereof) which represent late recoveries of the payments for which such
advances were made, or from related Liquidation  Proceeds or the proceeds of the
purchase of such Home Equity Loan;

(d) _____ to pay to itself out of each  payment  received on account of interest
on a Home Equity Loan as  contemplated  by Section  3.09, an amount equal to the
related  Master  Servicing  Fee (to the extent not retained  pursuant to Section
3.02),  and to pay to any  Subservicer  any  Subservicing  Fees  not  previously
withheld by the Subservicer;

(e) _____ to the extent  deposited in the Custodial  Account to pay to itself as
additional  servicing  compensation any interest or investment  income earned on
funds deposited in the Custodial Account and Payment Account that it is entitled
to withdraw pursuant to Sections 3.02(b) and 5.01;

                                       13
<PAGE>

(f) _____ to the extent deposited in the Custodial Account,  to pay to itself as
additional  servicing  compensation  any  Foreclosure  Profits  (to  the  extent
permitted by law);

(g)  _____  to  pay  to  itself,  a  Subservicer  or the  Seller,  or any  other
appropriate  person, as the case may be, with respect to any Home Equity Loan or
property  acquired  in respect  thereof  that has been  purchased  or  otherwise
transferred  to the Seller,  the Master  Servicer or other  entity,  all amounts
received thereon and not required to be distributed to Securityholders as of the
date on which the related Purchase Price or Repurchase Price is determined;

(h) _____ to withdraw any other amount  deposited in the Custodial  Account that
was not required to be deposited therein pursuant to Section 3.02;

(i) after the occurrence of an  Amortization  Event,  to pay to the Seller,  the
Excluded Amount for each Group II Loan;

(j) _____ to reimburse itself for amounts expended by it (a) pursuant to Section
3.06 in good faith in connection with the restoration of property  damaged by an
Uninsured  Cause,  and (b) in connection  with the  liquidation of a Home Equity
Loan or  disposition  of an REO Property to the extent not otherwise  reimbursed
pursuant to clause (c) above; and

(k) _____ to reimburse itself or the REMIC  Administrator  for expenses incurred
by and reimbursable to it or the REMIC Administrator  pursuant to Sections 3.07,
6.03 or otherwise, or Section 11.01 of the Indenture.

Since, in connection with withdrawals pursuant to clauses (c), (d), (f) and (g),
the Master  Servicer's  entitlement  thereto is limited to  collections or other
recoveries on the related Home Equity Loan,  the Master  Servicer shall keep and
maintain separate  accounting,  on a Home Equity Loan by Home Equity Loan basis,
for the purpose of justifying any withdrawal from the Custodial Account pursuant
to  such  clauses.   Notwithstanding  any  other  provision  of  this  Servicing
Agreement,  the Master  Servicer  shall be entitled to reimburse  itself for any
previously  unreimbursed expenses incurred pursuant to Section 3.07 or otherwise
reimbursable  pursuant to the terms of this Servicing  Agreement that the Master
Servicer determines to be otherwise  nonrecoverable  (except with respect to any
Home Equity Loan as to which the Repurchase  Price has been paid), by withdrawal
from the Custodial  Account of amounts on deposit  therein  attributable  to the
Home Equity Loans on any Business Day prior to the Payment Date  succeeding  the
date of such determination.

Section 3.04 MAINTENANCE OF HAZARD INSURANCE;  PROPERTY PROTECTION EXPENSES. (a)
_____ The Master Servicer shall cause to be maintained for each Home Equity Loan
hazard insurance naming the Master Servicer or related Subservicer as loss payee
thereunder  providing  extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements  securing such
Home Equity Loan from time to time or (ii) the combined  Loan  Balance  owing on
such Home Equity Loan and any mortgage loan senior to such Home Equity Loan from
time to time;  provided,  however,  that such  coverage may not be less than the
minimum  amount  required  to  fully  compensate  for any  loss or  damage  on a

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<PAGE>

replacement cost basis. The Master Servicer shall also cause to be maintained on
property acquired upon foreclosure,  or deed in lieu of foreclosure, of any Home
Equity Loan,  fire  insurance  with  extended  coverage in an amount which is at
least equal to the amount necessary to avoid the application of any co-insurance
clause contained in the related hazard insurance  policy.  Amounts  collected by
the Master Servicer under any such policies (other than amounts to be applied to
the  restoration  or repair of the related  Mortgaged  Property or property thus
acquired or amounts  released to the  Mortgagor  in  accordance  with the Master
Servicer's  normal  servicing  procedures)  shall be deposited in the  Custodial
Account  to the  extent  called  for by  Section  3.02.  In cases  in which  any
Mortgaged  Property is located at any time during the life of a Home Equity Loan
in a federally  designated flood area, the hazard insurance to be maintained for
the related  Home  Equity  Loan shall  include  flood  insurance  (to the extent
available).  All such flood insurance shall be in amounts equal to the lesser of
(i) the amount  required to  compensate  for any loss or damage to the Mortgaged
Property  on a  replacement  cost  basis  and (ii) the  maximum  amount  of such
insurance  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). The Master Servicer shall be under no
obligation to require that any Mortgagor maintain earthquake or other additional
insurance  and  shall  be  under  no  obligation  itself  to  maintain  any such
additional  insurance  on property  acquired  in respect of a Home Equity  Loan,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance.

        If the  Master  Servicer  shall  obtain and  maintain  a blanket  policy
consistent  with its general  mortgage  servicing  activities  insuring  against
hazard losses on all of the Home Equity Loans,  it shall  conclusively be deemed
to have  satisfied its  obligations  as set forth in the first  sentence of this
Section  3.04,  it being  understood  and agreed  that such policy may contain a
deductible  clause,  in which case the Master  Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged  Property a policy
complying with the first sentence of this Section 3.04 and there shall have been
a loss which would have been  covered by such policy,  deposit in the  Custodial
Account the amount not  otherwise  payable under the blanket  policy  because of
such deductible clause. Any such deposit by the Master Servicer shall be made on
the last Business Day of the  Collection  Period in the month in which  payments
under any such policy would have been  deposited in the  Custodial  Account.  In
connection with its activities as servicer of the Home Equity Loans,  the Master
Servicer  agrees to present,  on behalf of itself,  the Issuer and the Indenture
Trustee, claims under any such blanket policy.

Section 3.05  ENFORCEMENT OF DUE-ON-SALE  CLAUSES;  ASSUMPTION AND  MODIFICATION
AGREEMENTS;  RELEASE OR SUBSTITUTION OF LIEN. (a) When any Mortgaged Property is
conveyed by the Mortgagor, the Master Servicer or Subservicer,  to the extent it
has knowledge of such conveyance, shall enforce any due-on-sale clause contained
in any Mortgage Note or Mortgage,  to the extent  permitted under applicable law
and governmental regulations,  but only to the extent that such enforcement will
not adversely affect or jeopardize  coverage under any Required Insurance Policy
or otherwise  adversely  affect the interests of the  Certificateholders  or the
Credit Enhancer. Notwithstanding the foregoing:

               (i) ____ the Master Servicer shall not be deemed to be in default
        under this Section 3.05(a) by reason of any transfer or assumption which
        the Master Servicer is restricted by law from preventing; and

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<PAGE>

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

        (b)  ____  Subject  to  the  Master   Servicer's  duty  to  enforce  any
due-on-sale  clause to the  extent  set forth in  Section  3.05(a),  the  Master
Servicer or the related  Subservicer,  as the case may be,  shall be entitled to
(A) execute assumption agreements,  substitution agreements,  and instruments of
satisfaction or cancellation or of partial or full release or discharge,  or any
other document  contemplated  by this Servicing  Agreement and other  comparable
instruments  with  respect  to the Home  Equity  Loans and with  respect  to the
Mortgaged  Properties subject to the Mortgages (and the Issuer and the Indenture
Trustee each shall promptly  execute any such documents on request of the Master
Servicer)  and (B)  approve  the  granting  of an  easement  thereon in favor of
another Person,  any alteration or demolition of the related Mortgaged  Property
or other  similar  matters,  if it has  determined,  exercising  its good  faith
business  judgment  in the same  manner  as it would if it were the owner of the
related  Home  Equity  Loan,  that the  security  for,  and the  timely and full
collectability  of,  such  Home  Equity  Loan  would not be  adversely  affected
thereby,  and that each of REMIC I,  REMIC II and REMIC  III would  continue  to
qualify  as a REMIC  under  the  Code as a  result  thereof  and  that no tax on
"prohibited  transactions"  or  "contributions"  after the  startup day would be
imposed on any of REMIC I, REMIC II or REMIC III as a result thereof.  A partial
release  pursuant to this Section  3.05 shall be permitted  only if the Combined
Loan-to-Value  Ratio for such Home Equity Loan after such  partial  release does
not exceed the Combined  Loan-to-Value Ratio for such Home Equity Loan as of the
Cut-off Date,  and provided  further  that,  in the case of a Group I Loan,  the
Master Servicer,  the Indenture Trustee and the Credit Enhancer have received an
Opinion of Counsel to the effect that such partial release will not result in an
Adverse  REMIC Event.  Any fee  collected by the Master  Servicer or the related
Subservicer  for processing such request will be retained by the Master Servicer
or such Subservicer as additional servicing compensation.

        (c)  ____  The  Master  Servicer  may  enter  into an  agreement  with a
Mortgagor to release the lien on the Mortgaged  Property  relating to a Group II
Loan (the "Existing  Lien"),  if at the time of such agreement the Group II Loan
is current in payment of  principal  and  interest,  under any of the  following
circumstances:

(i) _____ in any case in which,  simultaneously with the release of the Existing
Lien, the Mortgagor executes and delivers to the Master Servicer a Mortgage on a
substitute Mortgaged Property, provided that the Combined Loan-to-Value Ratio of
the Group II Loan  (calculated  based on the Appraised  Value of the  substitute
Mortgaged  Property) is not greater than the Combined  Loan-to-Value Ratio prior
to releasing the Existing Lien;

(ii) ____ in any case in which,  simultaneously with the release of the Existing
Lien, the Mortgagor executes and delivers to the Master Servicer a Mortgage on a
substitute  Mortgaged  Property,  provided that: (A) the Combined  Loan-to-Value
Ratio of the  Group II Loan  (calculated  based  on the  Appraised  Value of the
substitute  Mortgaged  Property)  is not greater than the lesser of (1) 100% and
(2) 105% of the Combined  Loan-to-Value  Ratio prior to  releasing  the Existing
Lien;  and (B) the  Master  Servicer  determines  that at least two  appropriate

                                       16
<PAGE>

compensating  factors are present  (compensating  factors may  include,  without
limitation, an increase in the Mortgagor's monthly cash flow after debt service,
the Mortgagor's debt-to-income ratio has not increased since origination,  or an
increase in the Mortgagor's credit score); or

(iii) in any case in which,  at the time of release of the  Existing  Lien,  the
Mortgagor  does not provide the Master  Servicer with a Mortgage on a substitute
Mortgaged  Property  (any Group II Loan that  becomes and remains  unsecured  in
accordance with this subsection,  an "Unsecured  Loan"),  provided that: (A) the
current  Combined  Loan-to-Value  Ratio is greater than or equal to 85%; (B) the
Master  Servicer  shall not permit the  release of an  Existing  Lien under this
clause (iii) as to more than 100 Group II Loans in any calendar  year; (C) at no
time shall the aggregate Loan Balance of Unsecured Loans exceed 2.5% of the then
Pool Balance;  (D) the Mortgagor  agrees to an automatic debit payment plan; and
(E) the Master  Servicer  shall  provide  notice to each Rating  Agency that has
requested notice of such releases.

        In connection  with any Unsecured  Loan, the Master Servicer may require
the Mortgagor to enter into an agreement  under which:  (i) the Loan Rate may be
increased  effective until a substitute  Mortgage meeting the criteria under (i)
or (ii) above is  provided;  or (ii) any other  provision  may be made which the
Master  Servicer  considers to be appropriate.  Thereafter,  the Master Servicer
shall determine in its discretion whether to accept any proposed Mortgage on any
substitute  Mortgaged Property as security for the Group II Loan, and the Master
Servicer may require the Mortgagor to agree to any further  conditions which the
Master  Servicer  considers  appropriate in connection  with such  substitution,
which may include a  reduction  of the Loan Rate (but not below the Loan Rate in
effect  at the  Closing  Date).  Any Group II Loan as to which a  Mortgage  on a
substitute  Mortgaged  Property  is provided in  accordance  with the  preceding
sentence shall no longer be deemed to be an Unsecured Loan.

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

                                       17
<PAGE>

Section 3.06 TRUST  ESTATE;  RELATED  DOCUMENTS  (a) ______ When required by the
provisions of this  Servicing  Agreement,  the Issuer or the  Indenture  Trustee
shall  execute  instruments  to  release  property  from the  terms of the Trust
Agreement,  Indenture  or  Custodial  Agreement,  as  applicable,  or convey the
Issuer's or the Indenture  Trustee's interest in the same, in a manner and under
circumstances  which are not inconsistent  with the provisions of this Servicing
Agreement.  No party  relying upon an  instrument  executed by the Issuer or the
Indenture  Trustee as provided in this  Section 3.06 shall be bound to ascertain
the Issuer's or the Indenture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any moneys.

