Document:

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                                                                     EXHIBIT 4.2

                         UNAFFILIATED SELLER'S AGREEMENT

                            dated as of March 1, 2000

                                  by and among

              PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
                                  as Depositor,

                               ABFS 2000-1, INC.,
                             as Unaffiliated Seller

                                       and

                         AMERICAN BUSINESS CREDIT, INC.,
              HOMEAMERICAN CREDIT, INC., D/B/A UPLAND MORTGAGE, and
                    NEW JERSEY MORTGAGE AND INVESTMENT CORP.,
                                 as Originators

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                                TABLE OF CONTENTS

                                                                            Page

Article I DEFINITIONS.........................................................1

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

Article II PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS....................3

  Section 2.01  Agreement to Purchase the Initial Mortgage Loans .............3
  Section 2.02  Agreement to Purchase the Subsequent Mortgage Loans ..........3
  Section 2.03  Purchase Price ...............................................4
  Section 2.04  Conveyance of Mortgage Loans; Possession of Mortgage Files ...4
  Section 2.05  Delivery of Mortgage Loan Documents ..........................5
  Section 2.06  Acceptance of Mortgage Loans .................................6
  Section 2.07  Transfer of Mortgage Loans; Assignment of Agreement ..........7
  Section 2.08  Examination of Mortgage Files ................................7
  Section 2.09  Books and Records ............................................8
  Section 2.10  Cost of Delivery and Recordation of Documents ................8

Article III REPRESENTATIONS AND WARRANTIES....................................8

  Section 3.01  Representations and Warranties as to the Originators .........8
  Section 3.02  Representations and Warranties as to the Unaffiliated
                Seller. .....................................................10
  Section 3.03  Representations and Warranties Relating to the Mortgage
                Loans .......................................................13
  Section 3.04  Representations and Warranties of the Depositor .............25
  Section 3.05  Repurchase Obligation for Defective Documentation and for
                Breach of a Representation or Warranty.......................25

Article IV THE UNAFFILIATED SELLER...........................................28

  Section 4.01  Covenants of the Originators and the Unaffiliated Seller ....28
  Section 4.02  Merger or Consolidation .....................................29
  Section 4.03  Costs .......................................................29
  Section 4.04  Indemnification .............................................29

Article V CONDITIONS OF CLOSING..............................................32

  Section 5.01  Conditions of Depositor's Obligations .......................32
  Section 5.02  Conditions of Unaffiliated Seller's Obligations .............34
  Section 5.03  Termination of Depositor's Obligations ......................35

Article VI MISCELLANEOUS.....................................................35

  Section 6.01  Notices .....................................................35
  Section 6.02  Severability of Provisions ..................................35

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  Section 6.03  Agreement of Unaffiliated Seller ............................36
  Section 6.04  Survival ....................................................36
  Section 6.05  Effect of Headings and Table of Contents ....................36
  Section 6.06  Successors and Assigns ......................................36
  Section 6.07  Confirmation of Intent; Grant of Security Interest ..........36
  Section 6.08  Miscellaneous ...............................................37
  Section 6.09  Amendments ..................................................37
  Section 6.10  Third-Party Beneficiaries ...................................38
  Section 6.11  GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
                TRIAL .......................................................38
  Section 6.12  Execution in Counterparts ...................................39

                             SCHEDULES AND EXHIBITS

Schedule I - Mortgage Loan Schedule

Exhibit A - Form of Subsequent Transfer Agreement

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            This UNAFFILIATED SELLER'S AGREEMENT, dated as of March 1, 2000
(this "Agreement"), by and among PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION, a Delaware corporation, (the "Depositor"), ABFS 2000-1, INC., a
Delaware corporation (the "Unaffiliated Seller"), AMERICAN BUSINESS CREDIT,
INC., a Pennsylvania corporation ("ABC"), HOMEAMERICAN CREDIT, INC. D/B/A UPLAND
MORTGAGE, a Pennsylvania corporation ("Upland") and NEW JERSEY MORTGAGE AND
INVESTMENT CORP., a New Jersey corporation ("NJMIC", and together with ABC and
Upland, the "Originators").

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

            WHEREAS, Schedule I attached hereto and made a part hereof lists
certain fixed rate business purpose loans and consumer purpose first and second
lien mortgage loans (the "Mortgage Loans") owned by the Originators that the
Originators desire to sell to the Unaffiliated Seller, the Unaffiliated Seller
desires to sell to the Depositor and that the Depositor desires to purchase; and

            WHEREAS, it is the intention of the Originators, the Unaffiliated
Seller and the Depositor that simultaneously with the Originators' conveyance of
the Mortgage Loans to the Unaffiliated Seller and the Unaffiliated Seller's
conveyance of the Mortgage Loans to the Depositor on the Closing Date, (a) the
Depositor shall sell the Mortgage Loans to the ABFS Mortgage Loan Trust 2000-1,
a Delaware statutory business trust (the "Trust") pursuant to a Sale and
Servicing Agreement to be dated as of March 1, 2000 (the "Sale and Servicing
Agreement"), to be entered into by and among the Depositor, as depositor, the
Trust, as issuer, ABC, as servicer (in such capacity, the "Servicer"), Chase
Bank of Texas, N.A., a national banking association, as collateral agent (the
"Collateral Agent"), and The Chase Manhattan Bank, a New York banking
corporation, as indenture trustee (the "Indenture Trustee"), and (b) the Trust
shall issue its Mortgage Backed Notes (the "Notes"), pursuant to an Indenture,
to be dated as of March 1, 2000 (the "Indenture"), by and between the Trust and
the Indenture Trustee, which Notes will be secured by a pledge of the assets of
the Trust.

            NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

            Section 1.01 Definitions. (a) Whenever used herein, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article I:

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Prospectus" means the Prospectus dated June 23, 1999 relating to
the offering by the Depositor from time to time of its Mortgage Backed Notes
(Issuable in Series) in the form in which it was or will be filed with the
Commission pursuant to Rule 424(b) under the Securities Act with respect to the
offer and sale of the Notes.

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            "Prospectus Supplement" means the Prospectus Supplement dated March
15, 2000, relating to the offering of the Notes in the form in which it was or
will be filed with the Commission pursuant to Rule 424(b) under the Securities
Act with respect to the offer and sale of the Notes.

            "Registration Statement" means that certain registration statement
on Form S-3, as amended (Registration No. 333-75489) relating to the offering by
the Depositor from time to time of its Mortgage Backed Notes (Issuable in
Series) as heretofore declared effective by the Commission.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Termination Event" means the existence of any one or more of the
following conditions:

            (a) a stop order suspending the effectiveness of the Registration
      Statement shall have been issued or a proceeding for that purpose shall
      have been initiated or threatened by the Commission; or

            (b) subsequent to the execution and delivery of this Agreement, a
      downgrading, or public notification of a possible change, without
      indication of direction, shall have occurred in the rating afforded any of
      the debt securities or claims paying ability of any person providing any
      form of credit enhancement for any of the Notes, by any "nationally
      recognized statistical rating organization," as that term is defined by
      the Commission for purposes of Rule 436(g)(2) under the Securities Act; or

            (c) subsequent to the execution and delivery of this Agreement,
      there shall have occurred an adverse change in the condition, financial or
      otherwise, earnings, affairs, regulatory situation or business prospects
      of the Note Insurer or the Unaffiliated Seller reasonably determined by
      the Depositor to be material; or

            (d) subsequent to the date of this Agreement there shall have
      occurred any of the following: (i) a suspension or material limitation in
      trading in securities substantially similar to the Notes; (ii) a general
      moratorium on commercial banking activities in the State of New York
      declared by either Federal or New York State authorities; or (iii) the
      engagement by the United States in hostilities, or the escalation of such
      hostilities, or any calamity or crisis, if the effect of any such event
      specified in this clause (iii) in the reasonable judgment of the Depositor
      makes it impracticable or inadvisable to proceed with the public offering
      or the delivery of the Notes on the terms and in the manner contemplated
      in the Prospectus Supplement.

            (b) Capitalized terms used herein that are not otherwise defined
shall have the respective meanings ascribed thereto in Appendix I to the
Indenture.

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                                   ARTICLE II

                 PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS

            Section 2.01 Agreement to Purchase the Initial Mortgage Loans. (a)
Subject to the terms and conditions of this Agreement, the Originators agree to
sell, and the Unaffiliated Seller agrees to purchase on the Closing Date and
immediately subsequent thereto, the Unaffiliated Seller agrees to sell, and the
Depositor agrees to purchase, the Mortgage Loans having the Cut-Off Date
Aggregate Principal Balance or, in accordance with Section 2.08 hereof, such
other balance as is evidenced by the actual Cut-Off Date Aggregate Principal
Balance of the Mortgage Loans accepted by the Depositor on the Closing Date and
listed in the Mortgage Loan Schedule.

            (b) Subject to Section 2.08 hereof, the Depositor and the
Unaffiliated Seller have agreed upon which of the Unaffiliated Seller's Mortgage
Loans are to be purchased by the Depositor on the Closing Date pursuant to this
Agreement, and the Unaffiliated Seller has prepared a schedule describing the
Mortgage Loans (the "Mortgage Loan Schedule") setting forth all of the Mortgage
Loans to be purchased under this Agreement, which Mortgage Loan Schedule is
attached hereto as Schedule I. The Mortgage Loan Schedule shall conform to the
requirements of the Depositor and to the definition of "Mortgage Loan Schedule"
in Appendix I to the Indenture.

            (c) The closing for the purchase and sale of the Mortgage Loans
shall take place at the offices of Dewey Ballantine LLP, New York, New York, at
10:00 a.m., New York, New York time, on the Closing Date, or such other place
and time as the parties shall agree.