(b)  _____  If from  time to time  the  Master  Servicer  shall  deliver  to the
Custodian copies of any written assurance,  assumption agreement or substitution
agreement or other similar  agreement  pursuant to Section  3.05,  the Custodian
shall check that each of such documents purports to be an original executed copy
(or a copy of the original  executed  document if the original executed copy has
been  submitted for recording and has not yet been  returned)  and, if so, shall
file such  documents,  and upon receipt of the original  executed  copy from the
applicable  recording  office or  receipt  of a copy  thereof  certified  by the
applicable  recording  office shall file such originals or certified copies with
the Related Documents. If any such documents submitted by the Master Servicer do
not meet the above qualifications,  such documents shall promptly be returned by
the Custodian to the Master Servicer, with a direction to the Master Servicer to
forward the correct documentation.

(c) _____  Upon  receipt of a Request  for  Release  from the  Master  Servicer,
substantially in the form of Exhibit C to the effect that a Home Equity Loan has
been the subject of a final payment or a prepayment in full and the related Home
Equity Loan has been terminated or that  substantially all Liquidation  Proceeds
which have been determined by the Master Servicer in its reasonable  judgment to
be finally  recoverable  have been recovered,  and upon deposit to the Custodial
Account of such final monthly payment,  prepayment in full together with accrued
and unpaid interest to the date of such payment with respect to such Home Equity
Loan or, if  applicable,  Liquidation  Proceeds,  the Custodian  shall  promptly
release  the  Related  Documents  to the Master  Servicer,  which the  Indenture
Trustee shall execute,  along with such documents as the Master  Servicer or the
Mortgagor may request to evidence satisfaction and discharge of such Home Equity
Loan,  upon  request  of the  Master  Servicer.  If from  time  to  time  and as
appropriate for the servicing or foreclosure of any Home Equity Loan, the Master
Servicer requests the Custodian to release the Related Documents and delivers to
the  Custodian a trust  receipt  reasonably  satisfactory  to the  Custodian and
signed by a Responsible  Officer of the Master  Servicer,  the  Custodian  shall
release the Related Documents to the Master Servicer.  If such Home Equity Loans
shall be  liquidated  and the Custodian  receives a certificate  from the Master
Servicer as provided  above,  then,  upon  request of the Master  Servicer,  the
Custodian shall release the trust receipt to the Master Servicer.

Section 3.07 REALIZATION UPON DEFAULTED HOME EQUITY LOANS; LOSS MITIGATION. With
respect to such of the Home Equity  Loans as come into and  continue in default,
the Master  Servicer  will decide  whether to (i)  foreclose  upon the Mortgaged
Properties  securing  such Home  Equity  Loans,  (ii) write off the unpaid  Loan
Balance  of the Home  Equity  Loans as bad  debt,  (iii)  take a deed in lieu of
foreclosure,  (iv)  accept a short sale (a payoff of the Home Equity Loan for an
amount less than the total amount  contractually  owed in order to  facilitate a
sale of the Mortgaged  Property by the Mortgagor) or permit a short  refinancing

                                       18
<PAGE>

(a  payoff of the Home  Equity  Loan for an  amount  less than the total  amount
contractually  owed in  order  to  facilitate  refinancing  transactions  by the
Mortgagor  not involving a sale of the  Mortgaged  Property),  (v) arrange for a
repayment  plan,  (vi) agree to a modification in accordance with this Servicing
Agreement,  or (vii) in the case of a Group II Loan,  take an unsecured note, in
connection  with a  negotiated  release of the lien of the  Mortgage in order to
facilitate a settlement  with the Mortgagor;  in each case subject to the rights
of any related first lien holder; provided that in connection with the foregoing
if the Master  Servicer  has actual  knowledge  that any  Mortgaged  Property is
affected by hazardous or toxic wastes or substances and that the  acquisition of
such Mortgaged  Property would not be commercially  reasonable,  then the Master
Servicer will not cause the Issuer or the Indenture  Trustee to acquire title to
such Mortgaged  Property in a foreclosure or similar  proceeding.  In connection
with such decision,  the Master Servicer shall follow such practices (including,
in the case of any default on a related  senior  mortgage loan, the advancing of
funds to  correct  such  default  if  deemed  to be  appropriate  by the  Master
Servicer) and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general  mortgage  servicing  activities and as shall be
required or permitted by the Program  Guide;  provided that the Master  Servicer
shall not be liable in any respect hereunder if the Master Servicer is acting in
connection  with any such  foreclosure  or  attempted  foreclosure  which is not
completed or other conversion in a manner that is consistent with the provisions
of this  Servicing  Agreement.  The foregoing is subject to the proviso that the
Master Servicer shall not be required to expend its own funds in connection with
any foreclosure or attempted  foreclosure  which is not completed or towards the
correction of any default on a related  senior  mortgage loan or  restoration of
any property unless it shall determine that such  expenditure  will increase Net
Liquidation  Proceeds.  In the event of a  determination  by the Master Servicer
that any such expenditure previously made pursuant to this Section 3.07 will not
be  reimbursable  from Net  Liquidation  Proceeds,  the Master Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.03.

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

                                       19
<PAGE>

that is 180  days or more  delinquent  as of the end of the  related  Collection
Period;  provided further,  however, any subsequent  collections with respect to
any such Group I Loan shall be deposited to the Custodial Account,  and (ii) for
purposes  of  determining  the  amount of any  Liquidation  Proceeds,  Insurance
Proceeds, REO Proceeds or any other unscheduled collections or the amount of any
Liquidation  Loss Amount,  the Master  Servicer  may take into  account  minimal
amounts  of  additional  receipts  expected  to be  received  or  any  estimated
additional  liquidation  expenses expected to be incurred in connection with the
related defaulted Group I Loan or REO Property.

        In the  event  that  title to any  Mortgaged  Property  is  acquired  in
foreclosure or by deed in lieu of  foreclosure,  the deed or certificate of sale
shall be issued in the name of the Indenture  Trustee or a nominee thereof,  who
shall hold the same on behalf of the Issuer in  accordance  with Section 3.13 of
the Indenture. Notwithstanding any such acquisition of title and cancellation of
the related Home Equity Loan, such Mortgaged Property shall (except as otherwise
expressly  provided  herein) be considered to be an outstanding Home Equity Loan
held as an asset of the Issuer until such time as such  property  shall be sold.
Consistent  with the foregoing for purposes of all  calculations  hereunder,  so
long as such Mortgaged  Property  shall be considered to be an outstanding  Home
Equity  Loan it shall be assumed  that,  notwithstanding  that the  indebtedness
evidenced by the related Loan Agreement  shall have been  discharged,  such Loan
Agreement  in effect at the time of any such  acquisition  of title  before  any
adjustment  thereto by reason of any  bankruptcy  or similar  proceeding  or any
moratorium or similar waiver or grace period will remain in effect.

        In the event that the Trust  acquires  any REO  Property as aforesaid or
otherwise in  connection  with a default or imminent  default on a Group I Loan,
the Master  Servicer on behalf the Trust shall  dispose of such REO  Property as
soon  as  practicable,   giving  due  consideration  to  the  interests  of  the
Noteholders and the Certificateholders, but in all cases within three full years
after the taxable year of its  acquisition  by the Trust for purposes of Section
860G(a)(8)  of the  Code (or  such  shorter  period  as may be  necessary  under
applicable  state (including any state in which such property is located) law to
maintain  the status of any of REMIC I,  REMIC II or REMIC III as a REMIC  under
applicable  state law and avoid taxes resulting from such property failing to be
foreclosure  property  under  applicable  state  law) or, at the  expense of the
Trust,  request,  more than 60 days  before the day on which  such grace  period
would  otherwise  expire,  an extension  of such grace period  unless the Master
Servicer obtains for the Indenture  Trustee an Opinion of Counsel,  addressed to
the Indenture Trustee and the Master Servicer, to the effect that the holding by
the Trust of such REO Property  subsequent to such period will not result in the
imposition of taxes on "prohibited  transactions"  as defined in Section 860F of
the Code or cause the Trust to fail to qualify as a REMIC (for  federal  (or any
applicable   State  or  local)  income  tax  purposes)  at  any  time  that  any
Certificates are outstanding,  in which case the Trust may continue to hold such
REO Property  (subject to any conditions  contained in such Opinion of Counsel).
The Master  Servicer  shall be  entitled  to be  reimbursed  from the  Custodial
Account for any costs incurred in obtaining such Opinion of Counsel, as provided
in Section 3.03.  Notwithstanding any other provision of this Agreement,  no REO
Property  acquired  by the Trust  shall be rented (or  allowed to continue to be

                                       20
<PAGE>

rented)  or  otherwise  used by or on  behalf  of the  Trust in such a manner or
pursuant to any terms that would (i) cause such REO  Property to fail to qualify
as "foreclosure  property" within the meaning of Section  860G(a)(8) of the Code
or (ii) subject REMIC I, REMIC II or REMIC III to the  imposition of any federal
income taxes on the income  earned from such REO  Property,  including any taxes
imposed by reason of Section 860G(c) of the Code, unless the Master Servicer has
agreed to indemnify and hold  harmless the Trust with respect to the  imposition
of any such taxes.

        Any  proceeds  from the purchase or  repurchase  of any Home Equity Loan
pursuant to the terms of this Servicing Agreement  (including without limitation
Sections  2.03 and 3.15)  will be applied in the  following  order of  priority:
first,  to the Master  Servicer or the related  Subservicer,  all Servicing Fees
payable  therefrom to the Payment Date on which such amounts are to be deposited
in the Payment  Account;  second,  as Interest  Collections,  accrued and unpaid
interest on the related  Home Equity  Loan,  at the Net Loan Rate to the Payment
Date on which such  amounts  are to be  deposited  in the Payment  Account;  and
third, as Principal  Collections,  as a recovery of principal on the Home Equity
Loan.

        Liquidation  Proceeds with respect to a Liquidated Home Equity Loan will
be applied in the following  order of priority:  first,  to reimburse the Master
Servicer or the related Subservicer in accordance with this Section 3.07 for any
Liquidation Expenses; second, to the Master Servicer or the related Subservicer,
all unpaid  Servicing Fees through the date of receipt of the final  Liquidation
Proceeds;  third,  as Principal  Collections,  as a recovery of principal on the
Home Equity Loan,  up to an amount equal to the Loan Balance of the related Home
Equity Loan  immediately  prior to the date it became a  Liquidated  Home Equity
Loan;  fourth,  as  Interest  Collections,  accrued  and unpaid  interest on the
related Home Equity Loan at the Net Loan Rate through the date of receipt of the
final Liquidation Proceeds; and fifth, to Foreclosure Profits.

        Proceeds and other recoveries from a Home Equity Loan after it becomes a
Liquidated  Home Equity Loan will be applied in the following order of priority:
first, to reimburse the Master Servicer or the related Subservicer in accordance
with this Section 3.07 for any expenses previously unreimbursed from Liquidation
Proceeds  or  otherwise;   second,   to  the  Master  Servicer  or  the  related
Subservicer,  all unpaid  Servicing  Fees  payable  thereto  through the date of
receipt of the proceeds  previously  unreimbursed  from Liquidation  Proceeds or
otherwise;  third, as Interest Collections,  up to an amount equal to the sum of
(a) the Loan  Balance of the related Home Equity Loan  immediately  prior to the
date it became a Liquidated Home Equity Loan, less any Net Liquidation  Proceeds
previously  received  with  respect to such Home  Equity  Loan and  applied as a
recovery of principal,  and (b) accrued and unpaid  interest on the related Home
Equity Loan at the Net Loan Rate  through  the date of receipt of the  proceeds;
and fourth, to Foreclosure Profits.

        In the event of a  default  on a Home  Equity  Loan one or more of whose
obligors is a Non-United  States Person,  in connection  with any foreclosure or
acquisition  of a deed in  lieu  of  foreclosure  (together,  "foreclosure")  in
respect of such Home Equity Loan, the Master Servicer will cause compliance with
the provisions of Treasury  Regulation Section  1.1445-2(d)(3) (or any successor
thereto)  necessary to assure that no  withholding  tax  obligation  arises with
respect to the proceeds of such foreclosure  except to the extent,  if any, that
proceeds of such foreclosure are required to be remitted to the obligors on such
Home Equity Loan.