            Section 2.02 Agreement to Purchase the Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in Section 2.14(b)
of the Indenture, (i) in consideration of the Unaffiliated Seller's delivery on
the related Subsequent Transfer Dates to or upon the order of the Originators of
all or a portion of the balance of funds on deposit in the Pre-Funding Accounts,
the Originators shall on any Subsequent Transfer Date sell, transfer, assign,
set over and convey to the Unaffiliated Seller, without recourse, but subject to
the terms and provisions of this Agreement, all of the right, title and interest
of the Originators in and to the Subsequent Mortgage Loans, including all
principal of, and all interest due on, such Subsequent Mortgage Loans, and all
other assets included or to be included in the Trust Estate and (ii) in
consideration of the Depositor's delivery on the related Subsequent Transfer
Dates to or upon the order of the Unaffiliated Seller of all or a portion of the
balance of funds on deposit in the Pre-Funding Accounts, the Unaffiliated Seller
shall on any Subsequent Transfer Date sell, transfer, assign, set over and
convey to the Depositor, without recourse, but subject to the terms and
provisions of this Agreement, all of the right, title and interest of the
Unaffiliated Seller in and to the Subsequent Mortgage Loans, including all
principal of, and all interest due on, such Subsequent Mortgage Loans, and all
other assets included or to be included in the Trust Estate.

            The amount released from a Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans to the related Pool shall be one-hundred
percent (100%) of the Aggregate Principal Balance of such Subsequent Mortgage
Loans so transferred, as of the related Subsequent Cut-Off Date.

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            The obligation of the Depositor to purchase a Subsequent Mortgage
Loan on any Subsequent Transfer Date is subject to the satisfaction of the
requirements set forth in Section 2.14(b) of the Indenture.

            Section 2.03 Purchase Price. (a) On the Closing Date, as
consideration for the Originators' sale of the Initial Mortgage Loans to the
Unaffiliated Seller, the Unaffiliated Seller will deliver to the Originators an
amount in cash equal to the sum of (A) 99.70% and 99.70% of the Original Note
Principal Balance as of the Closing Date of the Class A-1 Notes and Class A-2
Notes, respectively, plus (B) accrued interest on the Original Note Principal
Balance of the Class A-1 Notes at the rate of 7.925% per annum, from (and
including) March 1, 2000 to (but not including) the Closing Date, minus (C) the
Original Pre-Funded Amount and the Original Capitalized Interest Amount for each
Class of Notes, payable by wire transfer of same day funds.

            On the Closing Date, as full consideration for the Unaffiliated
Seller's sale of the Initial Mortgage Loans to the Depositor, the Depositor will
deliver to, or at the direction of, the Unaffiliated Seller (i) an amount in
cash equal to the sum of (A) 99.70% and 99.70% of the Original Note Principal
Balance as of the Closing Date of the Class A-1 Notes and Class A-2 Notes,
respectively, plus (B) accrued interest on the Original Note Principal Balance
of the Class A-1 Notes at the rate of 7.925% per annum, from (and including)
March 1, 2000 to (but not including) the Closing Date, minus (C) the Original
Pre-Funded Amount and the Original Capitalized Interest Amount for each Class of
Notes, payable by wire transfer of same day funds, and (ii) the Trust
Certificates to be issued pursuant to the Trust Agreement.

            (b) On each Subsequent Transfer Date, as full consideration for the
Originators' sale of the Subsequent Mortgage Loans to the Unaffiliated Seller
and the Unaffiliated Seller's sale of the Subsequent Mortgage Loans to the
Depositor, the Depositor will deliver to the Unaffiliated Seller and the
Unaffiliated Seller will deliver to the Originators an amount in cash equal to
the sum of 100% of the Aggregate Principal Balance of the Subsequent Mortgage
Loans of the related Pool as of the related Subsequent Cut-Off Date.

            Section 2.04 Conveyance of Mortgage Loans; Possession of Mortgage
Files. (a) On the Closing Date and on each Subsequent Transfer Date, the
Originators shall sell, transfer, assign, set over and convey to the
Unaffiliated Seller, without recourse, but subject to the terms of this
Agreement, all right, title and interest in and to the applicable Mortgage
Loans, including all principal outstanding as of, and all interest due after,
the related Cut-Off Date, the Insurance Policies relating to each such Mortgage
Loan and all right, title and interest in and to the proceeds of such Insurance
Policies and all of its rights under this Agreement with respect to the Mortgage
Loans from and after the related Cut-Off Date or the Subsequent Cut-Off Date, as
applicable, and the Unaffiliated Seller shall sell, transfer, assign, set over
and convey to the Depositor, without recourse, but subject to the terms of this
Agreement, all right, title and interest in and to the applicable Mortgage
Loans, including all principal outstanding as of, and all interest due after,
the related Cut-Off Date, the Insurance Policies relating to each such Mortgage
Loan, all right, title and interest in and to the proceeds of such Insurance
Policies and all of its rights under this Agreement with respect to the Mortgage
Loans from and after the related Cut-Off Date or the Subsequent Cut-Off Date, as
applicable. Upon payment of the purchase price for such Mortgage Loans as
provided in Section 2.03 of this Agreement, the Originators and the Unaffiliated
Seller shall have hereby, and shall be deemed to have, sold, transferred,
assigned,

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set over and conveyed to the Depositor such Mortgage Loans, the Insurance
Policies relating to each such Mortgage Loan, all right, title and interest in
and to the proceeds of such Insurance Policies and all of its rights under this
Agreement with respect to the Mortgage Loans from and after the related Cut-Off
Date or the Subsequent Cut-Off Date, as applicable.

            (b) Upon the sale of such Mortgage Loans, the ownership of each
related Mortgage Note, each related Mortgage and the contents of the related
Mortgage File shall immediately vest in the Depositor and the ownership of all
related records and documents with respect to each Mortgage Loan prepared by or
which come into the possession of the Originators or the Unaffiliated Seller
shall immediately vest in the Depositor. The contents of any Indenture Trustee's
Mortgage File in the possession of the Originators or the Unaffiliated Seller at
any time after such sale, and any principal collected and interest due on the
Mortgage Loans after the related Cut-Off Date and received by the Originators or
the Unaffiliated Seller, shall be held in trust by the Originators or the
Unaffiliated Seller for the benefit of the Depositor as the owner thereof, and
shall be promptly delivered by the Originators or the Unaffiliated Seller to or
upon the order of the Depositor.

            (c) Pursuant to the Sale and Servicing Agreement, the Depositor
shall, on the Closing Date, assign all of its right, title and interest in and
to the Initial Mortgage Loans to the Trust. Pursuant to the Indenture, the Trust
shall, on the Closing Date, pledge all of its right, title and interest in and
to the Initial Mortgage Loans to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer.

            Section 2.05 Delivery of Mortgage Loan Documents. (a) On or prior to
the Closing Date or Subsequent Transfer Date, as applicable, the related
Originator shall deliver to the Unaffiliated Seller, and the Unaffiliated Seller
shall deliver to the Collateral Agent, on behalf of the Indenture Trustee (as
pledgee of the Trust pursuant to the Indenture, the Trust being the assignee of
the Depositor pursuant to the Sale and Servicing Agreement), each of the
documents for each applicable Mortgage Loan in accordance with the provisions of
Section 2.05 of the Sale and Servicing Agreement.

            (b) As promptly as practicable, but in any event within thirty (30)
days from the Closing Date or the Subsequent Transfer Date, as applicable, the
Unaffiliated Seller shall promptly submit, or cause to be submitted by the
related Originator, for recording in the appropriate public office for real
property records, each assignment referred to in Section 2.05(a)(iv) of the Sale
and Servicing Agreement. The Collateral Agent, on behalf of the Indenture
Trustee, shall be required to retain a copy of each assignment submitted for
recording. In the event that any such assignment is lost or returned unrecorded
because of a defect therein, the Unaffiliated Seller or such Originator shall
promptly prepare a substitute assignment or cure such defect, as the case may
be, and thereafter the Unaffiliated Seller or such Originator shall submit each
such assignment for recording.

            (c) The Unaffiliated Seller or the related Originator shall, within
five (5) Business Days after the receipt thereof, deliver or cause to be
delivered to the Collateral Agent, on behalf of the Indenture Trustee (as
pledgee of the Trust pursuant to the Indenture, the Trust being the assignee of
the Depositor pursuant to the Sale and Servicing Agreement): (i) the original
recorded Mortgage and related power of attorney, if any, in those instances
where a copy

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thereof certified by the related Originator was delivered to the Collateral
Agent, on behalf of the Indenture Trustee, pursuant to Section 2.05 of the Sale
and Servicing Agreement; (ii) the original recorded assignment of Mortgage from
the related Originator to the Indenture Trustee, which, together with any
intervening assignments of Mortgage, evidences a complete chain of assignment
from the originator of the Mortgage Loan to the Indenture Trustee in those
instances where copies of such assignments certified by the related Originator
were delivered to the Collateral Agent, on behalf of the Indenture Trustee,
pursuant to Section 2.05 of the Sale and Servicing Agreement; and (iii) the
title insurance policy or title opinion required in Section 2.05(a)(vi) of the
Sale and Servicing Agreement.

            Notwithstanding anything to the contrary contained in this Section
2.05, in those instances where the public recording office retains the original
Mortgage, power of attorney, if any, assignment or assignment of Mortgage after
it has been recorded or such original has been lost, the Unaffiliated Seller or
the related Originator shall be deemed to have satisfied its obligations
hereunder upon delivery to the Collateral Agent, on behalf of the Indenture
Trustee, of a copy of such Mortgage, power of attorney, if any, assignment or
assignment of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.

            From time to time the Unaffiliated Seller or the related Originator
may forward or cause to be forwarded to the Collateral Agent, on behalf of the
Indenture Trustee, additional original documents evidencing an assumption or
modification of a Mortgage Loan.

            (d) All original documents relating to the Mortgage Loans that are
not delivered to the Collateral Agent, on behalf of the Indenture Trustee, as
permitted by Section 2.05(a) hereof are and shall be held by the Servicer, the
Unaffiliated Seller or the related Originator in trust for the benefit of the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer. In the
event that any such original document is required pursuant to the terms of this
Section 2.05 to be a part of an Indenture Trustee's Mortgage File, such document
shall be delivered promptly to the Collateral Agent, on behalf of the Indenture
Trustee. From and after the sale of the Mortgage Loans to the Depositor pursuant
hereto, to the extent that the Unaffiliated Seller or the related Originator
retains legal title of record to any Mortgage Loans prior to the vesting of
legal title in the Indenture Trustee, such title shall be retained in trust for
the Trust as the owner of the Mortgage Loans, as the Depositor's assignee, and
the Indenture Trustee, as the Trust's pledgee.

            Section 2.06 Acceptance of Mortgage Loans. (a) To evidence the
transfer of the Mortgage Loans and related Mortgage Files to the Collateral
Agent, on behalf of the Indenture Trustee, the Collateral Agent shall deliver
the acknowledgement of receipt, the Initial Certification and the Final
Certification required to be delivered pursuant to Section 2.06(b) of the Sale
and Servicing Agreement.

            (b) The Sale and Servicing Agreement provides that, if the
Collateral Agent during the process of reviewing the Indenture Trustee's
Mortgage Files, finds any document constituting a part of an Indenture Trustee's
Mortgage File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the Mortgage Loan Schedule, or does not conform to
the requirements of Section 2.05 of the Sale and Servicing Agreement or the
description thereof as set forth in the Mortgage Loan Schedule, the Collateral
Agent shall

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promptly so notify the Servicer, the Unaffiliated Seller, the Indenture Trustee,
the related Originator and the Note Insurer. The Unaffiliated Seller and the
Originators agree that in performing any such review, the Collateral Agent may
conclusively rely on the Unaffiliated Seller and the Originators as to the
purported genuineness of any such document and any signature thereon. Each of
the Originators and the Unaffiliated Seller agrees to use reasonable efforts to
remedy a material defect in a document constituting part of an Indenture
Trustee's Mortgage File of which it is notified. If, however, within sixty (60)
days after such notice neither the Unaffiliated Seller nor any Originator has
remedied the defect and the defect materially and adversely affects the interest
of the Noteholders in the related Mortgage Loan or the interests of the Note
Insurer, then the Unaffiliated Seller and the Originators shall be obligated to
either substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage
Loan or purchase such Mortgage Loan in the manner and subject to the conditions
set forth in Section 3.05 hereof.

            (c) The failure of the Collateral Agent, the Indenture Trustee or
the Note Insurer to give any notice contemplated herein within the time periods
specified above shall not affect or relieve the Unaffiliated Seller's or the
Originators obligation to repurchase for any Mortgage Loan pursuant to this
Section 2.06 or Section 3.05 of this Agreement.

            Section 2.07 Transfer of Mortgage Loans; Assignment of Agreement.
The Originators and the Unaffiliated Seller each hereby acknowledges and agrees
that the Depositor or the Trust may assign its interest under this Agreement to
the Indenture Trustee as may be required to effect the purposes of the Indenture
and the Sale and Servicing Agreement, without further notice to, or consent of,
the Unaffiliated Seller or the Originators, and the Indenture Trustee shall
succeed to such of the rights and obligations of the Depositor and the Trust
hereunder as shall be so assigned. The Depositor shall, pursuant to the Sale and
Servicing Agreement, assign all of its right, title and interest in and to the
Mortgage Loans and its right to exercise the remedies created by Sections 2.06
and 3.05 hereof for breaches of the representations, warranties, agreements and
covenants of the Unaffiliated Seller or the Originators contained in Sections
2.05, 2.06, 3.02 and 3.03 hereof to the Trust, and the Trust shall, pursuant to
the Indenture, pledge such right, title and interest to the Indenture Trustee,
for the benefit of the Noteholders and the Note Insurer. Each of the Originators
and the Unaffiliated Seller agrees that, upon such assignment to the Trust and
pledge to the Indenture Trustee, such representations, warranties, agreements
and covenants will run to and be for the benefit of the Indenture Trustee and
the Indenture Trustee may enforce, without joinder of the Depositor or the
Trust, the repurchase obligations of the Unaffiliated Seller and the Originators
set forth herein with respect to breaches of such representations, warranties,
agreements and covenants.

            Section 2.08 Examination of Mortgage Files. Prior to the Closing
Date and each Subsequent Transfer Date, as applicable, the Unaffiliated Seller
shall make the Mortgage Files available to the Depositor or its designee for
examination at the Unaffiliated Seller's offices or at such other place as the
Unaffiliated Seller shall reasonably specify. Such examination may be made by
the Depositor or its designee at any time on or before the Closing Date or
Subsequent Transfer Date, as the case may be. If the Depositor or its designee
makes such examination prior to the Closing Date or Subsequent Transfer Date, as
the case may be, and identifies any Mortgage Loans that do not conform to the
requirements of the Depositor as described in this Agreement, such Mortgage
Loans shall be deleted from the Mortgage Loan

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Schedule and may be replaced, prior to the Closing Date or Subsequent Transfer
Date, as the case may be, by substitute Mortgage Loans acceptable to the
Depositor. The Depositor may, at its option and without notice to the
Unaffiliated Seller, purchase all or part of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Depositor, the
Collateral Agent or the Indenture Trustee has conducted or has failed to conduct
any partial or complete examination of the Mortgage Files shall not affect the
rights of the Depositor or the Indenture Trustee to demand repurchase or other
relief as provided in this Agreement.

            Section 2.09 Books and Records. The transfer of each Mortgage Loan
shall be reflected on each of the Originators' and the Unaffiliated Seller's
accounting and other records, balance sheet and other financial statements as a
sale of assets by the Originators to the Unaffiliated Seller, by the
Unaffiliated Seller to the Depositor and by the Depositor to the Trust;
provided, that the Unaffiliated Seller's tax returns shall not reflect the
transfer from the Unaffiliated Seller to the Depositor and from the Depositor to
the Trust as a sale of the Mortgage Loans. Each of the Originators and the
Unaffiliated Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be clearly
marked to reflect the ownership of each Mortgage Loan by the Trust, and the
pledge of each Mortgage Loan by the Trust to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer.

            Section 2.10 Cost of Delivery and Recordation of Documents. The
costs relating to the delivery and recordation of the documents in connection
with the Mortgage Loans as specified in this Article II and in Article II of the
Sale and Servicing Agreement shall be borne by the Unaffiliated Seller or the
Originators.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

            Section 3.01 Representations and Warranties as to the Originators.
Each of the Originators hereby represents and warrants to the Unaffiliated
Seller and the Depositor, as of the Closing Date, that:

            (a) The Originator is a corporation duly organized, validly existing
      and in good standing under the laws of (i) with respect to ABC and Upland,
      the State of Pennsylvania, or (ii) with respect to NJMIC, the State of New
      Jersey, and has all licenses necessary to carry on its business as now
      being conducted and is licensed, qualified and in good standing in each
      state where a Mortgaged Property is located if the laws of such state
      require licensing or qualification in order to conduct business of the
      type conducted by the Originator and to perform its obligations as the
      Originator hereunder, and in any event the Originator is in compliance
      with the laws of any such state to the extent necessary to ensure the
      enforceability of the related Mortgage Loan; the Originator has the full
      power and authority, corporate and otherwise, to execute and deliver this
      Agreement and to perform in accordance herewith; the execution, delivery
      and performance of this Agreement (including all instruments of transfer
      to be delivered pursuant to this Agreement) by the Originator and the
      consummation of the transactions contemplated hereby have been duly and
      validly authorized; this Agreement evidences

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<PAGE>

      the valid, binding and enforceable obligation of the Originator; and all
      requisite corporate action has been taken by the Originator to make this
      Agreement valid and binding upon the Originator in accordance with its
      terms;

            (b) No consent, approval, authorization or order of any court or
      governmental agency or body is required for the execution, delivery and
      performance by the Originator of, or compliance by the Originator with,
      this Agreement or the sale of the Mortgage Loans pursuant to the terms of
      this Agreement or the consummation of the transactions contemplated by
      this Agreement, or if required, such approval has been obtained prior to
      the Closing Date;

            (c) Neither the execution and delivery of this Agreement, the
      acquisition nor origination of the Mortgage Loans by the Originator or the
      transactions contemplated hereby, nor the fulfillment of or compliance
      with the terms and conditions of this Agreement, has or will conflict with
      or result in a breach of any of the terms, conditions or provisions of the
      Originator's charter or by-laws or any legal restriction or any agreement
      or instrument to which the Originator is now a party or by which it is
      bound or to which its property is subject, or constitute a default or
      result in an acceleration under any of the foregoing, or result in the
      violation of any law, rule, regulation, order, judgment or decree to which
      the Originator or its property is subject, or impair the ability of the
      Indenture Trustee (or the Servicer as the agent of the Indenture Trustee)
      to realize on the Mortgage Loans, or impair the value of the Mortgage
      Loans;

            (d) Neither this Agreement nor the information contained in the
      Prospectus Supplement (other than the information under the caption
      "Underwriting") nor any statement, report or other document prepared by
      the Originator and furnished or to be furnished pursuant to this Agreement
      or in connection with the transactions contemplated hereby contains any
      untrue statement or alleged untrue statement of any material fact or omits
      to state a material fact necessary to make the statements contained herein
      or therein, in light of the circumstances under which they were made, not
      misleading;