                                       21
<PAGE>

Section  3.08  ISSUER AND  INDENTURE  TRUSTEE TO  COOPERATE.  On or before  each
Payment  Date,  the Master  Servicer  will notify the  Indenture  Trustee or the
Custodian,  with a copy to the Issuer,  of the  termination of or the payment in
full and the termination of any Home Equity Loan during the preceding Collection
Period.  Upon receipt of payment in full,  the Master  Servicer is authorized to
execute,  pursuant  to the  authorization  contained  in  Section  3.01,  if the
assignments  of Mortgage  have been  recorded to the extent  required  under the
Purchase  Agreement,   an  instrument  of  satisfaction  regarding  the  related
Mortgage,  which  instrument  of  satisfaction  shall be  recorded by the Master
Servicer if required by applicable  law and be delivered to the Person  entitled
thereto and cause the removal  from the  registration  of the MERS(R)  System of
such  Mortgage.  It is  understood  and agreed  that any  expenses  incurred  in
connection  with such instrument of satisfaction or transfer shall be reimbursed
from  amounts  deposited  in the  Custodial  Account.  From  time to time and as
appropriate  for the  servicing  or  foreclosure  of any Home Equity  Loan,  the
Indenture  Trustee or the Custodian  shall,  upon request of the Master Servicer
and delivery to the Indenture  Trustee or Custodian,  with a copy to the Issuer,
of a Request for Release,  in the form annexed  hereto as Exhibit C, signed by a
Servicing Officer,  release or cause to be released the related Mortgage File to
the Master Servicer and the Issuer or Indenture  Trustee shall promptly  execute
such  documents,  in the forms  provided  by the  Master  Servicer,  as shall be
necessary for the  prosecution  of any such  proceedings  or the taking of other
servicing  actions.  Such trust  receipt shall  obligate the Master  Servicer to
return the Mortgage File to the Indenture Trustee or the Custodian (as specified
in such receipt) when the need therefor by the Master  Servicer no longer exists
unless the Home Equity Loan shall be liquidated,  in which case, upon receipt of
a certificate of a Servicing Officer similar to that hereinabove specified,  the
trust receipt shall be released to the Master Servicer.

        In order to facilitate the foreclosure of the Mortgage securing any Home
Equity  Loan that is in default  following  recordation  of the  assignments  of
Mortgage in  accordance  with the  provisions  of the  Purchase  Agreement,  the
Indenture  Trustee or the Issuer shall, if so requested in writing by the Master
Servicer, promptly execute an appropriate assignment in the form provided by the
Master Servicer to assign such Home Equity Loan for the purpose of collection to
the Master Servicer (any such assignment shall  unambiguously  indicate that the
assignment is for the purpose of collection  only),  and, upon such  assignment,
such assignee for collection  will thereupon  bring all required  actions in its
own name and otherwise  enforce the terms of the Home Equity Loan and deposit or
credit the Net Liquidation Proceeds,  exclusive of Foreclosure Profits, received
with respect thereto in the Custodial Account.  In the event that all delinquent
payments due under any such Home Equity Loan are paid by the  Mortgagor  and any
other  defaults  are cured,  then the  assignee for  collection  shall  promptly
reassign such Home Equity Loan to the  Indenture  Trustee and return all Related
Documents to the place where the related Mortgage File was being maintained.

        In connection  with the Issuer's  obligation to cooperate as provided in
this Section 3.08 and all other provisions of this Servicing Agreement requiring
the Issuer to  authorize  or permit any actions to be taken with  respect to the
Home Equity Loans,  the Indenture  Trustee,  as pledgee of the Home Equity Loans
and as  assignee  of record  of the Home  Equity  Loans on behalf of the  Issuer
pursuant to Section 3.13 of the Indenture,  expressly  agrees,  on behalf of the
Issuer, to take all such actions on behalf of the Issuer and to promptly execute
and  return all  instruments  reasonably  required  by the  Master  Servicer  in
connection  therewith;  provided,  that if the Master  Servicer  shall request a
signature of the Indenture Trustee, on behalf of the Issuer, the Master Servicer

                                       22
<PAGE>

will deliver to the Indenture Trustee an Officer's Certificate stating that such
signature is necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties under this Servicing Agreement.

Section  3.09  SERVICING  COMPENSATION;  PAYMENT OF CERTAIN  EXPENSES  BY MASTER
SERVICER.  The Master Servicer shall be entitled to receive the Master Servicing
Fee in accordance with Sections 3.02 and 3.03 as  compensation  for its services
in connection with servicing the Home Equity Loans.  Subject to Section 3.07, in
the event that  Liquidation  Proceeds,  Insurance  Proceeds  and REO Proceeds in
respect of a Cash Liquidation or REO Disposition  exceed the unpaid Loan Balance
of such Home Equity Loan plus unpaid  interest  accrued  thereon  (including REO
Imputed  Interest) at the related Net Loan Rate,  the Master  Servicer  shall be
entitled  to  retain   therefrom  and  to  pay  to  itself  and/or  the  related
Subservicer,  any Foreclosure Profits.  Additional servicing compensation in the
form of assumption fees,  investment  income on amounts in the Custodial Account
or the  Certificate  Distribution  Account or otherwise shall be retained by the
Master  Servicer or the  Subservicer to the extent  provided  herein.  Moreover,
additional  servicing   compensation  in  the  form  of  late  payment  charges,
investment  income on amounts in the  Payment  Account  and other  receipts  not
required  to be  deposited  in the  Custodial  Account as  specified  in Section
3.02(b) shall be retained by the Master  Servicer.  The Master Servicer shall be
required to pay all expenses  incurred by it in connection  with its  activities
hereunder (including payment of all other fees and expenses not expressly stated
hereunder  to be for the  account  of the  Securityholders,  including,  without
limitation,  the fees and expenses of the Owner Trustee,  Indenture  Trustee and
any Custodian) and shall not be entitled to reimbursement therefor.

Section 3.10 ANNUAL  STATEMENT AS TO COMPLIANCE.  (a) _____ The Master  Servicer
will deliver to the Issuer,  each Underwriter and the Indenture Trustee,  with a
copy to the Credit  Enhancer,  on or before the  earlier of (a) March 31 of each
year,  beginning  with the first March 31 that occurs at least six months  after
the Cut-off  Date or (b) with  respect to any  calendar  year  during  which the
Depositor's  annual  report on Form 10-K is required  to be filed in  accordance
with the Exchange Act and the rules and regulations of the Commission,  the date
on which the annual  report on Form 10-K is required  to be filed in  accordance
with the  Exchange  Act and the  rules and  regulations  of the  Commission,  an
Officer's  Certificate stating that (i) a review of the activities of the Master
Servicer  during  the  preceding  calendar  year  and of its  performance  under
servicing  agreements,  including this  Servicing  Agreement has been made under
such officer's  supervision  and (ii) to the best of such  officer's  knowledge,
based on such review,  the Master Servicer has complied in all material respects
with the minimum servicing standards set forth in the Uniform Single Attestation
Program for Mortgage  Bankers and has fulfilled all of its material  obligations
in all material  respects  throughout  such year, or, if there has been material
noncompliance  with such servicing  standards or a default in the fulfillment in
all  material  respects  of any  such  obligation  relating  to  this  Servicing
Agreement,  such statement shall include a description of such  noncompliance or
specify  each such  default,  as the case may be,  known to such officer and the
nature and status thereof.

(b) _____ The Master  Servicer  shall  deliver  to the Issuer and the  Indenture
Trustee,  with a copy to the Credit  Enhancer,  promptly  after having  obtained
knowledge  thereof,  but in no event later than five Business  Days  thereafter,

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<PAGE>

written notice by means of an Officer's  Certificate of any event which with the
giving of notice or the lapse of time or both, would become a Servicing Default.

Section 3.11 ANNUAL SERVICING  REPORT.  On or before the earlier of (a) March 31
of each year,  beginning with the first March 31 that occurs at least six months
after the Cut-off  Date,  or (b) with respect to any calendar  year during which
the Depositor's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission,  the date
on which  the  annual  report is  required  to be filed in  accordance  with the
Exchange  Act and the  rules  and  regulations  of the  Commission,  the  Master
Servicer at its expense shall cause a firm of nationally recognized  independent
public  accountants  (who may also render other services to the Master Servicer)
to furnish a report to the Issuer,  the Indenture Trustee,  the Depositor,  each
Underwriter,  the Credit  Enhancer  and each Rating  Agency  stating its opinion
that, on the basis of an  examination  conducted by such firm  substantially  in
accordance  with standards  established  by the American  Institute of Certified
Public  Accountants,  the  assertions  made  pursuant to Section 3.10  regarding
compliance with the minimum servicing  standards set forth in the Uniform Single
Attestation  Program for Mortgage Bankers during the preceding calendar year are
fairly stated in all material  respects,  subject to such  exceptions  and other
qualifications  that,  in the opinion of such firm,  such  accounting  standards
require it to report.  In rendering  such  statement,  such firm may rely, as to
matters  relating to the direct  servicing of Home Equity Loans by Subservicers,
upon  comparable  statements for  examinations  conducted by independent  public
accountants  substantially  in  accordance  with  standards  established  by the
American Institute of Certified Public Accountants  (rendered within one year of
such statement) with respect to such Subservicers.

Section 3.12 ACCESS TO CERTAIN  DOCUMENTATION AND INFORMATION REGARDING THE HOME
EQUITY Loans.  Whenever  required by statute or regulation,  the Master Servicer
shall provide to the Credit Enhancer, any Securityholder upon reasonable request
(or a regulator  for a  Securityholder)  or the  Indenture  Trustee,  reasonable
access to the  documentation  regarding  the Home Equity Loans such access being
afforded  without  charge but only upon  reasonable  request  and during  normal
business  hours at the offices of the Master  Servicer.  Nothing in this Section
3.12 shall  derogate from the  obligation of the Master  Servicer to observe any
applicable law  prohibiting  disclosure of information  regarding the Mortgagors
and the  failure of the Master  Servicer  to provide  access as provided in this
Section  3.12 as a result of such  obligation  shall not  constitute a breach of
this Section 3.12.

Section 3.13 MAINTENANCE OF CERTAIN  SERVICING  INSURANCE  POLICIES.  The Master
Servicer shall during the term of its service as servicer  maintain in force (i)
a  policy  or  policies  of  insurance  covering  errors  and  omissions  in the
performance of its obligations as master servicer  hereunder and (ii) a fidelity
bond in respect  of its  officers,  employees  or  agents.  Each such  policy or
policies and bond shall be at least equal to the coverage that would be required
by Fannie Mae or Freddie  Mac,  whichever  is greater,  for  Persons  performing
servicing for Home Equity Loans purchased by such entity. Coverage of the Master
Servicer under a policy or bond obtained by an Affiliate of the Master  Servicer
and  providing  the coverage  required by this  Section  3.13 shall  satisfy the
requirements of this Section 3.13.

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<PAGE>

Section 3.14 INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE AND REPORTS OF
FORECLOSURES AND ABANDONMENTS OF MORTGAGED  PROPERTY.  The Master Servicer shall
prepare and deliver all federal and state  information  reports  with respect to
the Home Equity Loans when and as required by all  applicable  state and federal
income tax laws. In particular,  with respect to the  requirement  under Section
6050J of the Code to the effect that the Master  Servicer or  Subservicer  shall
make reports of foreclosures and abandonments of any mortgaged property for each
year  beginning in 2003, the Master  Servicer or Subservicer  shall file reports
relating to each instance  occurring during the previous  calendar year in which
the Master  Servicer  (i) on behalf of the  Issuer,  acquires an interest in any
Mortgaged Property through foreclosure or other comparable conversion in full or
partial  satisfaction of a Home Equity Loan, or (ii) knows or has reason to know
that any  Mortgaged  Property  has been  abandoned.  The reports from the Master
Servicer or  Subservicer  shall be in form and substance  sufficient to meet the
reporting  requirements  imposed by Section  6050J and  Section  6050H  (reports
relating to mortgage interest received) of the Code.

Section 3.15   OPTIONAL REPURCHASE OR TRANSFER OF HOME EQUITY LOANS.

(a) ______  Notwithstanding  any provision in Section 3.07 to the contrary,  the
Master Servicer,  at its option and in its sole  discretion,  may repurchase any
Home Equity Loan that is delinquent in payment for a period of 90 days or longer
for a price equal to the Repurchase Price;  provided,  that any such Home Equity
Loan that becomes 90 days or more delinquent  during any given Calendar  Quarter
shall only be eligible for purchase  pursuant to this Section 3.15(a) during the
period  beginning on the first Business Day of the following  Calendar  Quarter,
and ending at the close of business on the  second-to-last  Business Day of such
following Calendar Quarter; and provided further,  that such Home Equity Loan is
90  days or more  delinquent  at the  time of  repurchase.  Such  option  if not
exercised shall not thereafter be reinstated as to any Home Equity Loan,  unless
the  delinquency  is cured and the Home Equity  Loan  thereafter  again  becomes
delinquent in payment by 90 days or more in a subsequent Calendar Quarter. If at
any time the Master Servicer makes a payment to the Payment Account covering the
amount of the  Repurchase  Price for such a Home  Equity  Loan,  and the  Master
Servicer provides to the Indenture Trustee a certification signed by a Servicing
Officer  stating  that the  amount of such  payment  has been  deposited  in the
Payment Account, then the Indenture Trustee shall execute the assignment of such
Home  Equity  Loan at the  request  of the  Master  Servicer  without  recourse,
representation or warranty to the Master Servicer which shall succeed to all the
Indenture  Trustee's  right,  title and  interest  in and to such Loan,  and all
security and documents relative thereto.  Such assignment shall be an assignment
outright and not for security.  The Master Servicer will thereupon own such Home
Equity Loan, and all such security and documents, free of any further obligation
to the Indenture Trustee or the Securityholders with respect thereto.