            (e) There is no action, suit, proceeding or investigation pending
      or, to the knowledge of the Originator, threatened before a court,
      administrative agency or government tribunal against the Originator which,
      either in any one instance or in the aggregate, may result in any material
      adverse change in the business, operations, financial condition,
      properties or assets of the Originator, or in any material impairment of
      the right or ability of the Originator to carry on its business
      substantially as now conducted, or in any material liability on the part
      of the Originator, or which would draw into question the validity of this
      Agreement, the Mortgage Loans, or of any action taken or to be taken in
      connection with the obligations of the Originator contemplated herein, or
      which would impair materially the ability of the Originator to perform
      under the terms of this Agreement or that will prohibit its entering into
      this Agreement or the consummation of any of the transactions contemplated
      hereby;

            (f) The Originator is not in violation of or in default with respect
      to, and the execution and delivery of this Agreement by the Originator and
      its performance of and compliance with the terms hereof will not
      constitute a violation or default with respect to,

                                       9

<PAGE>

      any order or decree of any court or any order, regulation or demand of any
      federal, state, municipal or governmental agency, which violation or
      default might have consequences that would materially and adversely affect
      the condition (financial or other) or operations of the Originator or its
      properties or might have consequences that would materially and adversely
      affect its performance hereunder or under any subservicing agreement;

            (g) Upon the receipt of each Mortgage File by the Depositor (or its
      assignee) under this Agreement, the Depositor (or its assignee) will have
      good title to each related Mortgage Loan and such other items comprising
      the corpus of the Trust Estate free and clear of any lien created by the
      Originator (other than liens which will be simultaneously released);

            (h) The consummation of the transactions contemplated by this
      Agreement are in the ordinary course of business of the Originator, and
      the transfer, assignment and conveyance of the Mortgage Notes and the
      Mortgages by the Originator pursuant to this Agreement are not subject to
      the bulk transfer or any similar statutory provisions in effect in any
      applicable jurisdiction;

            (i) With respect to any Mortgage Loan purchased by the Originator,
      the Originator acquired title to the Mortgage Loan in good faith, without
      notice of any adverse claim;

            (j) The Originator does not believe, nor does it have any reason or
      cause to believe, that it cannot perform each and every covenant contained
      in this Agreement. The Originator is solvent and the sale of the Mortgage
      Loans by the Originator pursuant to the terms of this Agreement will not
      cause the Originator to become insolvent. The sale of the Mortgage Loans
      by the Originator pursuant to the terms of this Agreement was not
      undertaken with the intent to hinder, delay or defraud any of the
      Originator's creditors;

            (k) The Mortgage Loans are not intentionally selected in a manner so
      as to affect adversely the interests of the Depositor or of any transferee
      of the Depositor (including the Trust and the Indenture Trustee);

            (l) The Originator has determined that it will treat the disposition
      of the Mortgage Loans pursuant to this Agreement as a sale for accounting
      and tax purposes;

            (m) The Originator has not dealt with any broker or agent or anyone
      else that may be entitled to any commission or compensation in connection
      with the sale of the Mortgage Loans to the Depositor other than to the
      Depositor or an affiliate thereof; and

            (n) The consideration received by the Originator upon the sale of
      the Mortgage Loans under this Agreement constitutes fair consideration and
      reasonably equivalent value for the Mortgage Loans.

            Section 3.02 Representations and Warranties as to the Unaffiliated
Seller. The Unaffiliated Seller hereby represents and warrants to the Depositor,
as of the Closing Date, that:

                                       10

<PAGE>

            (a) The Unaffiliated Seller is a corporation duly organized, validly
      existing and in good standing under the laws of the State of Delaware and
      has all licenses necessary to carry on its business as now being conducted
      and is licensed, qualified and in good standing in each state where a
      Mortgaged Property is located if the laws of such state require licensing
      or qualification in order to conduct business of the type conducted by the
      Unaffiliated Seller and to perform its obligations as the Unaffiliated
      Seller hereunder, and in any event the Unaffiliated Seller is in
      compliance with the laws of any such state to the extent necessary to
      ensure the enforceability of the related Mortgage Loan; the Unaffiliated
      Seller has the full power and authority, corporate and otherwise, to
      execute and deliver this Agreement and to perform in accordance herewith;
      the execution, delivery and performance of this Agreement (including all
      instruments of transfer to be delivered pursuant to this Agreement) by the
      Unaffiliated Seller and the consummation of the transactions contemplated
      hereby have been duly and validly authorized; this Agreement evidences the
      valid, binding and enforceable obligation of the Unaffiliated Seller; and
      all requisite corporate action has been taken by the Unaffiliated Seller
      to make this Agreement valid and binding upon the Unaffiliated Seller in
      accordance with its terms;

            (b) No consent, approval, authorization or order of any court or
      governmental agency or body is required for the execution, delivery and
      performance by the Unaffiliated Seller of or compliance by the
      Unaffiliated Seller with this Agreement or the sale of the Mortgage Loans
      pursuant to the terms of this Agreement or the consummation of the
      transactions contemplated by this Agreement, or if required, such approval
      has been obtained prior to the Closing Date;

            (c) Neither the execution and delivery of this Agreement, the
      acquisition nor origination of the Mortgage Loans by the Unaffiliated
      Seller nor the transactions contemplated hereby, nor the fulfillment of or
      compliance with the terms and conditions of this Agreement, has or will
      conflict with or result in a breach of any of the terms, conditions or
      provisions of the Unaffiliated Seller's charter or by-laws or any legal
      restriction or any agreement or instrument to which the Unaffiliated
      Seller is now a party or by which it is bound or to which its property is
      subject, or constitute a default or result in an acceleration under any of
      the foregoing, or result in the violation of any law, rule, regulation,
      order, judgment or decree to which the Unaffiliated Seller or its property
      is subject, or impair the ability of the Indenture Trustee (or the
      Servicer as the agent of the Indenture Trustee) to realize on the Mortgage
      Loans, or impair the value of the Mortgage Loans;

            (d) Neither this Agreement nor the information contained in the
      Prospectus Supplement (other than the information under the caption
      "Underwriting") nor any statement, report or other document prepared by
      the Unaffiliated Seller and furnished or to be furnished pursuant to this
      Agreement or in connection with the transactions contemplated hereby
      contains any untrue statement or alleged untrue statement of any material
      fact or omits to state a material fact necessary to make the statements
      contained herein or therein, in light of the circumstances under which
      they were made, not misleading;

                                       11

<PAGE>

            (e) There is no action, suit, proceeding or investigation pending
      nor, to the knowledge of the Unaffiliated Seller, threatened before a
      court, administrative agency or government tribunal against the
      Unaffiliated Seller which, either in any one instance or in the aggregate,
      may result in any material adverse change in the business, operations,
      financial condition, properties or assets of the Unaffiliated Seller, or
      in any material impairment of the right or ability of the Unaffiliated
      Seller to carry on its business substantially as now conducted, or in any
      material liability on the part of the Unaffiliated Seller, or which would
      draw into question the validity of this Agreement, the Mortgage Loans, or
      of any action taken or to be taken in connection with the obligations of
      the Unaffiliated Seller contemplated herein, or which would impair
      materially the ability of the Unaffiliated Seller to perform under the
      terms of this Agreement or that will prohibit its entering into this
      Agreement or the consummation of any of the transactions contemplated
      hereby;

            (f) The Unaffiliated Seller is not in violation of or in default
      with respect to, and the execution and delivery of this Agreement by the
      Unaffiliated Seller and its performance of and compliance with the terms
      hereof will not constitute a violation or default with respect to, any
      order or decree of any court or any order, regulation or demand of any
      federal, state, municipal or governmental agency, which violation or
      default might have consequences that would materially and adversely affect
      the condition (financial or other) or operations of the Unaffiliated
      Seller or its properties or might have consequences that would materially
      and adversely affect its performance hereunder or under any subservicing
      agreement;

            (g) Upon the receipt of each Mortgage File by the Depositor (or its
      assignee) under this Agreement, the Depositor (or its assignee) will have
      good title to each related Mortgage Loan and such other items comprising
      the corpus of the Trust Estate free and clear of any lien created by the
      Unaffiliated Seller (other than liens which will be simultaneously
      released);

            (h) The consummation of the transactions contemplated by this
      Agreement are in the ordinary course of business of the Unaffiliated
      Seller, and the transfer, assignment and conveyance of the Mortgage Notes
      and the Mortgages by the Unaffiliated Seller pursuant to this Agreement
      are not subject to the bulk transfer or any similar statutory provisions
      in effect in any applicable jurisdiction;

            (i) With respect to any Mortgage Loan purchased by the Unaffiliated
      Seller, the Unaffiliated Seller acquired title to the Mortgage Loan in
      good faith, without notice of any adverse claim;

            (j) The Unaffiliated Seller does not believe, nor does it have any
      reason or cause to believe, that it cannot perform each and every covenant
      contained in this Agreement. The Unaffiliated Seller is solvent and the
      sale of the Mortgage Loans by the Unaffiliated Seller pursuant to the
      terms of this Agreement will not cause the Unaffiliated Seller to become
      insolvent. The sale of the Mortgage Loans by the Unaffiliated Seller
      pursuant to the terms of this Agreement was not undertaken with the intent
      to hinder, delay or defraud any of the Unaffiliated Seller's creditors;

                                       12

<PAGE>

            (k) The Mortgage Loans are not intentionally selected in a manner so
      as to affect adversely the interests of the Depositor or of any transferee
      of the Depositor (including the Trust and the Indenture Trustee);

            (l) The Unaffiliated Seller has determined that it will treat the
      disposition of the Mortgage Loans pursuant to this Agreement as a sale for
      accounting purposes;

            (m) The Unaffiliated Seller has not dealt with any broker or agent
      or anyone else that may be entitled to any commission or compensation in
      connection with the sale of the Mortgage Loans to the Depositor other than
      to the Depositor or an affiliate thereof; and

            (n) The consideration received by the Unaffiliated Seller upon the
      sale of the Mortgage Loans under this Agreement constitutes fair
      consideration and reasonably equivalent value for the Mortgage Loans.