(b) _____ Subject to the conditions set forth below, the Master  Servicer,  upon
receipt of  written  notice  and  direction  from the  Issuer,  shall  cause the
retransfer of Group II Loans from the Indenture  Trustee to the Issuer as of the
close of business on a Payment Date (the "Transfer Date"). On the fifth Business
Day (the "Transfer  Notice Date") prior to the Transfer Date  designated in such
notice,  the  Master  Servicer  shall  give the  Indenture  Trustee,  the Rating
Agencies  and the  Credit  Enhancer  a notice of the  proposed  retransfer  that
contains a list of the Home Equity Loans to be  retransferred.  Such retransfers
of  Group II  Loans  shall  be  permitted  upon  satisfaction  of the  following
conditions:

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<PAGE>

(i)  _____  No  Amortization  Event  has  occurred  or  will  result  from  such
retransfer;

(ii) ____ On the Transfer Date, the Group II Overcollateralization Amount (after
giving effect to the removal from the Trust of the Group II Loans proposed to be
transferred)  will  equal  or  exceed  Group II  Required  Overcollateralization
Amount;

(iii) On or before the Transfer Date,  the Master  Servicer shall have delivered
to the Indenture  Trustee a revised Home Equity Loan  Schedule  showing that the
Home Equity Loans are no longer owned by the Trust;

(iv) ____ The Master  Servicer  shall  represent  and warrant  that the Group II
Loans to be  removed  from the Trust  were  selected  at random  and the  Master
Servicer  shall have  received  the  consent of the  Credit  Enhancer  as to the
selection of the particular Group II Loans to be removed; and

(v) _____ The Master Servicer shall have delivered to the Indenture  Trustee and
the Credit Enhancer an officer's certificate certifying that the items set forth
in subparagraphs  (i) through (iv),  inclusive,  have been performed or are true
and correct,  as the case may be. The Indenture Trustee may conclusively rely on
such officer's certificate,  shall have no duty to make inquiries with regard to
the matters set forth therein and shall incur no liability in so relying.

        The Master  Servicer  shall not be permitted to effect the retransfer of
any Group II Loan except under the conditions  specified  above.  Upon receiving
the requisite  notice and direction from the Issuer,  the Master  Servicer shall
perform in a timely manner those acts required of it, as specified  above.  Upon
satisfaction of the above conditions, on the Transfer Date the Indenture Trustee
shall deliver, or cause to be delivered,  to the Issuer a written itemization of
each Group II Loan being  transferred,  together with the Mortgage File for each
such Home Equity Loan,  and the  Indenture  Trustee shall execute and deliver to
the Issuer or its designee such other documents  prepared by the Master Servicer
as shall be reasonably necessary to transfer such Group II Loans to the Group II
Certificateholders.  Any such transfer of the Trust's right,  title and interest
in and to the  Group  II Loans  shall be  without  recourse,  representation  or
warranty  by or of the  Indenture  Trustee  or the  Trust to the  Issuer  or its
designee.

                                   ARTICLE IV

                              SERVICING CERTIFICATE

Section 4.01  STATEMENTS  TO  SECURITYHOLDERS.  (a) With respect to each Payment
Date, on the Business Day following the related  Determination  Date, the Master
Servicer  shall  forward to the  Indenture  Trustee  and the  Indenture  Trustee
pursuant to Section 3.26 of the Indenture shall forward or cause to be forwarded
by  mail  to  each  Certificateholder,  Noteholder,  the  Credit  Enhancer,  the
Depositor,  the Owner  Trustee,  the  Certificate  Paying  Agent and each Rating
Agency,  a statement  setting forth the following  information  (the  "Servicing
Certificate") as to the Notes and Certificates, to the extent applicable:

                                       26
<PAGE>

(a) _____ for each Loan Group, the aggregate amount of (a) Interest Collections,
(b)  Principal  Collections  and (c)  Substitution  Adjustment  Amounts for such
Collection Period;

(b)     the amount paid as principal to the Noteholders of each Class of Notes;

(c) _____ for each Loan Group, the amount paid as interest to the Noteholders of
each  Class of Notes,  separately  stating  the  portion  thereof  in respect of
Prepayment  Interest  Shortfalls,  Relief  Act  Shortfalls,  Group I Net WAC Cap
Shortfalls or Group II Net WAC Cap Shortfalls, if any;

(d)  _____ for each Loan  Group,  the  aggregate  Interest  Distribution  Amount
remaining  unpaid,  if any,  for each Class of Class I Notes and Class II Notes,
after giving effect to the payments made on such Payment Date;

(e)  _____  with  respect  to Loan  Group I, the  amount  of any  Group I Credit
Enhancement Draw Amount or Dissolution  Draw, if any, for such Payment Date, the
amount  paid to the Credit  Enhancer  in  reimbursement  for prior draws and the
aggregate amount of prior draws under the Group I Policy not yet reimbursed;

(f) _____  with  respect  to Loan  Group II,  the  amount of any Group II Credit
Enhancement Draw Amount or Dissolution  Draw, if any, for such Payment Date, the
amount  paid to the Credit  Enhancer  in  reimbursement  for prior draws and the
aggregate amount of prior draws under the Group II Policy not yet reimbursed;

(g) _____ for each Loan Group, the amount of such  distribution as principal and
interest to the  Certificateholders of the Certificates,  separately stating the
portion  thereof which resulted in a reduction of the  Certificate  Loan Balance
thereof;

(h) _____ the aggregate Loan Balance of the Home Equity Loans in each Loan Group
as of the end of the preceding Collection Period;

(i) _____ the  aggregate  amount of  Additional  Balances  on the Group II Loans
created during the previous Collection Period conveyed to the Issuer;

(j) _____ for each Loan Group,  the number and  aggregate  Loan Balances of Home
Equity Loans (a) as to which the Minimum Monthly Payment is Delinquent for 30-59
days, 60-89 days and 90 or more days, respectively,  (b) that are foreclosed and
(c) that have become  REO, in each case as of the end of the related  Collection
Period;  provided,  however,  that such  information will not be provided on the
statements relating to the first Payment Date;

(k) _____ the Note Rate for each Class of Class I Notes and Class II Notes,  the
Group I Net WAC Rate and the  Group II Net WAC Rate for the  related  Collection
Period;

(l) _____ for each Loan Group,  the  aggregate  Liquidation  Loss  Amounts  with
respect to the related  Collection  Period,  the amount of any Liquidation  Loss
Distribution  Amounts  with  respect  to the  Notes,  and the  aggregate  of the
Liquidation  Loss  Amounts  from all  Collection  Periods to date  expressed  as
dollars and as a percentage of the aggregate  Cut-off Date Loan Balance for such
Loan Group;

                                       27
<PAGE>

(m) _____ the  aggregate  Excess Loss Amounts with respect to the Group II Loans
with respect to the related  Collection  Period and the  aggregate of the Excess
Loss Amounts with respect to the Group II Loans from all  Collection  Periods to
date;

(n) _____ for each Loan  Group,  the  aggregate  Special  Hazard  Losses,  Fraud
Losses,   Bankruptcy   Losses  and  losses  caused  by  or  resulting   from  an
Extraordinary  Event  with  respect  to the  related  Collection  Period and the
aggregate of each of such losses from all Collection Periods to date;

(o) _____ for each Loan Group,  the Security  Balance of each  related  Class of
Notes and the Certificate  Principal Balance of the related  Certificates  after
giving effect to the distribution of principal on such Payment Date;

(p) _____ the aggregate Servicing Fees for the related Collection Period and the
aggregate amount of Draws for the related Collection Period;

(q) _____ the  number and amount of any  increases  in the Credit  Limits of the
Home Equity Loans during the related Collection Period;

(r)   _____   the   Group  I   Overcollateralization   Amount,   the   Group  II
Overcollateralization  Amount,  the  Undercollateralization  Amount, the Special
Hazard  Amount for each Loan  Group,  the Fraud Loss Amount for each Loan Group,
the  Bankruptcy  Loss  Amount  for  each  Loan  Group,   the  Group  I  Required
Overcollateralization  Amount  immediately  following  such Payment Date and the
Group  II  Required  Overcollateralization  Amount  immediately  following  such
Payment Date; and

(s) _____ (1) the number and principal amount of release agreements  pursuant to
Section  3.05(c)  entered  into during the  calendar  year and since the Closing
Date, stated separately,  for the Group II Loans and, the aggregate  outstanding
principal  amount of such release  agreements  expressed as a percentage  of the
Pool Balance for Loan Group II with information provided separately with respect
to all Unsecured Loans and (2) the number and principal amount of Capitalization
Workouts  pursuant to Section  3.02(a)(v)  entered into during the calendar year
and  since the  Closing  Date,  stated  separately  for each Loan  Group and the
aggregate  outstanding  amount of the  Capitalization  Workouts  expressed  as a
percentage of the respective Pool Balance.

        In the case of information  furnished pursuant to clauses (ii) and (iii)
above, the amounts shall be expressed as an aggregate dollar amount per Variable
Funding  Note,  Term  Note  or  Certificate,   as  applicable,   with  a  $1,000
denomination.

        In addition,  the Master Servicer shall forward to the Indenture Trustee
any other information reasonably requested by the Indenture Trustee necessary to
make distributions pursuant to Section 3.05 of the Indenture. Prior to the close
of business on the Business Day next  succeeding  each  Determination  Date, the
Master  Servicer  shall furnish a written  statement to the  Certificate  Paying
Agent and the Indenture  Trustee setting forth the aggregate amounts required to
be withdrawn from the Custodial  Account and deposited into the Payment  Account
on the Business Day preceding the related Payment Date pursuant to Section 3.03.
The  determination  by the Master Servicer of such amounts shall, in the absence

                                       28
<PAGE>

of  obvious  error,  be  presumptively  deemed to be  correct  for all  purposes
hereunder  and the Owner  Trustee and  Indenture  Trustee  shall be protected in
relying  upon  the same  without  any  independent  check  or  verification.  In
addition,  upon the Issuer's written request, the Master Servicer shall promptly
furnish  information  reasonably  requested  by the  Issuer  that is  reasonably
available to the Master Servicer to enable the Issuer to perform its federal and
state income tax reporting obligations.

        (b) The Master Servicer shall, on behalf of the Depositor and in respect
of the  Trust,  sign and  cause to be filed  with the  Commission  any  periodic
reports  required to be filed under the  provisions of the Exchange Act, and the
rules and  regulations  of the  Commission  thereunder.  In connection  with the
preparation  and filing of such periodic  reports,  the Indenture  Trustee shall
timely  provide  to the  Master  Servicer  (I) a list of Holders as shown on the
Certificate  Register and the Note Register as of the end of each calendar year,
(II)  copies of all  pleadings,  other  legal  process  and any other  documents
relating to any claims,  charges and complaints involving the Indenture Trustee,
as indenture trustee hereunder,  or the Trust that are received by the Indenture
Trustee,  (III)  notice  of all  matters  that,  to the  actual  knowledge  of a
Responsible  Officer of the Indenture Trustee,  have been submitted to a vote of
the Holders,  other than those matters that have been submitted to a vote of the
Holders at the request of the Depositor or the Master Servicer,  and (IV) notice
of any failure of the Indenture  Trustee to make any distribution to the Holders
as required  pursuant to this  Agreement.  Neither the Master  Servicer  nor the
Indenture Trustee shall have any liability with respect to the Master Servicer's
failure to properly  prepare or file such  periodic  reports  resulting  from or
relating to the Master Servicer's inability or failure to obtain any information
not resulting from the Master  Servicer's own negligence or willful  misconduct.
Any Form 10-K filed with the Commission in connection with this clause (b) shall
include a certification, signed by the senior officer in charge of the servicing
functions of the Master  Servicer,  in the form  attached as Exhibit E hereto or
such other form as may be required or  permitted  by the  Commission  (the "Form
10-K  Certification"),  in  compliance  with Rules  13a-14 and 15d-14  under the
Exchange Act and any additional directives of the Commission. In connection with
the Form 10-K  Certification,  the  Indenture  Trustee  shall provide the Master
Servicer with a back-up certification  substantially in the form attached hereto
as Exhibit F. This  Section  4.01(b)  may be  amended  in  accordance  with this
Agreement,  but without the Rating Agency  confirmations  otherwise  required by
Section 8.01, and without the consent of the Holders.

Section 4.02 TAX REPORTING.  So long as Residential  Funding  Corporation or any
Affiliate  thereof owns 100% of the  Certificates,  then no separate federal and
state income tax returns and  information  returns or reports will be filed with
respect to the Issuer,  and the Issuer will be treated as an entity wholly owned
by Residential Funding Corporation or an affiliate thereof.

                                   ARTICLE V

                                 PAYMENT ACCOUNT

Section 5.01 PAYMENT ACCOUNT. The Indenture Trustee shall establish and maintain
a Payment  Account titled  "JPMorgan Chase Bank, as Indenture  Trustee,  for the
benefit of the  Securityholders,  the  Certificate  Paying  Agent and the Credit
Enhancer  pursuant to the  Indenture,  dated as of March 27, 2003,  between Home
Equity Loan Trust 2003-HS1 and JPMorgan Chase Bank".  The Payment  Account shall

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be an Eligible Account.  On each Payment Date, amounts on deposit in the Payment
Account will be distributed by the Indenture  Trustee in accordance with Section
3.05 of the Indenture.  The Indenture  Trustee shall,  upon written request from
the Master  Servicer,  invest or cause the  institution  maintaining the Payment
Account to invest the funds in the  Payment  Account  in  Permitted  Investments
designated  in the name of the Indenture  Trustee,  which shall mature not later
than the Business Day next preceding the Payment Date next following the date of
such investment  (except that (i) any investment in the  institution  with which
the Payment  Account is maintained  may mature on such Payment Date and (ii) any
other investment may mature on such Payment Date if the Indenture  Trustee shall
advance funds on such Payment Date to the Payment  Account in the amount payable
on such  investment on such Payment Date,  pending receipt thereof to the extent
necessary  to make  distributions  on the  Securities)  and shall not be sold or
disposed  of prior to  maturity.  All  income  and gain  realized  from any such
investment  shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time. The amount of any losses  incurred
in respect of any such investments  shall be deposited in the Payment Account by
the Master Servicer out of its own funds immediately as realized.

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                                   ARTICLE VI

                               THE MASTER SERVICER

Section 6.01  LIABILITY OF THE MASTER  SERVICER.  The Master  Servicer  shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Master Servicer herein.

Section 6.02 MERGER OR  CONSOLIDATION  OF, OR ASSUMPTION OF THE  OBLIGATIONS OF,
THE MASTER  SERVICER.  Any  corporation  into which the Master  Servicer  may be
merged or converted  or with which it may be  consolidated,  or any  corporation
resulting  from any  merger,  conversion  or  consolidation  to which the Master
Servicer shall be a party, or any corporation  succeeding to the business of the
Master  Servicer,  shall be the  successor  of the Master  Servicer,  hereunder,
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.

        The Master  Servicer  may assign its rights and  delegate its duties and
obligations under this Servicing Agreement;  provided, that the Person accepting
such  assignment or  delegation  shall be a Person which is qualified to service
Home Equity Loans,  is  reasonably  satisfactory  to the  Indenture  Trustee (as
pledgee of the Home  Equity  Loans),  the Issuer  and the  Credit  Enhancer,  is
willing to service  the Home  Equity  Loans and  executes  and  delivers  to the
Indenture Trustee and the Issuer an agreement,  in form and substance reasonably
satisfactory to the Credit Enhancer, the Indenture Trustee and the Issuer, which
contains an  assumption by such Person of the due and punctual  performance  and
observance  of each  covenant  and  condition to be performed or observed by the
Master Servicer under this Servicing  Agreement;  provided,  further,  that each
Rating  Agency's  rating of the Securities in effect  immediately  prior to such
assignment  and  delegation  will not be qualified,  reduced,  or withdrawn as a
result of such  assignment  and  delegation  (as  evidenced  by a letter to such
effect from each Rating  Agency),  if determined  without  regard to the related
Policy;  and provided,  further,  that the Owner Trustee  receives an Opinion of
Counsel to the effect that such  assignment  or  delegation  shall not cause the
Trust to be treated as a corporation for federal or state income tax purposes.

Section 6.03 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS.  Neither
the Master  Servicer nor any of the directors or officers or employees or agents
of the Master  Servicer  shall be under any  liability to the Issuer,  the Owner
Trustee,  the Indenture Trustee or the  Securityholders  for any action taken or
for  refraining  from the taking of any action in good  faith  pursuant  to this
Servicing Agreement,  provided,  however,  that this provision shall not protect
the Master  Servicer  or any such  Person  against  any  liability  which  would
otherwise  be imposed by reason of its willful  misfeasance,  bad faith or gross
negligence  in the  performance  of its  duties  hereunder  or by  reason of its
reckless disregard of its obligations and duties hereunder.  The Master Servicer
and any director or officer or employee or agent of the Master Servicer may rely

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in good faith on any  document of any kind prima  facie  properly  executed  and
submitted by any Person  respecting any matters  arising  hereunder.  The Master
Servicer and any director or officer or employee or agent of the Master Servicer
shall be indemnified by the Issuer and held harmless against any loss, liability
or  expense  incurred  in  connection  with any legal  action  relating  to this
Servicing  Agreement or the  Securities,  including any amount paid to the Owner
Trustee or the Indenture  Trustee  pursuant to Section  6.06(b),  other than any
loss,  liability or expense incurred by reason of its willful  misfeasance,  bad
faith or gross  negligence  in the  performance  of its duties  hereunder  or by
reason of its reckless  disregard of its obligations and duties  hereunder.  The
Master  Servicer  shall not be under any  obligation to appear in,  prosecute or
defend any legal  action  which is not  incidental  to its duties to service the
Home Equity Loans in accordance with this Servicing Agreement,  and which in its
opinion may involve it in any expense or liability;  provided, however, that the
Master  Servicer may in its sole  discretion  undertake any such action which it
may deem necessary or desirable in respect of this Servicing Agreement,  and the
rights  and  duties  of  the   parties   hereto   and  the   interests   of  the
Securityholders.  In such event, the reasonable legal expenses and costs of such
action  and any  liability  resulting  therefrom  shall be  expenses,  costs and
liabilities  of the  Issuer,  and the Master  Servicer  shall be  entitled to be
reimbursed  therefor.  The Master Servicer's right to indemnity or reimbursement
pursuant to this Section 6.03 shall survive any  resignation  or  termination of
the Master Servicer pursuant to Section 6.04 or 7.01 with respect to any losses,
expenses,  costs or liabilities arising prior to such resignation or termination
(or arising from events that occurred prior to such resignation or termination).

Section 6.04 MASTER SERVICER NOT TO RESIGN. Subject to the provisions of Section
6.02,  the Master  Servicer  shall not resign  from the  obligations  and duties
hereby imposed on it except (i) upon  determination  that the performance of its
obligations or duties hereunder are no longer  permissible  under applicable law
or are in  material  conflict  by  reason  of  applicable  law  with  any  other
activities  carried  on by it or  its  subsidiaries  or  Affiliates,  the  other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master  Servicer or its  subsidiaries  or Affiliates at
the date of this Servicing  Agreement or (ii) upon satisfaction of the following
conditions:  (a) the Master  Servicer has  proposed a successor  servicer to the
Issuer and the Indenture Trustee in writing and such proposed successor servicer
is  reasonably  acceptable to the Issuer,  the Indenture  Trustee and the Credit
Enhancer;  (b) each Rating  Agency shall have  delivered a letter to the Issuer,
the Credit  Enhancer and the Indenture  Trustee prior to the  appointment of the
successor  servicer  stating that the  proposed  appointment  of such  successor
servicer  as Master  Servicer  hereunder  will not  result in the  reduction  or
withdrawal of the then current rating of the Securities,  if determined  without
regard to the  related  Policy;  and (c) such  proposed  successor  servicer  is
reasonably  acceptable to the Credit  Enhancer,  as evidenced by a letter to the
Issuer and the Indenture Trustee; provided, however, that no such resignation by
the Master Servicer shall become effective until such successor  servicer or, in
the case of (i) above,  the  Indenture  Trustee,  as pledgee of the Home  Equity
Loans, shall have assumed the Master Servicer's responsibilities and obligations
hereunder or the Indenture  Trustee,  as pledgee of the Home Equity Loans, shall
have  designated a successor  servicer in accordance with Section 7.02. Any such
resignation shall not relieve the Master Servicer of  responsibility  for any of
the obligations  specified in Sections 7.01 and 7.02 as obligations that survive
the resignation or termination of the Master  Servicer.  Any such  determination
permitting  the  resignation  of the Master  Servicer  shall be  evidenced by an
Opinion of Counsel to such effect  delivered  to the  Indenture  Trustee and the
Credit Enhancer.

Section  6.05  DELEGATION  OF DUTIES.  In the ordinary  course of business,  the
Master  Servicer at any time may  delegate  any of its duties  hereunder  to any
Person,  including any of its  Affiliates,  who agrees to conduct such duties in
accordance  with  standards  comparable to those with which the Master  Servicer

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<PAGE>

complies  pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 6.04.

Section 6.06 MASTER SERVICER TO PAY INDENTURE TRUSTEE'S AND OWNER TRUSTEE'S FEES
AND  EXPENSES;  INDEMNIFICATION.  (a) _____ The Master  Servicer  covenants  and
agrees to pay to the Owner Trustee,  the Indenture Trustee and any co-trustee of
the  Indenture  Trustee or the Owner  Trustee  from time to time,  and the Owner
Trustee,  the Indenture  Trustee and any such  co-trustee  shall be entitled to,
reasonable  compensation  (which shall not be limited by any provision of law in
regard to the  compensation  of a trustee of an express  trust) for all services
rendered by each of them in the execution of the trusts  created under the Trust
Agreement and the Indenture  and in the exercise and  performance  of any of the
powers and duties under the Trust  Agreement or the  Indenture,  as the case may
be, of the Owner  Trustee,  the Indenture  Trustee and any  co-trustee,  and the
Master  Servicer will pay or reimburse the Indenture  Trustee and any co-trustee
upon request for all reasonable expenses, disbursements and advances incurred or
made by the Indenture  Trustee or any  co-trustee in accordance  with any of the
provisions of this Servicing Agreement except any such expense,  disbursement or
advance as may arise from its negligence, willful misfeasance or bad faith.

(b) _____ The Master Servicer agrees to indemnify the Indenture  Trustee and the
Owner Trustee for, and to hold the Indenture  Trustee and the Owner Trustee,  as
the case may be,  harmless  against,  any loss,  liability  or expense  incurred
without negligence, bad faith or willful misconduct on the part of the Indenture
Trustee  or the  Owner  Trustee,  as the  case  may be,  arising  out of,  or in
connection with, the acceptance and  administration of the Issuer and the assets
thereof,  including the costs and expenses (including  reasonable legal fees and
expenses) of defending the Indenture  Trustee or the Owner Trustee,  as the case
may be, against any claim in connection  with the exercise or performance of any
of its powers or duties under any Basic Document, provided that:

(i) _____  with  respect  to any such  claim,  the  Indenture  Trustee  or Owner
Trustee, as the case may be, shall have given the Master Servicer written notice
thereof promptly after the Indenture  Trustee or Owner Trustee,  as the case may
be, shall have actual knowledge thereof;

(ii) ____ while  maintaining  control  over its own  defense,  the  Issuer,  the
Indenture  Trustee or Owner  Trustee,  as the case may be, shall  cooperate  and
consult fully with the Master Servicer in preparing such defense; and

(iii) notwithstanding  anything in this Servicing Agreement to the contrary, the
Master Servicer shall not be liable for settlement of any claim by the Indenture
Trustee or the Owner Trustee, as the case may be, entered into without the prior
consent of the Master Servicer.

        No termination of this Servicing  Agreement shall affect the obligations
created by this Section 6.06 of the Master  Servicer to indemnify  the Indenture
Trustee and the Owner Trustee under the  conditions  and to the extent set forth
herein.

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<PAGE>

        Notwithstanding  the  foregoing,  the  indemnification  provided  by the
Master Servicer in this Section 6.06(b) shall not pertain to any loss, liability
or expense of the Indenture  Trustee or the Owner  Trustee,  including the costs
and expenses of defending itself against any claim,  incurred in connection with
any actions taken by the Indenture Trustee or the Owner Trustee at the direction
of the  Noteholders or  Certificateholders,  as the case may be, pursuant to the
terms of this Servicing Agreement.

                                  ARTICLE VII

                                     DEFAULT

Section 7.01 SERVICING  DEFAULT.  If any one of the following events ("Servicing
Default") shall occur and be continuing:

(a) _____ Any failure by the Master Servicer to deposit in the Custodial Account
or  Payment  Account  any  deposit  required  to be made under the terms of this
Servicing  Agreement  which  continues  unremedied for a period of five Business
Days after the date upon which  written  notice of such failure  shall have been
given to the Master Servicer by the Issuer or the Indenture  Trustee,  or to the
Master Servicer, the Issuer and the Indenture Trustee by the Credit Enhancer; or

(b) _____ Failure on the part of the Master  Servicer duly to observe or perform
in any material respect any other covenants or agreements of the Master Servicer
set forth in the Securities or in this Servicing  Agreement,  which failure,  in
each case,  materially and adversely affects the interests of Securityholders or
the Credit Enhancer and which continues unremedied for a period of 45 days after
the date on which  written  notice  of such  failure,  requiring  the same to be
remedied, and stating that such notice is a "Notice of Default" hereunder, shall
have been given to the Master  Servicer by the Issuer or the Indenture  Trustee,
or to the Master  Servicer,  the Issuer and the Indenture  Trustee by the Credit
Enhancer; or

(c) _____ The entry against the Master  Servicer of a decree or order by a court
or agency or supervisory  authority having  jurisdiction in the premises for the
appointment of a trustee, conservator, receiver or liquidator in any insolvency,
conservatorship,  receivership,  readjustment of debt, marshalling of assets and
liabilities or similar proceedings,  or for the winding up or liquidation of its
affairs,  and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or

(d) _____ The Master Servicer shall voluntarily go into liquidation,  consent to
the appointment of a conservator,  receiver, liquidator or similar person in any
insolvency,  readjustment  of debt,  marshalling  of assets and  liabilities  or
similar  proceedings of or relating to the Master  Servicer or of or relating to
all or  substantially  all of its  property,  or a  decree  or order of a court,
agency or  supervisory  authority  having  jurisdiction  in the premises for the
appointment  of a  conservator,  receiver,  liquidator or similar  person in any
insolvency,  readjustment  of debt,  marshalling  of assets and  liabilities  or
similar proceedings,  or for the winding-up or liquidation of its affairs, shall
have been  entered  against the Master  Servicer  and such decree or order shall
have  remained in force  undischarged,  unbonded or unstayed  for a period of 60
days;  or the Master  Servicer  shall admit in writing its  inability to pay its