            Section 3.03 Representations and Warranties Relating to the Mortgage
Loans. The Originators represent and warrant to the Unaffiliated Seller and the
Unaffiliated Seller represents to the Depositor that, as of the Closing Date, as
to each Initial Mortgage Loan, and as of the Subsequent Transfer Date, as to
each Subsequent Mortgage Loan, immediately prior to the sale and transfer of
such Mortgage Loan by the Unaffiliated Seller to the Depositor:

            (a) The information set forth in each Mortgage Loan Schedule is
      complete, true and correct;

            (b) The information to be provided by the Unaffiliated Seller or the
      Originators, directly or indirectly, to the Depositor in connection with a
      Subsequent Mortgage Loan will be true and correct in all material respects
      at the date or dates respecting which such information is furnished;

            (c) Each Mortgage is a valid first or second lien on a fee simple
      (or its equivalent under applicable state law) estate in the real property
      securing the amount owed by the Mortgagor under the Mortgage Note subject
      only to (i) the lien of current real property taxes and assessments which
      are not delinquent, (ii) with respect to any Mortgage Loan identified on
      the Mortgage Loan Schedule as secured by a second lien, the related first
      mortgage loan, (iii) covenants, conditions and restrictions, rights of
      way, easements and other matters of public record as of the date of
      recording of such Mortgage, such exceptions appearing of record being
      acceptable to mortgage lending institutions generally in the area wherein
      the property subject to the Mortgage is located or specifically reflected
      in the appraisal obtained in connection with the origination of the
      related Mortgage Loan obtained by the Unaffiliated Seller and (iv) other
      matters to which like properties are commonly subject which do not
      materially interfere with the benefits of the security intended to be
      provided by such Mortgage;

            (d) Immediately prior to the transfer and assignment by the related
      Originator to the Unaffiliated Seller and by the Unaffiliated Seller to
      the Depositor, the Unaffiliated Seller or such Originator, as applicable,
      had good title to, and was the sole owner of each Mortgage Loan, free of
      any interest of any other Person, and the Unaffiliated Seller or

                                       13

<PAGE>

      such Originator has transferred all right, title and interest in each
      Mortgage Loan to the Depositor or the Unaffiliated Seller, as applicable;

            (e) As of the applicable Cut-Off Date, no payment of principal or
      interest on or in respect of any Mortgage Loan remains unpaid for thirty
      (30) or more days past the date the same was due in accordance with the
      related Mortgage Note without regard to applicable grace periods;

            (f) As of the Initial Cut-Off Date, no Mortgage Loan has a Mortgage
      Interest Rate less than 7.59% per annum in Pool I, 9.10% per annum in Pool
      II and the weighted average Mortgage Interest Rate of the Mortgage Loans
      is 11.78% in Pool I and 12.64% in Pool II;

            (g) At origination, no Mortgage Loan in Pool I or Pool II had an
      original term to maturity of greater than 360 months;

            (h) As of the Initial Cut-Off Date, the weighted average remaining
      term to maturity of the Mortgage Loans is 248.50 months for the Mortgage
      Loans in Pool I and 233.97 months for the Mortgage Loans in Pool II;

            (i) To the best knowledge of the Unaffiliated Seller and each of the
      Originators, there is no mechanics' lien or claim for work, labor or
      material (and no rights are outstanding that under law could give rise to
      such lien) affecting the premises subject to any Mortgage which is or may
      be a lien prior to, or equal or coordinate with, the lien of such
      Mortgage, except those which are insured against by the title insurance
      policy referred to in (ff) below;

            (j) To the best knowledge of the Unaffiliated Seller and each of the
      Originators, there is no delinquent tax or assessment lien against any
      Mortgaged Property;

            (k) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
      including, without limitation, the obligation of the Mortgagor to pay the
      unpaid principal of and interest on the Mortgage Note, are each not
      subject to any right of rescission (or any such rescission right has
      expired in accordance with applicable law), set-off, counterclaim, or
      defense, including the defense of usury, nor will the operation of any of
      the terms of the Mortgage Note or the Mortgage, or the exercise of any
      right thereunder, render either the Mortgage Note or the Mortgage
      unenforceable, in whole or in part, or subject to any right of rescission,
      set-off, counterclaim, or defense, including the defense of usury, and no
      such right of rescission, set-off, counterclaim, or defense has been
      asserted with respect thereto;

            (l) To the best knowledge of the Unaffiliated Seller and each of the
      Originators, the Mortgaged Property is free of material damage and is in
      good repair, and there is no pending or threatened proceeding for the
      total or partial condemnation of the Mortgaged Property;

                                       14

<PAGE>

            (m) Neither the Originators nor the Unaffiliated Seller has received
      a notice of default of any first mortgage loan secured by the Mortgaged
      Property which has not been cured by a party other than the Unaffiliated
      Seller;

            (n) Each Mortgage Note and Mortgage are in substantially the forms
      previously provided to the Depositor and the Indenture Trustee on behalf
      of the Unaffiliated Seller;

            (o) No Mortgage Loan had, at the date of origination, a CLTV in
      excess of 100% for Pool I and 100% for Pool II, and the weighted average
      CLTV of all Mortgage Loans as of the Initial Cut-Off Date is approximately
      77.76% in Pool I and 76.52% for Pool II;

            (p) The Mortgage Loan was not originated in a program in which the
      amount of documentation in the underwriting process was limited in
      comparison to the originator's normal documentation requirements;

            (q) No more than the following percentages of the Mortgage Loans by
      Cut-Off Date Aggregate Principal Balance are secured by Mortgaged
      Properties located in the following states:

                                       15

<PAGE>

                          Pool I
        -------------------------------------------
                                   Percentage of
                                   Cut-Off Date
                                     Aggregate
        State                    Principal Balance
        ---------------------    ------------------

        Alabama                         0.09
        Arizona                         0.02
        Arkansas                        0.09
        Colorado                        0.08
        Connecticut                     1.71
        Delaware                        1.32
        Florida                        10.11
        Georgia                         3.62
        Illinois                        4.87
        Indiana                         1.40
        Kansas                          0.10
        Kentucky                        0.57
        Louisiana                       0.09
        Massachusetts                   3.10
        Maryland                        2.30
        Michigan                        1.61
        Minnesota                       0.01
        Mississippi                     0.11
        Missouri                        0.64
        New Hampshire                   0.31
        New Jersey                     13.97
        New York                       28.77
        North Carolina                  2.56
        North Dakota                    0.04
        Ohio                            4.51
        Oklahoma                        0.04
        Oregon                          0.11
        Pennsylvania                   10.89
        Rhode Island                    0.51
        South Carolina                  1.51
        Tennessee                       1.67
        Vermont                         0.19
        Virginia                        2.63
        Washington                      0.09
        West Virginia                   0.11
        Wisconsin                       0.14
                                 -----------------
                                      100.00%
                                 =================

                                       16

<PAGE>

                          Pool II
         ------------------------------------------
                                   Percentage of
                                   Cut-Off Date
                                     Aggregate
         State                   Principal Balance
         --------------------    ------------------

         Connecticut                    6.96
         Florida                        3.68
         Georgia                        4.35
         Illinois                       7.59
         Indiana                        1.18
         Massachusetts                  2.87
         Maryland                       0.54
         Michigan                       2.53
         New Jersey                    13.23
         New York                      34.27
         North Carolina                 1.89
         Ohio                           4.90
         Pennsylvania                   6.46
         South Carolina                 1.12
         Tennessee                      0.27
         Virginia                       5.84
         Vermont                        0.51
         Wisconsin                      1.84
                                 -----------------
                                      100.00%
                                 =================

                                       17

<PAGE>

            (r) The Mortgage Loans were not selected by the Unaffiliated Seller
      or the Originators for sale hereunder or inclusion in the Trust Estate on
      any basis adverse to the Trust Estate relative to the portfolio of similar
      mortgage loans of the Unaffiliated Seller or the Originators;

            (s) None of the Mortgage Loans constitutes a lien on leasehold
      interests;

            (t) Each Mortgage contains customary and enforceable provisions
      which render the rights and remedies of the holder thereof adequate for
      the realization against the related Mortgaged Property of the benefits of
      the security including (A) in the case of a Mortgage designated as a deed
      of trust, by trustee's sale and (B) otherwise by judicial foreclosure. To
      the best of the Unaffiliated Seller's and the Originators' knowledge,
      there is no homestead or other exemption available to the related
      Mortgagor which would materially interfere with the right to sell the
      related Mortgaged Property at a trustee's sale or the right to foreclose
      the related Mortgage. The Mortgage contains customary and enforceable
      provisions for the acceleration of the payment of the Principal Balance of
      such Mortgage Loan in the event all or any part of the related Mortgaged
      Property is sold or otherwise transferred without the prior written
      consent of the holder thereof;