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<PAGE>

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,
then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Master  Servicer,  either the Issuer or the  Indenture  Trustee,
with the consent of the Credit Enhancer,  or the Credit Enhancer, by notice then
given in  writing to the Master  Servicer  (and to the Issuer and the  Indenture
Trustee if given by the Credit  Enhancer)  may  terminate  all of the rights and
obligations of the Master  Servicer as servicer  under this Servicing  Agreement
other  than  its  right to  receive  servicing  compensation  and  expenses  for
servicing the Home Equity Loans hereunder during any period prior to the date of
such  termination and the Issuer or the Indenture  Trustee,  with the consent of
the Credit  Enhancer,  or the Credit  Enhancer  may  exercise  any and all other
remedies  available  at law or equity.  Any such  notice to the Master  Servicer
shall also be given to each Rating Agency,  the Credit  Enhancer and the Issuer.
On or after the  receipt by the Master  Servicer  of such  written  notice,  all
authority  and power of the  Master  Servicer  under this  Servicing  Agreement,
whether with respect to the  Securities  or the Home Equity Loans or  otherwise,
shall  pass to and be vested in the  Indenture  Trustee  as  pledgee of the Home
Equity Loans,  pursuant to and under this Section 7.01; and, without limitation,
the Indenture Trustee is hereby authorized and empowered to execute and deliver,
on behalf of the Master Servicer, as attorney-in-fact or otherwise,  any and all
documents  and other  instruments,  and to do or  accomplish  all other  acts or
things  necessary  or  appropriate  to effect  the  purposes  of such  notice of
termination,  whether to complete  the  transfer  and  endorsement  of each Home
Equity Loan and related documents,  or otherwise.  The Master Servicer agrees to
cooperate  with the  Indenture  Trustee  in  effecting  the  termination  of the
responsibilities and rights of the Master Servicer hereunder, including, without
limitation,  the transfer to the Indenture Trustee for the  administration by it
of all cash amounts  relating to the Home Equity Loans that shall at the time be
held by the Master Servicer and to be deposited by it in the Custodial  Account,
or that have been deposited by the Master  Servicer in the Custodial  Account or
thereafter  received  by the Master  Servicer  with  respect to the Home  Equity
Loans.  All  reasonable  costs and  expenses  (including,  but not  limited  to,
attorneys'  fees) incurred in connection with amending this Servicing  Agreement
to reflect  such  succession  as Master  Servicer  pursuant to this Section 7.01
shall be paid by the predecessor  Master Servicer (or if the predecessor  Master
Servicer  is  the  Indenture   Trustee,   the  initial  Master   Servicer)  upon
presentation of reasonable documentation of such costs and expenses.

        Notwithstanding any termination of the activities of the Master Servicer
hereunder,  the Master  Servicer  shall be entitled to receive,  out of any late
collection  of a payment on a Home Equity Loan which was due prior to the notice
terminating the Master Servicer's rights and obligations  hereunder and received
after such  notice,  that portion to which the Master  Servicer  would have been
entitled  pursuant to Sections 3.03 and 3.09 as well as its Master Servicing Fee
in  respect  thereof,  and any other  amounts  payable  to the  Master  Servicer
hereunder  the  entitlement  to  which  arose  prior to the  termination  of its
activities hereunder.

        Notwithstanding  the  foregoing,  a delay in or failure  of  performance
under  Section  7.01(a) or under  Section  7.01(b)  after the  applicable  grace
periods specified in such Sections,  shall not constitute a Servicing Default if
such delay or failure  could not be  prevented  by the  exercise  of  reasonable
diligence by the Master  Servicer and such delay or failure was caused by an act

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<PAGE>

of God or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or  sabotage,  epidemics,  landslides,  lightning,  fire,  hurricanes,
earthquakes,  floods or similar causes. The preceding sentence shall not relieve
the Master  Servicer  from using  reasonable  efforts to perform its  respective
obligations  in a timely manner in accordance  with the terms of this  Servicing
Agreement  and the Master  Servicer  shall provide the  Indenture  Trustee,  the
Credit Enhancer and the Securityholders  with notice of such failure or delay by
it,  together with a description  of its efforts to so perform its  obligations.
The Master Servicer shall immediately notify the Indenture  Trustee,  the Credit
Enhancer and the Owner Trustee in writing of any Servicing Default.

Section 7.02   INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Master  Servicer  receives a notice of termination
pursuant  to  Section  7.01 or sends a notice  pursuant  to  Section  6.04,  the
Indenture  Trustee as pledgee of the Home Equity Loans shall be the successor in
all  respects  to the Master  Servicer in its  capacity  as servicer  under this
Servicing  Agreement and the  transactions  set forth or provided for herein and
shall be subject to all the  responsibilities,  duties and liabilities  relating
thereto  placed on the  Master  Servicer  by the terms  and  provisions  hereof.
Nothing in this Servicing Agreement or in the Trust Agreement shall be construed
to  permit  or  require   the   Indenture   Trustee   to  (i)   succeed  to  the
responsibilities,  duties and  liabilities of the initial Master Servicer in its
capacity  as  Seller  under  the  Purchase  Agreement,  (ii) be  responsible  or
accountable for any act or omission of the Master Servicer prior to the issuance
of a notice of  termination  hereunder,  (iii) require or obligate the Indenture
Trustee, in its capacity as successor Master Servicer,  to purchase,  repurchase
or  substitute  any Home Equity Loan,  (iv) fund any  Additional  Balances  with
respect to any Home Equity Loan, (v) fund any losses on any Permitted Investment
directed  by  any  other  Master  Servicer,  or  (vi)  be  responsible  for  the
representations and warranties of the Master Servicer. As compensation therefor,
the  Indenture  Trustee  shall be  entitled to such  compensation  as the Master
Servicer  would have been entitled to hereunder if no such notice of termination
had been  given.  Notwithstanding  the above,  (i) if the  Indenture  Trustee is
unwilling to act as successor Master Servicer,  or (ii) if the Indenture Trustee
is legally unable so to act, the Indenture Trustee as pledgee of the Home Equity
Loans may (in the situation  described in clause (i)) or shall (in the situation
described in clause (ii)) appoint or petition a court of competent  jurisdiction
to appoint any established housing and home finance  institution,  bank or other
mortgage loan or home equity loan  servicer  having a net worth of not less than
$10,000,000 as the successor to the Master Servicer  hereunder in the assumption
of all or any part of the responsibilities,  duties or liabilities of the Master
Servicer hereunder;  provided,  that any such successor Master Servicer shall be
acceptable to the Credit Enhancer,  as evidenced by the Credit  Enhancer's prior
written  consent which consent shall not be  unreasonably  withheld and provided
further that the  appointment  of any such  successor  Master  Servicer will not
result in the qualification,  reduction or withdrawal of the ratings assigned to
the  Securities  by the Rating  Agencies,  if determined  without  regard to the
related Policy.  Pending  appointment of a successor to the Master Servicer here
under,  unless the Indenture  Trustee is  prohibited by law from so acting,  the
Indenture  Trustee  shall  act in such  capacity  as  hereinabove  provided.  In
connection with such appointment and assumption, the successor shall be entitled
to receive  compensation out of payments on Home Equity Loans in an amount equal
to the  compensation  which the Master  Servicer  would  otherwise have received

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<PAGE>

pursuant to Section 3.09 (or such lesser  compensation as the Indenture  Trustee
and such successor shall agree).  The appointment of a successor Master Servicer
shall not affect any liability of the predecessor Master Servicer which may have
arisen  under  this  Servicing  Agreement  prior to its  termination  as  Master
Servicer (including,  without limitation, the obligation to purchase Home Equity
Loans pursuant to Section 3.01, to pay any deductible  under an insurance policy
pursuant to Section  3.04 or to  indemnify  the  Indenture  Trustee  pursuant to
Section 6.06), nor shall any successor Master Servicer be liable for any acts or
omissions of the  predecessor  Master  Servicer or for any breach by such Master
Servicer of any of its representations or warranties  contained herein or in any
related  document or agreement.  The Indenture  Trustee and such successor shall
take  such  action,  consistent  with  this  Servicing  Agreement,  as  shall be
necessary to effectuate any such succession.

(b) _____ Any successor, including the Indenture Trustee, to the Master Servicer
as servicer  shall  during the term of its service as servicer  (i)  continue to
service  and   administer   the  Home  Equity  Loans  for  the  benefit  of  the
Securityholders,  (ii)  maintain  in force a policy  or  policies  of  insurance
covering  errors and omissions in the  performance of its  obligations as Master
Servicer hereunder and a fidelity bond in respect of its officers, employees and
agents to the same  extent as the Master  Servicer  is so  required  pursuant to
Section 3.13 and (iii) be bound by the terms of the Insurance Agreement.

(c) _____ Any successor Master Servicer,  including the Indenture Trustee, shall
not be deemed  in  default  or to have  breached  its  duties  hereunder  if the
predecessor  Master  Servicer shall fail to deliver any required  deposit to the
Custodial Account or otherwise cooperate with any required servicing transfer or
succession hereunder.

(d) _____ In  connection  with the  termination  or  resignation  of the  Master
Servicer  hereunder,  either (i) the successor  Master  Servicer,  including the
Indenture  Trustee  if the  Indenture  Trustee  is  acting as  successor  Master
Servicer,  shall  represent  and  warrant  that it is a  member  of MERS in good
standing and shall agree to comply in all material  respects  with the rules and
procedures  of MERS in  connection  with the  servicing of the Home Equity Loans
that are registered  with MERS, in which case the  predecessor  Master  Servicer
shall cooperate with the successor Master Servicer in causing MERS to revise its
records to reflect the transfer of servicing to the successor Master Servicer as
necessary  under MERS' rules and  regulations,  or (ii) the  predecessor  Master
Servicer shall  cooperate with the successor  Master Servicer in causing MERS to
execute and deliver an assignment of Mortgage in recordable form to transfer the
Mortgage  from MERS to the  Indenture  Trustee and to execute  and deliver  such
other notices,  documents and other instruments as may be necessary or desirable
to effect a transfer of such Home Equity Loan or  servicing  of such Home Equity
Loan on the MERS(R) System to the successor  Master  Servicer.  The  predecessor
Master  Servicer  shall  file or cause to be filed  any such  assignment  in the
appropriate recording office. The predecessor Master Servicer shall bear any and
all fees of MERS,  costs of preparing any assignments of Mortgage,  and fees and
costs of filing any  assignments  of Mortgage  that may be  required  under this
subsection (d). The successor  Master Servicer shall cause such assignment to be
delivered to the Indenture Trustee or the Custodian promptly upon receipt of the
original  with evidence of recording  thereon or a copy  certified by the public
recording office in which such assignment was recorded.

Section  7.03  NOTIFICATION  TO  SECURITYHOLDERS.  Upon  any  termination  of or
appointment of a successor to the Master  Servicer  pursuant to this Article VII
or Section 6.04, the Indenture  Trustee shall give prompt written notice thereof
to the Securityholders, the Credit Enhancer, the Issuer and each Rating Agency.

                                       37
<PAGE>

                                  ARTICLE VIII

                            MISCELLANEOUS PROVISIONS

Section 8.01  AMENDMENT.  This  Servicing  Agreement may be amended from time to
time by the parties  hereto,  provided  that any amendment be  accompanied  by a
letter  from the  Rating  Agencies  that the  amendment  will not  result in the
downgrading  or  withdrawal of the rating then  assigned to the  Securities,  if
determined without regard to the related Policy, and a tax opinion to the effect
that neither such  amendment nor any action  permitted by such amendment and not
otherwise  permitted  by this  Agreement  will cause any of REMIC I, REMIC II or
REMIC III to fail to qualify as a REMIC or, except as permitted  pursuant to the
provisions of Section 11.01(f) of the Indenture,  give rise to the imposition of
a tax on "prohibited  transactions" of a REMIC, or prohibited contributions to a
REMIC,  on any REMIC I,  REMIC II or REMIC III and  provided  further,  that the
Credit Enhancer and the Indenture Trustee shall consent thereto.