            (u) The proceeds of such Mortgage Loan have been fully disbursed,
      including reserves set aside by the Unaffiliated Seller or the
      Originators, there is no requirement for, and neither the Unaffiliated
      Seller nor the Originators shall make any, future advances thereunder. Any
      future advances made prior to the applicable Cut-Off Date have been
      consolidated with the principal balance secured by the Mortgage, and such
      principal balance, as consolidated, bears a single interest rate and
      single repayment term reflected on the applicable Mortgage Loan Schedule.
      The Principal Balance as of the applicable Cut-Off Date does not exceed
      the original principal amount of such Mortgage Loan. Except with respect
      to no more than $150,000 of escrow funds, any and all requirements as to
      completion of any on-site or off-site improvements and as to disbursements
      of any escrow funds therefor have been complied with. All costs, fees, and
      expenses incurred in making, or recording such Mortgage Loan have been
      paid;

            (v) All Mortgage Loans were originated in compliance with the
      Originators' Underwriting Guidelines;

            (w) The terms of the Mortgage and the Mortgage Note have not been
      impaired, waived, altered, or modified in any respect, except by a written
      instrument which has been recorded, if necessary, to protect the interest
      of the Indenture Trustee and which has been delivered to the Collateral
      Agent, on behalf of the Indenture Trustee. The substance of any such
      alteration or modification is or as to Subsequent Mortgage Loans will be
      reflected on the applicable Mortgage Loan Schedule and, to the extent
      necessary, has been or will be approved by (i) the insurer under the
      applicable mortgage title insurance policy, and (ii) the insurer under any
      other insurance policy required hereunder for such Mortgage Loan where
      such insurance policy requires approval and the failure to procure
      approval would impair coverage under such policy;

                                       18

<PAGE>

            (x) No instrument of release, waiver, alteration, or modification
      has been executed in connection with such Mortgage Loan, and no Mortgagor
      has been released, in whole or in part, except in connection with an
      assumption agreement which has been approved by the insurer under any
      insurance policy required hereunder for such Mortgage Loan where such
      policy requires approval and the failure to procure approval would impair
      coverage under such policy, and which is part of the Mortgage File and has
      been delivered to the Collateral Agent, on behalf of the Indenture
      Trustee, and the terms of which are reflected in the applicable Mortgage
      Loan Schedule;

            (y) Other than delinquencies described in clause (e) above, there is
      no default, breach, violation, or event of acceleration existing under the
      Mortgage or the Mortgage Note and no event which, with the passage of time
      or with notice and the expiration of any grace or cure period, would
      constitute such a default, breach, violation or event of acceleration, and
      neither the Originators nor the Unaffiliated Seller has waived any such
      default, breach, violation or event of acceleration. All taxes,
      governmental assessments (including assessments payable in future
      installments), insurance premiums, water, sewer, and municipal charges,
      leaseholder payments, or ground rents which previously became due and
      owing in respect of or affecting the related Mortgaged Property have been
      paid. Neither the Originators nor the Unaffiliated Seller has advanced
      funds, or induced, solicited, or knowingly received any advance of funds
      by a party other than the Mortgagor, directly or indirectly, for the
      payment of any amount required by the Mortgage or the Mortgage Note;

            (z) All of the improvements which were included for the purposes of
      determining the Appraised Value of the Mortgaged Property were completed
      at the time that such Mortgage Loan was originated and lie wholly within
      the boundaries and building restriction lines of such Mortgaged Property.
      Except for de minimis encroachments, no improvements on adjoining
      properties encroach upon the Mortgaged Property. To the best of the
      Unaffiliated Seller's and the Originators' knowledge, no improvement
      located on or being part of the Mortgaged Property is in violation of any
      applicable zoning law or regulation. All inspections, licenses, and
      certificates required to be made or issued with respect to all occupied
      portions of the Mortgaged Property (including all such improvements which
      were included for the purpose of determining such Appraised Value) and,
      with respect to the use and occupancy of the same, including but not
      limited to certificates of occupancy and fire underwriters certificates,
      have been made or obtained from the appropriate authorities and the
      Mortgaged Property is lawfully occupied under applicable law;

            (aa) To the best of the Unaffiliated Seller's and the Originators'
      knowledge, there do not exist any circumstances or conditions with respect
      to the Mortgage, the Mortgaged Property, the Mortgagor, or the Mortgagor's
      credit standing that can be reasonably expected to cause such Mortgage
      Loan to become delinquent or adversely affect the value or marketability
      of such Mortgage Loan, other than any such circumstances or conditions
      permitted under the Originator's Underwriting Guidelines;

            (bb) All parties which have had any interest in the Mortgage,
      whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
      period in which they held

                                       19

<PAGE>

      and disposed of such interest, were) (i) in compliance with any and all
      applicable licensing requirements of the laws of the state wherein the
      Mortgaged Property is located and (ii) (A) organized under the laws of
      such state, (B) qualified to do business in such state, (C) federal
      savings and loan associations or national banks having principal offices
      in such state, (D) not doing business in such state, or (E) not required
      to qualify to do business in such state;

            (cc) The Mortgage Note and the Mortgage are genuine, and each is the
      legal, valid and binding obligation of the maker thereof, enforceable in
      accordance with its terms, except as such enforcement may be limited by
      bankruptcy, insolvency, reorganization, moratorium, or other similar laws
      affecting the enforcement of creditors' rights generally and except that
      the equitable remedy of specific performance and other equitable remedies
      are subject to the discretion of the courts. All parties to the Mortgage
      Note and the Mortgage had legal capacity to execute the Mortgage Note and
      the Mortgage and convey the estate therein purported to be conveyed, and
      the Mortgage Note and the Mortgage have been duly and properly executed by
      such parties or pursuant to a valid power-of-attorney that has been
      recorded with the Mortgage;

            (dd) The transfer of the Mortgage Note and the Mortgage as and in
      the manner contemplated by this Agreement is sufficient either (i) fully
      to transfer to the Depositor all right, title, and interest of the
      Unaffiliated Seller and the Originators thereto as note holder and
      mortgagee or (ii) to grant to the Depositor the security interest referred
      to in Section 6.07 hereof. The Mortgage has been duly assigned and the
      Mortgage Note has been duly endorsed. The Assignment of Mortgage delivered
      to the Collateral Agent, on behalf of the Indenture Trustee, pursuant to
      Section 2.04(a)(iv) of the Sale and Servicing Agreement is in recordable
      form and is acceptable for recording under the laws of the applicable
      jurisdiction. The endorsement of the Mortgage Note, the delivery to the
      Collateral Agent, on behalf of the Indenture Trustee, of the endorsed
      Mortgage Note, and such Assignment of Mortgage, and the delivery of such
      Assignment of Mortgage for recording to, and the due recording of such
      Assignment of Mortgage in, the appropriate public recording office in the
      jurisdiction in which the Mortgaged Property is located are sufficient to
      permit the Indenture Trustee to avail itself of all protection available
      under applicable law against the claims of any present or future creditors
      of the Unaffiliated Seller and the Originators, and are sufficient to
      prevent any other sale, transfer, assignment, pledge, or hypothecation of
      the Mortgage Note and Mortgage by the Unaffiliated Seller or the
      Originators from being enforceable;

            (ee) Any and all requirements of any federal, state, or local law
      including, without limitation, usury, truth-in-lending, real estate
      settlement procedures, consumer credit protection, equal credit
      opportunity, or disclosure laws applicable to such Mortgage Loan have been
      complied with, and the Servicer shall maintain in its possession,
      available for the Indenture Trustee's inspection, and shall deliver to the
      Indenture Trustee or its designee upon demand, evidence of compliance with
      all such requirements. The consummation of the transactions contemplated
      by this Agreement will not cause the violation of any such laws;

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<PAGE>

            (ff) Such Mortgage Loan is covered by an ALTA mortgage title
      insurance policy or such other generally used and acceptable form of
      policy, issued by and the valid and binding obligation of a title insurer
      qualified to do business in the jurisdiction where the Mortgaged Property
      is located, insuring the Unaffiliated Seller, and its successors and
      assigns, as to the first or second priority lien, as applicable, of the
      Mortgage in the original principal amount of such Mortgage Loan. The
      assignment to the Indenture Trustee of the Unaffiliated Seller's interest
      in such mortgage title insurance policy does not require the consent of or
      notification to the insurer. Such mortgage title insurance policy is in
      full force and effect and will be in full force and effect and inure to
      the benefit of the Indenture Trustee upon the consummation of the
      transactions contemplated by this Agreement. No claims have been made
      under such mortgage title insurance policy and none of the Unaffiliated
      Seller, the Originators nor any prior holder of the Mortgage has done, by
      act or omission, anything which would impair the coverage of such mortgage
      title insurance policy;

            (gg) All improvements upon the Mortgaged Property are insured
      against loss by fire, hazards of extended coverage, and such other hazards
      as are customary in the area where the Mortgaged Property is located
      pursuant to insurance policies conforming to the requirements of Section
      3.05 hereof. If the Mortgaged Property at origination was located in an
      area identified on a flood hazard boundary map or flood insurance rate map
      issued by the Federal Emergency Management Agency as having special flood
      hazards (and such flood insurance has been made available), such Mortgaged
      Property was covered by flood insurance at origination. Each individual
      insurance policy is the valid and binding obligation of the insurer, is in
      full force and effect, and will be in full force and effect and inure to
      the benefit of the Indenture Trustee upon the consummation of the
      transactions contemplated by this Agreement, and contain a standard
      mortgage clause naming the originator of such Mortgage Loan, and its
      successors and assigns, as mortgagee and loss payee. All premiums thereon
      have been paid. The Mortgage obligates the Mortgagor to maintain all such
      insurance at the Mortgagor's cost and expense, and upon the Mortgagor's
      failure to do so, authorizes the holder of the Mortgage to obtain and
      maintain such insurance at the Mortgagor's cost and expense and to seek
      reimbursement therefor from the Mortgagor, and none of the Unaffiliated
      Seller, the related Originator or any prior holder of the Mortgage has
      acted or failed to act so as to impair the coverage of any such insurance
      policy or the validity, binding effect, and enforceability thereof;

            (hh) If the Mortgage constitutes a deed of trust, a trustee, duly
      qualified under applicable law to serve as such, has been properly
      designated and currently so serves and is named in such Mortgage, as no
      fees or expenses are or will become payable by the trustee or the
      Noteholders to the Indenture Trustee under the deed of trust, except in
      connection with a trustee's sale after default by the Mortgagor;

            (ii) The Mortgaged Property consists of one or more parcels of real
      property separately assessed for tax purposes. To the extent there is
      erected thereon a detached or an attached one-family residence or a
      detached two-to six-family dwelling, or an individual condominium unit in
      a low-rise condominium, or an individual unit in a planned unit
      development, or a commercial property, a manufactured dwelling, or a

                                       21

<PAGE>

      mixed use or multiple purpose property, such residence, dwelling or unit
      is not (i) a unit in a cooperative apartment, (ii) a property constituting
      part of a syndication, (iii) a time share unit, (iv) a property held in
      trust, (v) a mobile home, (vi) a log-constructed home, or (vii) a
      recreational vehicle;

            (jj) There exist no material deficiencies with respect to escrow
      deposits and payments, if such are required, for which customary
      arrangements for repayment thereof have not been made or which the
      Unaffiliated Seller or the related Originator expects not to be cured, and
      no escrow deposits or payments of other charges or payments due the
      Unaffiliated Seller have been capitalized under the Mortgage or the
      Mortgage Note;

            (kk) Such Mortgage Loan was not originated at a below market
      interest rate. Such Mortgage Loan does not have a shared appreciation
      feature, or other contingent interest feature;

            (ll) The origination and collection practices used by the
      Unaffiliated Seller, the Originators or the Servicer with respect to such
      Mortgage Loan have been in all respects legal, proper, prudent, and
      customary in the mortgage origination and servicing business;

            (mm) The Mortgagor has, to the extent required by applicable law,
      executed a statement to the effect that the Mortgagor has received all
      disclosure materials, if any, required by applicable law with respect to
      the making of fixed-rate mortgage loans. The Servicer shall maintain or
      cause to be maintained such statement in the Mortgage File;

            (nn) All amounts received by the Unaffiliated Seller or the
      Originators with respect to such Mortgage Loan after the applicable
      Cut-Off Date and required to be deposited in the related Distribution
      Account have been so deposited in the related Distribution Account and
      are, as of the Closing Date, or will be as of the Subsequent Transfer
      Date, as applicable, in the related Distribution Account;

            (oo) The appraisal report with respect to the Mortgaged Property
      contained in the Mortgage File was signed prior to the approval of the
      application for such Mortgage Loan by a qualified appraiser, duly
      appointed by the originator of such Mortgage Loan, who had no interest,
      direct or indirect, in the Mortgaged Property or in any loan made on the
      security thereof and whose compensation is not affected by the approval or
      disapproval of such application;

            (pp) When measured by the Cut-Off Date Aggregate Principal Balance,
      the Mortgagors with respect to at least 88.27% of the Mortgage Loans in
      Pool I and 83.69% of the Mortgage Loans in Pool II, represented at the
      time of origination that the Mortgagor would occupy the Mortgaged Property
      as the Mortgagor's primary residence;

            (qq) Each of the Originators and the Unaffiliated Seller has no
      knowledge with respect to the Mortgaged Property of any governmental or
      regulatory action or third party claim made, instituted or threatened in
      writing relating to a violation of any applicable federal, state or local
      environmental law, statute, ordinance, regulation, order, decree or
      standard;

                                       22

<PAGE>

            (rr) [Reserved];

            (ss) With respect to second lien Mortgage Loans:

                  (i) the Unaffiliated Seller and the Originators have no
            knowledge that the Mortgagor has received notice from the holder of
            the prior mortgage that such prior mortgage is in default,

                  (ii) no consent from the holder of the prior mortgage is
            needed for the creation of the second lien Mortgage or, if required,
            has been obtained and is in the related Mortgage File,

                  (iii) if the prior mortgage has a negative amortization, the
            CLTV was determined using the maximum loan amount of such prior
            mortgage,

                  (iv) the related first mortgage loan encumbering the related
            Mortgaged Property does not have a mandatory future advance
            provision, and

                  (v) the Mortgage Loans conform in all material respects to the
            description thereof in the Prospectus Supplement.

            (tt) Each of the Originators and the Unaffiliated Seller further
      represents and warrants to the Indenture Trustee, the Note Insurer and the
      Noteholders that as of the Subsequent Cut-Off Date all representations and
      warranties set forth in clauses (a) through (ss) above and (uu) through
      (ww) below will be correct in all material respects as to each Subsequent
      Mortgage Loan, and the representations so made in this subsection (tt) as
      to the following matters will be correct: (i) each Subsequent Mortgage
      Loan may not be thirty (30) or more days contractually delinquent as of
      the related Subsequent Cut-Off Date; (ii) the original term to maturity of
      such Subsequent Mortgage Loan may not exceed 360 months for Pool I and 360
      months for Pool II; (iii) such Subsequent Mortgage Loan must have a
      mortgage interest rate of at least 7.50% for Pool I and 9.25% for Pool II;
      (iv) the purchase of the Subsequent Mortgage Loans is consented to by the
      Note Insurer and the Rating Agencies, notwithstanding the fact that the
      Subsequent Mortgage Loans meet the parameters stated herein; (v) the
      principal balance of any such Subsequent Mortgage Loan may not exceed
      $250,000 for Pool I and $650,000 for Pool II; (vi) no such Subsequent
      Mortgage Loan shall have a CLTV of more than (a) for consumer purpose
      loans, 100% for Pool I and 100% for Pool II, and (b) for business purpose
      loans, 77.00% for Pool I and 77.00% for Pool II; and (vii) following the
      purchase of such Subsequent Mortgage Loans by the Trust, (a) no more than
      24.00% for Pool I and 47.00% for Pool II of the aggregate principal
      balance of the Mortgage Loans may be second liens; (b) no more than 45.00%
      for Pool I and 60.00% for Pool II of the Mortgage Loans may be Balloon
      Loans; (c) no more than 7.00% for Pool I and 23.00% for Pool II of the
      Mortgage Loans may be secured by mixed-use properties, commercial
      properties, or five or more unit multifamily properties; (d) no more than
      13.00% of the aggregate mortgage loans are made to limited documentation
      or no documentation borrowers; (e) no more than 23.00% of the Mortgage
      Loans are made to "B" quality borrowers; (f) no more than 12.00% of the
      Mortgage Loans are made to "C" quality borrowers; (g) no more

                                       23

<PAGE>

      than 3.00% of the Mortgage Loans are made to "D" quality borrowers; (h) no
      more than 1.25% of the Mortgage Loans are secured by mortgage properties
      within a single zip code; (i) no more than 30.00% of the Mortgage Loans
      are secured by mortgage properties in the state of New York; (j) no more
      than 15.00% of the Mortgage Loans are secured by mortgage properties in
      the state of New Jersey; (k) no more than 12.00% of the Mortgage Loans are
      secured by mortgage properties in the state of Pennsylvania; (l) no more
      than 12.00% of the Mortgage Loans are secured by mortgage properties in
      the state of Florida; (m) the Mortgage Loans will have a weighted average
      mortgage interest rate, (I) for consumer purpose loans, of at least 11.40%
      for Pool I and 11.60% for Pool II and (II) for business purpose loans, of
      at least 16.00% for Pool I and 15.75% for Pool II; and (n) the Mortgage
      Loans will have a weighted average CLTV of not more than (I) for consumer
      purpose loans, 80.00% for Pool I and 80.00% for Pool II, and (II) for
      business purpose loans, 64.00% for Pool I, 61.00% for Pool II.

            (uu) To the best of the Unaffiliated Seller's and the Originators'
      knowledge, no error, omission, misrepresentation, negligence, fraud or
      similar occurrence with respect to a Mortgage Loan has taken place on the
      part of any person, including without limitation the Mortgagor, any
      appraiser, any builder or developer, or any other party involved in the
      origination of the Mortgage Loan or in the application of any insurance in
      relation to such Mortgage Loan;

            (vv) Each Mortgaged Property is in compliance with all environmental
      laws, ordinances, rules, regulations and orders of federal, state or
      governmental authorities relating thereto. No hazardous material has been
      or is incorporated in, stored on or under (other than properly stored
      materials used for reasonable residential purposes) , released from,
      treated on, transported to or from, or disposed of on or from, any
      Mortgaged Property such that, under applicable law (A) any such hazardous
      material would be required to be eliminated before the Mortgaged Property
      could be altered, renovated, demolished or transferred, or (B) the owner
      of the Mortgaged Property, or the holder of a security interest therein,
      could be subjected to liability for the removal of such hazardous material
      or the elimination of the hazard created thereby. Neither the Unaffiliated
      Seller nor any Mortgagor has received notification from any federal, state
      or other governmental authority relating to any hazardous materials on or
      affecting the Mortgaged Property or to any potential or known liability
      under any environmental law arising from the ownership or operation of the
      Mortgaged Property. For the purposes of this subsection, the term
      "hazardous materials" shall include, without limitation, gasoline,
      petroleum products, explosives, radioactive materials, polychlorinated
      biphenyls or related or similar materials, asbestos or any material
      containing asbestos, lead, lead-based paint and any other substance or
      material as may be defined as a hazardous or toxic substance by any
      federal, state or local environmental law, ordinance, rule, regulation or
      order, including, without limitation, CERCLA, the Clean Air Act, the Clean
      Water Act, the Resource Conservation and Recovery Act, the Toxic
      Substances Control Act and any regulations promulgated pursuant thereto;
      and

            (ww) With respect to any business purpose loan, the related Mortgage
      Note contains an acceleration clause, accelerating the maturity date under
      the Mortgage Note to the date the individual guarantying such loan, if
      any, becomes subject to any

                                       24

<PAGE>

      bankruptcy, insolvency, reorganization, moratorium, or other similar laws
      affecting the enforcement of creditors' rights generally.