Section 8.02  GOVERNING  LAW.  THIS  SERVICING  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 8.03 NOTICES. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if  personally  delivered
at or mailed by certified mail, return receipt requested,  to (a) in the case of
the Master Servicer, 2255 North Ontario Street, Burbank,  California 91504-3120,
Attention:  Director - Bond  Administration,  (b) in the case of the  Depositor,
8400  Normandale  Lake  Boulevard,  Suite  250,  Minneapolis,  Minnesota  55437,
Attention: President, (c) in the case of the Credit Enhancer, Financial Guaranty
Insurance  Company,  125 Park  Avenue,  New  York,  New York  10017,  Attention:
Research and Risk Management (Home Equity Loan Trust 2003-HS1),  (d) in the case
of Standard & Poor's,  55 Water  Street,  New York,  New York 10041,  Attention:
Residential  Mortgage  Surveillance Group, (e) in the case of Moody's, 99 Church
Street, New York, New York 10007, Attention:  ABS Monitoring Department,  (f) in
the case of the Owner Trustee,  Wilmington  Trust Company,  Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001,  Attention: Corporate
Trust  Administration,  (g) in the case of the Issuer, to Home Equity Loan Trust
2003-HS1, c/o Owner Trustee, Wilmington Trust Company, Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration, (h) in the case of the Indenture Trustee, JPMorgan Chase Bank, 4
New York Plaza, 6th Floor, New York, New York, 10004,  Attention:  Institutional
Trust Services/Structured  Finance Services--2003-HS1 and (i) in the case of the
Underwriters,  to Deutsche Bank Securities Inc., 31 West 52nd Street,  New York,
New  York  10019,  Attention:   General  Counsel,  and  to  Residential  Funding
Securities  Corporation,  7501 Wisconsin Avenue,  Suite 900, Bethesda,  Maryland
20814-6528,  Attention:  Director of Compliance;  or, as to each party,  at such
other address as shall be  designated by such party in a written  notice to each
other party.  Any notice required or permitted to be mailed to a  Securityholder
shall be given by first  class  mail,  postage  prepaid,  at the address of such
Securityholder  as shown in the  Register.  Any notice so mailed within the time
prescribed in this Servicing  Agreement shall be  conclusively  presumed to have
been duly given,  whether or not the  Securityholder  receives such notice.  Any

                                       38
<PAGE>

notice or other  document  required to be delivered  or mailed by the  Indenture
Trustee to any Rating  Agency shall be given on a reasonable  efforts  basis and
only as a matter of courtesy and  accommodation  and the Indenture Trustee shall
have no liability  for failure to delivery such notice or document to any Rating
Agency.

Section 8.04  SEVERABILITY  OF PROVISIONS.  If any one or more of the covenants,
agreements,  provisions or terms of this  Servicing  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  Servicing  Agreement and shall in no way affect the
validity or enforceability  of the other provisions of this Servicing  Agreement
or of the Securities or the rights of the Securityholders thereof.

Section 8.05 THIRD-PARTY  BENEFICIARIES.  This Servicing Agreement will inure to
the benefit of and be binding upon the parties hereto, the Securityholders,  the
Credit Enhancer, the Owner Trustee and their respective successors and permitted
assigns.  Except as otherwise  provided in this  Servicing  Agreement,  no other
Person will have any right or obligation hereunder.

Section  8.06  COUNTERPARTS.  This  instrument  may be executed in any number of
counterparts,  each of which so executed shall be deemed to be an original,  but
all such counterparts shall together constitute but one and the same instrument.

Section 8.07 EFFECT OF HEADINGS  AND TABLE OF CONTENTS.  The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.

Section 8.08  TERMINATION UPON PURCHASE BY THE MASTER SERVICER OR LIQUIDATION OF
HOME EQUITY LOANS. (a) _______ The respective  obligations and  responsibilities
of the Master  Servicer,  the Issuer and the Indenture  Trustee  created  hereby
shall terminate upon the last action required to be taken by the Issuer pursuant
to the Trust  Agreement and by the Indenture  Trustee  pursuant to the Indenture
following the earlier of:

(i) _____  the date on or  before  which the  Indenture  or Trust  Agreement  is
terminated; or

(ii) ____ the  purchase by the Master  Servicer of all Home Equity Loans and all
property  acquired  in respect of any Home Equity  Loan  remaining  in the Trust
(other than the Group I Policy and the Group II Policy).

(b) _____ The right of the  Master  Servicer  to  purchase  the Group I Loans is
conditioned  upon  the Pool  Balance  for Loan  Group I as of such  date  (after
application of payments  received  during the related  Collection  Period) being
less than ten percent of the  aggregate of the Cut-off Date Loan Balances of the
Group I Loans; provided,  however, that no such purchase will be permitted if it
would  result in a draw under the  related  Policy,  unless the Credit  Enhancer
consents  in  writing  to the  purchase.  The right of the  Master  Servicer  to
purchase the Group II Loans is conditioned  upon the Pool Balance for Loan Group
II as of such date (after  application of payments  received  during the related
Collection  Period)  being less than ten percent of the aggregate of the Cut-off
Date  Loan  Balances  of the  Group II Loans;  provided,  however,  that no such
purchase  will be  permitted  if it would  result in a draw  under  the  related
Policy,  unless the Credit  Enhancer  consents in writing to the  purchase.  The
purchase  by the  Master  Servicer  of either  the Group I Loans or the Group II

                                       39
<PAGE>

Loans and all property acquired (including REO Property) in respect of such Home
Equity  Loans shall be at a price  equal to 100% of the unpaid  Loan  Balance of
each Home  Equity  Loan in the  related  Loan  Group,  plus  accrued  and unpaid
interest on each such Home Equity Loan, at the  applicable  Net Loan Rate,  plus
the related  Policy premium rate, up to the first day of the month in which such
amounts  are  to be  distributed  to  Securityholders,  or in  the  case  of REO
Property,  the fair market value of the REO  Property,  plus any amounts due and
owing to the Credit  Enhancer  under the Insurance  Agreement (any unpaid Master
Servicing Fee shall be deemed paid at such time).  If such right is exercised by
the Master  Servicer,  the Master  Servicer shall deposit the amount  calculated
pursuant to this Section  8.08(b) with the Indenture  Trustee for deposit in the
Payment Account and, upon the receipt of such deposit,  the Indenture Trustee or
Custodian shall release to the Master Servicer, the files pertaining to the Home
Equity Loans being purchased.

(c) _____ In addition to the  foregoing,  on any Payment  Date on which the Pool
Balance of a Loan  Group  (after  application  of  payment  received  during the
related  Collection  Period) is less than ten  percent of the  aggregate  of the
Cut-off  Date Loan  Balances  of the Home Equity  Loans in such Loan Group,  the
Master  Servicer  shall have the right,  at its option,  to purchase the related
Notes in whole,  but not in part, at a price equal to the  outstanding  Security
Balance of the related Notes (other than the Class A-I-IO Notes) plus the sum of
Interest  Distribution  Amount thereon for the related  Interest  Period and any
previously  unpaid  Interest  Distribution  Amount,  plus any amounts due to the
Credit  Enhancer under the Insurance  Agreement.  Any such purchase of the Class
A-I-IO Notes as discussed  above will be made at a price equal to the sum of the
interest accrued thereon during the related Interest Period; provided,  however,
that no such  purchase  will be permitted if it would result in a draw under the
related Policy,  unless the Credit Enhancer consents in writing to the purchase.
If the Master Servicer  exercises this right to purchase the outstanding Class I
Notes or Class II Notes, the Master Servicer will promptly  purchase the related
Home Equity Loans pursuant to this Section 8.08.

(d) _____ The Master Servicer, at its expense,  shall prepare and deliver to the
Indenture  Trustee for  execution,  at the time the Home Equity  Loans are to be
released to the Master Servicer,  appropriate documents assigning each such Home
Equity Loan from the Indenture  Trustee or the Issuer to the Master  Servicer or
the appropriate party.

Section 8.09 CERTAIN MATTERS AFFECTING THE INDENTURE  TRUSTEE.  For all purposes
of this Servicing  Agreement,  in the performance of any of its duties or in the
exercise of any of its powers hereunder,  the Indenture Trustee shall be subject
to and entitled to the benefits of Article VI of the Indenture.

Section  8.10 OWNER  TRUSTEE  NOT LIABLE FOR  RELATED  DOCUMENTS.  The  recitals
contained  herein shall be taken as the  statements  of the  Depositor,  and the
Owner Trustee assumes no responsibility for the correctness  thereof.  The Owner
Trustee  makes no  representations  as to the  validity or  sufficiency  of this
Servicing  Agreement,  of any Basic Document or of the Certificates  (other than
the signatures of the Owner Trustee on the Certificates) or the Notes, or of any
Related Documents. The Owner Trustee shall at no time have any responsibility or
liability  with  respect to the  sufficiency  of the Owner  Trust  Estate or its

                                       40
<PAGE>

ability to generate the payments to be distributed to  Certificateholders  under
the Trust  Agreement or the  Noteholders  under the  Indenture,  including,  the
compliance  by the  Depositor or the Seller with any warranty or  representation
made under any Basic Document or in any related  document or the accuracy of any
such warranty or representation,  or any action of the Certificate Paying Agent,
the  Certificate  Registrar or the  Indenture  Trustee  taken in the name of the
Owner Trustee.

                                       41
<PAGE>

        IN WITNESS WHEREOF,  the Master Servicer,  the Indenture Trustee and the
Issuer  have  caused  this  Servicing  Agreement  to be duly  executed  by their
respective  officers or  representatives  all as of the day and year first above
written.

                      RESIDENTIAL FUNDING CORPORATION,
                      as Master Servicer

                      By:  /s/ Julie Steinhagen
                      Name:  Julie Steinhagen
                      Title:    Director

                      HOME EQUITY LOAN TRUST 2003-HS1

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

                      By:  /s/ Janel R. Havrilla
                      Name: Janel R. Havrilla
                      Title:   Financial Services Officer

                      JPMORGAN CHASE BANK,
                      as Indenture Trustee

                      By:  /s/ Sora Jun
                      Name: Sora Jun
                      Title:   Trust Officer

                                       42
<PAGE>

                                    EXHIBIT A

                            HOME EQUITY LOAN SCHEDULE

                           TO BE PROVIDED UPON REQUEST

<PAGE>

                                    EXHIBIT B

                            LIMITED POWER OF ATTORNEY

                         KNOW ALL MEN BY THESE PREMISES:

        That  JPMorgan  Chase  Bank,  as  Indenture   Trustee  (the   "Indenture
Trustee"),  under the Indenture (the "Indenture") between Home Equity Loan Trust
2003-HS1 and the Indenture Trustee, a national banking association organized and
existing  under the laws of the  State of New York,  and  having  its  principal
office located at 4 New York Plaza,  in the City of New York in the State of New
York,  hath made,  constituted  and appointed,  and does by these presents make,
constitute and appoint Residential Funding Corporation,  a corporation organized
and  existing  under  the laws of the  State of  Delaware,  its true and  lawful
Attorney-in-Fact,  with full power and authority to sign, execute,  acknowledge,
deliver, file for record, and record any instrument on its behalf and to perform
such  other  act or acts as may be  customarily  and  reasonably  necessary  and
appropriate to effectuate the following  enumerated  transactions  in respect of
any of the  mortgages  or deeds of trust  (the  "Mortgages"  and the  "Deeds  of
Trust", respectively) creating a trust or second lien or an estate in fee simple
interest  in real  property  securing a Home Equity  Loan and  promissory  notes
secured  thereby (the "Mortgage  Notes") for which the  undersigned is acting as
Indenture Trustee for various Securityholders  (whether the undersigned is named
therein  as  mortgagee  or  beneficiary  or has  become  mortgagee  by virtue of
Endorsement  of the Mortgage Note secured by any such Mortgage or Deed of Trust)
and for which  Residential  Funding  Corporation  is  acting as master  servicer
pursuant to a Servicing  Agreement,  dated as of March 27, 2003 (the  "Servicing
Agreement").

        This  appointment  shall apply only to transactions  which the Indenture
Trustee is authorized to enter into under the  Indenture,  but in no event shall
apply to any transactions other than the following enumerated transactions only:

1. ______ The modification or re-recording of a Mortgage or Deed of Trust, where
said  modification or re-recording is for the purpose of correcting the Mortgage
or Deed of Trust to conform same to the original  intent of the parties  thereto
or to correct title errors  discovered after such title insurance was issued and
said modification or re-recording, in either instance, does not adversely affect
the lien of the Mortgage or Deed of Trust as insured.

2.  ______ The  subordination  of the lien of a Mortgage  or Deed of Trust to an
easement in favor of a public  utility  company or a  government  agency or unit
with powers of eminent  domain;  this section shall ____  include,  ____ without
____ limitation, ____ the execution of partial  satisfactions/releases,  partial
reconveyances or the execution of requests to trustees to accomplish same.

3. ______  With  respect to a Mortgage or Deed of Trust,  the  foreclosure,  the
taking  of a deed in lieu of  foreclosure,  or the  completion  of  judicial  or
non-judicial foreclosure or termination,  cancellation or rescission of any such
foreclosure, including, without limitation, any and all of the following acts:

        a. _____ The  substitution of trustee(s)  serving under a Deed of Trust,
        in accordance with state law and the Deed of Trust;

                                        1
<PAGE>

        b. _____ Statements of breach or non-performance;

        c. _____ Notices of default;

        d. _____  Cancellations/rescissions of notices of default and/or notices
        of sale;

        e. _____ The taking of a deed in lieu of foreclosure; and

        f. _____ Such other  documents and actions as may be necessary under the
        terms of the  Mortgage,  Deed of Trust  or  state  law to  expeditiously
        complete said transactions.

4. ______ The  conveyance  of the  properties  to the mortgage  insurer,  or the
closing of the title to the  property to be acquired  as real estate  owned,  or
conveyance of title to real estate owned.

5. ______ The completion of loan assumption agreements.

6. ______ The full  satisfaction/release  of a Mortgage or Deed of Trust or full
reconveyance upon payment and discharge of all sums secured thereby,  including,
without limitation, cancellation of the related Mortgage Note.

7.  ______  The  assignment  of any  Mortgage  or Deed of Trust and the  related
Mortgage Note, in connection with the repurchase of the Home Equity Loan secured
and evidenced  thereby  pursuant to the  requirements  of a Residential  Funding
Corporation Seller Contract, including, with limitation, by reason of conversion
of an adjustable rate mortgage loan from a variable rate to a fixed rate.

8. ______ The full  assignment  of a Mortgage or Deed of Trust upon  payment and
discharge  of all sums  secured  thereby  in  conjunction  with the  refinancing
thereof, including,  without limitation, the endorsement of the related Mortgage
Note.

9. ______ The modification or re-recording of a Mortgage or Deed of Trust, where
said  modification  or  re-recording  is for  the  purpose  of any  modification
pursuant to Section 3.01 of the Servicing Agreement.

10. _____ The  subordination  of the lien of a Mortgage or Deed of Trust,  where
said  subordination is in connection with any  modification  pursuant to Section
3.01   of   the   Servicing   Agreement,    and   the   execution   of   partial
satisfactions/releases in connection with such same Section 3.01.

The undersigned gives said  Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact  shall lawfully do or cause
to be done by authority hereof.

                                        2
<PAGE>

Third  parties  without  actual  notice may rely upon the  exercise of the power
granted  under this Limited  Power of Attorney;  and may be satisfied  that this
Limited Power of Attorney  shall  continue in full force and effect has not been
revoked  unless an  instrument  of  revocation  has been made in  writing by the
undersigned.

                                            JPMORGAN  CHASE  BANK,  not  in  its
                                            individual  capacity,  but solely as
                                            Indenture    Trustee    under    the
                                            Indenture

                                            By:
                                                Name:
                                                Title:

STATE OF              )

                      SS.

COUNTY OF             )

        On this th day of , 2003,  before me the  undersigned,  Notary Public of
said                 State,                  personally                 appeared
_____________________________________________________________________ personally
known to me to be duly authorized  officers of JPMorgan Chase Bank that executed
the within  instrument and personally known to me to be the persons who executed
the within  instrument  on behalf of  JPMorgan  Chase Bank  therein  named,  and
acknowledged  to me such  JPMorgan  Chase Bank  executed  the within  instrument
pursuant to its by-laws.

                                            WITNESS my hand and official seal.

                                            Notary Public in and for the
                                            State of ___________
After recording, please mail to:

Attn:

                                        3
<PAGE>

                                    EXHIBIT C

                           FORM OF REQUEST FOR RELEASE

DATE:

TO:

Re:     REQUEST FOR RELEASE OF DOCUMENTS

In connection with your  administration of the Home Equity Loans, we request the
release of the Mortgage File described below.

Servicing Agreement Dated:

Series #:

Account #:

Pool #:

Loan #:

Borrower Name(s):

Reason for Document Request: (circle one)   Home Equity Loan     Prepaid in Full

                          Home Equity Loan Repurchased

"We hereby  certify  that all amounts  received or to be received in  connection
with such  payments  which are required to be deposited  have been or will be so
deposited as provided in the Servicing Agreement."

                         Residential Funding Corporation

                              Authorized Signature
.................................................................................

TO CUSTODIAN/INDENTURE  TRUSTEE:  Please acknowledge this request, and check off
documents  being  enclosed with a copy of this form. You should retain this form
for your files in accordance with the terms of the Servicing Agreement.
               Enclosed Documents:          [  ]   Promissory Note
                                            [  ] Mortgage or Deed of Trust
                                            [  ] Assignment(s) of Mortgage or
                                                 Deed of Trust
                                            [  ] Title Insurance Policy
                                            [  ] Other:

Name ____________________
Title
Date

                                        1

<PAGE>

                                    EXHIBIT D

                 FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF
                                HOME EQUITY LOAN
                                                   ________ , 20    __

Residential Funding Mortgage Securities II, Inc.
8400 Normandale Lake Boulevard
Suite 600
Minneapolis, Minnesota 55437

JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York, New York  10004

Attention:  Residential Funding Corporation Series 2003-HS1

                      Re:    Home Equity Loan Pass-Through Certificates,
                             Series 2003-HS1, Assignment of Home Equity Loan

Ladies and Gentlemen:

               This letter is delivered to you in connection with the assignment
by __________ (the  "Indenture  Trustee") to  ____________________________  (the
"Lender") of (the "Home Equity Loan")  pursuant to Section 3.05 of the Servicing
Agreement  (the  "Servicing  Agreement"),  dated as of March 1, 2003  among Home
Equity Loan Trust  2003-HS1,  as issuer,  Residential  Funding  Corporation,  as
master  servicer,  and the  Indenture  Trustee.  All terms  used  herein and not
otherwise defined shall have the meanings set forth in the Servicing  Agreement.
The Lender hereby certifies, represents and warrants to, and covenants with, the
Master Servicer and the Indenture Trustee that:

               (i) ____ the Home  Equity Loan is secured by  Mortgaged  Property
located in a  jurisdiction  in which an  assignment in lieu of  satisfaction  is
required to preserve lien priority,  minimize or avoid mortgage  recording taxes
or otherwise  comply with, or facilitate a refinancing  under,  the laws of such
jurisdiction;

               (ii) the substance of the assignment is, and is intended to be, a
refinancing  of such Home Equity Loan and the form of the  transaction is solely
to comply with, or facilitate the transaction under, such local laws;

               (iii) the Home Equity Loan following the proposed assignment will
be modified to have a rate of interest at least 0.25 percent  below or above the
rate of interest on such Home Equity Loan prior to such proposed assignment; and

                                        1
<PAGE>

               (iv) such  assignment is at the request of the borrower under the
related Home Equity Loan.

                                            Very truly yours,

                                    (Lender)

                                            By:     ____________________
                                               Name:
                                               Title:

                                        2
<PAGE>

                                  EXHIBIT E

                         FORM OF FORM 10-K CERTIFICATION

        I, [identify the certifying individual], certify that:

        1. _____ I have  reviewed the annual  report on Form 10-K for the fiscal
year [____],  and all reports on Form 8-K containing  distribution  or servicing
reports filed in respect of periods  included in the year covered by that annual
report,  of the trust (the  "Trust")  created  pursuant to the Trust  Agreement,
dated as of March 19, 2003 between the Depositor and  Wilmington  Trust Company,
as owner trustee (the "Owner  Trustee"),  as amended and restated by the Amended
and Restated Trust  Agreement,  dated as of March 27, 2003 between the Depositor
and the Owner  Trustee  (the "Trust  Agreement").  [The Home  Equity  Loans were
serviced  by  the  Master  Servicer  pursuant  to  a  Servicing  Agreement  (the
"Servicing  Agreement"),  dated as of March 27, 2003, among the Master Servicer,
the Issuer and the Indenture Trustee. ]

        2. _____ Based on my knowledge,  the information in these reports, taken
as a whole,  does not contain any untrue statement of a material fact or omit to
state a material  fact  necessary to make the  statements  made, in light of the
circumstances  under which such  statements  were made, not misleading as of the
last day of the period covered by this annual report;

        3. _____ Based on my knowledge, the servicing information required to be
provided to the  Indenture  Trustee by the Master  Servicer  under the Servicing
Agreement for inclusion in these reports is included in these reports;

        4. _____ I am responsible for reviewing the activities  performed by the
Master  Servicer  under the Servicing  Agreement and based upon my knowledge and
the annual compliance review required under the Servicing Agreement, and, except
as disclosed in the reports,  the Master  Servicer has fulfilled its obligations
under the Servicing Agreement; and

        5. _____ The reports disclose all significant  deficiencies  relating to
the Master Servicer's compliance with the minimum servicing standards based upon
the report  provided by an independent  public  accountant,  after  conducting a
review in compliance  with the Uniform Single  Attestation  Program for Mortgage
Bankers  as set forth in the  Servicing  Agreement,  that is  included  in these
reports.

        In giving the  certifications  above,  I have  reasonably  relied on the
information provided to me by the following unaffiliated parties: [the Indenture
Trustee].

Date:_______________________

____________________________*
Name:
Title:

*    to be signed by the senior officer in charge of the servicing  functions of
     the Master Servicer

                                        1
<PAGE>

                                    EXHIBIT F

            [FORM OF BACK-UP CERTIFICATION TO FORM 10-K CERTIFICATE]

        The  undersigned,  a  Responsible  Officer of  JPMorgan  Chase Bank (the
"Indenture Trustee") certifies that:

        (a)  ____  The  Indenture  Trustee  has  performed  all  of  the  duties
specifically  required to be performed by it pursuant to the  provisions  of the
Servicing  Agreement  dated  as  of  March  27,  2003  (the  "Agreement")  among
Residential  Funding  Corporation,  as master  servicer,  Home Equity Loan Trust
2003-HS1,  as issuer, and the Indenture Trustee in accordance with the standards
set forth therein.

        (b) ____ Based on my knowledge,  the information that is provided by the
Indenture Trustee pursuant to Section 4.01(b)(I) of the Agreement is accurate as
of the last day of the 20[ ] calendar year.

        Capitalized  terms used and not defined  herein  shall have the meanings
given such terms in the Agreement.

     IN WITNESS WHEREOF,  I have duly executed this certificate as of _________,
20__.

                                            Name:__________________________
                                            Title:

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

                                                                                            PAGE

<S>                                                                                        <C>
ARTICLE I         Definitions...............................................................1

        Section 1.01    Definitions.........................................................1

        Section 1.02    Other Definitional Provisions.......................................1

        Section 1.03    Interest Calculations; Servicing Fee................................2

ARTICLE II        Representations and Warranties............................................2

        Section 2.01    Representations and Warranties Regarding the Master Servicer........2

        Section 2.02    Representations and Warranties of the Issuer........................3

        Section 2.03    Enforcement of Representations and Warranties.......................4

ARTICLE III       Administration and Servicing of Home Equity Loans.........................5

        Section 3.01    The Master Servicer.................................................5

        Section 3.02    Collection of Certain Home Equity Loan Payments....................10

        Section 3.03    Permitted Withdrawals from the Custodial Account...................13

        Section 3.04    Maintenance of Hazard Insurance; Property Protection Expenses......14

        Section 3.05    Enforcement of Due-on-Sale Clauses; Assumption and
               Modification Agreements; Release or Substitution of Lien....................15

        Section 3.06    Trust Estate; Related Documents....................................18

        Section 3.07    Realization Upon Defaulted Home Equity Loans; Loss Mitigation......18

        Section 3.08    Issuer and Indenture Trustee to Cooperate..........................22

        Section 3.09    Servicing Compensation; Payment of Certain Expenses by
               Master.......23

        Section 3.10    Annual Statement as to Compliance..................................23

        Section 3.11    Annual Servicing Report............................................24

        Section 3.12    Access to Certain Documentation and Information Regarding the
               Home Equity Loans...........................................................24

        Section 3.13    Maintenance of Certain Servicing Insurance Policies................24

        Section 3.14    Information Required by the Internal Revenue Service and
               Reports of Foreclosures and Abandonments of Mortgaged Property..............25

        Section 3.15    Optional Repurchase or Transfer of Home Equity Loans...............25

ARTICLE IV        Servicing Certificate....................................................26

        Section 4.01    Statements to Securityholders......................................26

        Section 4.02    Tax Reporting......................................................29

ARTICLE V         Payment Account..........................................................29

        Section 5.01    Payment Account....................................................29

                                        I
<PAGE>

ARTICLE VI        The Master Servicer......................................................31

        Section 6.01    Liability of the Master Servicer...................................31

        Section 6.02    Merger or Consolidation of, or Assumption of the Obligations
               of, the Master Servicer.....................................................31

        Section 6.03    Limitation on Liability of the Master Servicer and Others..........31

        Section 6.04    Master Servicer Not to Resign......................................32

        Section 6.05    Delegation of Duties...............................................32

        Section 6.06    Master Servicer to Pay Indenture Trustee's and Owner Trustee's
               Fees and Expenses; Indemnification..........................................33

ARTICLE VII       Default..................................................................34

        Section 7.01    Servicing Default..................................................34

        Section 7.02    Indenture Trustee to Act; Appointment of Successor.................36

        Section 7.03    Notification to Securityholders....................................37

ARTICLE VIII      Miscellaneous Provisions.................................................38

        Section 8.01    Amendment..........................................................38

        Section 8.02    GOVERNING LAW......................................................38

        Section 8.03    Notices............................................................38

        Section 8.04    Severability of Provisions.........................................39

        Section 8.05    Third-Party Beneficiaries..........................................39

        Section 8.06    Counterparts.......................................................39

        Section 8.07    Effect of Headings and Table of Contents...........................39

        Section 8.08    Termination Upon Purchase by the Master Servicer or
               Liquidation of Home Equity Loans............................................39

        Section 8.09    Certain Matters Affecting the Indenture Trustee....................40

        Section 8.10    Owner Trustee Not Liable for Related Documents.....................40

                                        II

<PAGE>

EXHIBITS

Exhibit A          Home Equity Loan Schedule..............................................A-1
Exhibit B          Limited Power of Attorney..............................................B-1
Exhibit C          Form of Request for Release............................................C-1
Exhibit D          Form of Lender Certification for Assignment
                   of Home Equity Loan....................................................D-1
Exhibit E          Form 10-K Certification................................................E-1
Exhibit F          Form of Back-Up Certification to Form 10-K Certificate.................F-1
</TABLE>

                                        III

<PAGE>

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