            Section 3.04 Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Unaffiliated Seller,
as of the date of execution of this Agreement and the Closing Date, that:

            (a) The Depositor is a corporation duly organized, validly existing
      and in good standing under the laws of the State of Delaware;

            (b) The Depositor has the corporate power and authority to purchase
      each Mortgage Loan and to execute, deliver and perform, and to enter into
      and consummate all the transactions contemplated by this Agreement;

            (c) This Agreement has been duly and validly authorized, executed
      and delivered by the Depositor, and, assuming the due authorization,
      execution and delivery hereof by the Unaffiliated Seller and the
      Originators, constitutes the legal, valid and binding agreement of the
      Depositor, enforceable against the Depositor in accordance with its terms,
      except as such enforcement may be limited by bankruptcy, insolvency,
      reorganization, moratorium or other similar laws relating to or affecting
      the rights of creditors generally, and by general equity principles
      (regardless of whether such enforcement is considered in a proceeding in
      equity or at law);

            (d) No consent, approval, authorization or order of or registration
      or filing with, or notice to, any governmental authority or court is
      required for the execution, delivery and performance of or compliance by
      the Depositor with this Agreement or the consummation by the Depositor of
      any of the transactions contemplated hereby, except such as have been made
      on or prior to the Closing Date;

            (e) The Depositor has filed or will file the Prospectus and
      Prospectus Supplement with the Commission in accordance with Rule 424(b)
      under the Securities Act; and

            (f) None of the execution and delivery of this Agreement, the
      purchase of the Mortgage Loans from the Unaffiliated Seller, the
      consummation of the other transactions contemplated hereby, or the
      fulfillment of or compliance with the terms and conditions of this
      Agreement, (i) conflicts or will conflict with the charter or bylaws of
      the Depositor or conflicts or will conflict with or results or will result
      in a breach of, or constitutes or will constitute a default or results or
      will result in an acceleration under, any term, condition or provision of
      any indenture, deed of trust, contract or other agreement or other
      instrument to which the Depositor is a party or by which it is bound and
      which is material to the Depositor, or (ii) results or will result in a
      violation of any law, rule, regulation, order, judgment or decree of any
      court or governmental authority having jurisdiction over the Depositor.

            Section 3.05 Repurchase Obligation for Defective Documentation and
for Breach of a Representation or Warranty. (a) Each of the representations and
warranties contained in Sections 3.01, 3.02 and 3.03 shall survive the purchase
by the Depositor of the

                                       25

<PAGE>

Mortgage Loans, the subsequent transfer thereof by the Depositor to the Trust
and the subsequent pledge thereof by the Trust to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer, and shall continue in full
force and effect, notwithstanding any restrictive or qualified endorsement on
the Mortgage Notes and notwithstanding subsequent termination of this Agreement,
the Sale and Servicing Agreement or the Indenture.

            (b) With respect to any representation or warranty contained in
Sections 3.01 or 3.03 hereof that is made to the best of the Originators'
knowledge or contained in Sections 3.02 or 3.03 hereof that is made to the best
of the Unaffiliated Seller's knowledge, if it is discovered by the Servicer, any
Subservicer, the Indenture Trustee, the Collateral Agent, the Depositor, the
Note Insurer or any Noteholder that the substance of such representation and
warranty was inaccurate as of the Closing Date or the Subsequent Transfer Date,
as applicable, and such inaccuracy materially and adversely affects the value of
the related Mortgage Loan, then notwithstanding the Originators' or the
Unaffiliated Seller's lack of knowledge with respect to the inaccuracy at the
time the representation or warranty was made, such inaccuracy shall be deemed a
breach of the applicable representation or warranty. Upon discovery by the
Originators, the Unaffiliated Seller, the Servicer, any Subservicer, the
Indenture Trustee, the Collateral Agent, the Note Insurer, the Depositor or any
Noteholder of a breach of any of such representations and warranties which
materially and adversely affects the value of Mortgage Loans or the interest of
the Noteholders, or which materially and adversely affects the interests of the
Note Insurer or the Noteholders in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the
Originators' or the Unaffiliated Seller's best knowledge), the party discovering
such breach shall give, pursuant to this Section 3.05(b) and pursuant to Section
4.02 of the Sale and Servicing Agreement, prompt written notice to the others.
Subject to the last paragraph of this Section 3.05(b), within sixty (60) days of
the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Unaffiliated Seller and the Originators shall
(a) promptly cure such breach in all material respects, or (b) purchase such
Mortgage Loan at a purchase price equal to the Loan Repurchase Price, or (c)
remove such Mortgage Loan from the Trust Estate (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans. Any such substitution shall be accompanied by payment by the Unaffiliated
Seller of the Substitution Adjustment, if any, to be deposited in the related
Distribution Account pursuant to the Sale and Servicing Agreement.

            The Originators shall cooperate with the Unaffiliated Seller to cure
any breach and shall reimburse the Unaffiliated Seller for the costs and
expenses related to any cure, substitution (including any Substitution
Adjustment) or repurchase incurred by the Unaffiliated Seller pursuant to this
Section 3.05.

            (c) As to any Deleted Mortgage Loan for which the Unaffiliated
Seller or an Originator substitutes a Qualified Substitute Mortgage Loan or
Loans, the Unaffiliated Seller or such Originator shall effect such substitution
by delivering to the Indenture Trustee and the Collateral Agent, a certification
in the form attached to the Sale and Servicing Agreement as Exhibit H, executed
by a Servicing Officer and the documents described in Section 2.05(a) of the
Sale and Servicing Agreement for such Qualified Substitute Mortgage Loan or
Loans. Pursuant to the Sale and Servicing Agreement, upon receipt by the
Indenture Trustee and the Collateral

                                       26

<PAGE>

Agent of a certification of a Servicing Officer of such substitution or purchase
and, in the case of a substitution, upon receipt by the Collateral Agent, on
behalf of the Indenture Trustee of the related Mortgage File, and the deposit of
certain amounts in the related Distribution Account pursuant to Section 2.07(b)
of the Sale and Servicing Agreement (which certification shall be in the form of
Exhibit H to the Sale and Servicing Agreement), the Collateral Agent, on behalf
of the Indenture Trustee, shall be required to release to the Servicer for
release to the Unaffiliated Seller the related Indenture Trustee's Mortgage File
and shall be required to execute, without recourse, and deliver such instruments
of transfer furnished by the Unaffiliated Seller as may be necessary to transfer
such Mortgage Loan to the Unaffiliated Seller or such Originator.

            (d) Pursuant to the Sale and Servicing Agreement, the Servicer shall
deposit in the related Distribution Account all payments received in connection
with such Qualified Substitute Mortgage Loan or Loans after the date of such
substitution. Monthly Payments received with respect to Qualified Substitute
Mortgage Loans on or before the date of substitution will be retained by the
Unaffiliated Seller. The Trust will own all payments received on the Deleted
Mortgage Loan on or before the date of substitution, and the Unaffiliated Seller
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. Pursuant to the Sale and Servicing
Agreement, the Servicer shall be required to give written notice to the
Indenture Trustee, the Collateral Agent and the Note Insurer that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of the Sale and
Servicing Agreement and the substitution of the Qualified Substitute Mortgage
Loan. The parties hereto agree to amend the Mortgage Loan Schedule accordingly.
Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall
be subject to the terms of the Indenture, the Sale and Servicing Agreement and
this Agreement in all respects, and the Unaffiliated Seller shall be deemed to
have made with respect to such Qualified Substitute Mortgage Loan or Loans, as
of the date of substitution, the representations and warranties set forth in
Sections 3.02 and 3.03 herein. On the date of such substitution, the
Unaffiliated Seller will remit to the Servicer and, pursuant to the Sale and
Servicing Agreement, the Servicer will deposit into the related Distribution
Account, an amount equal to the Substitution Adjustment, if any.

            (e) With respect to any Mortgage Loan that has been converted to an
REO Mortgage Loan, all references in this Section 3.05 or Section 2.06 to
"Mortgage Loan" shall be deemed to refer to such REO Mortgage Loan. With respect
to any Mortgage Loan that the Originator or Unaffiliated Seller is required to
repurchase that is or becomes a Liquidated Mortgage Loan, in lieu of
repurchasing such Mortgage Loan, the Originator or Unaffiliated Seller shall
deposit into the related Payment Account, pursuant to Section 8.01 of the
Indenture an amount equal to the amount of the Liquidated Loan Loss, if any,
incurred in connection with the liquidation of such Mortgage Loan within the
same time period in which the Originator or Unaffiliated Seller would have
otherwise been required to repurchase such Mortgage Loan.

            (f) It is understood and agreed that the obligations of the
Unaffiliated Seller and the Originator set forth in Section 2.06 and this
Section 3.05 to cure, purchase or substitute for a defective Mortgage Loan as
provided in Section 2.06 and this Section 3.05 constitute the sole remedies of
the Depositor, the Indenture Trustee, the Note Insurer and the Noteholders
respecting a breach of the foregoing representations and warranties.

                                       27

<PAGE>

            (g) The Unaffiliated Seller and the Originator shall be obligated to
indemnify the Indenture Trustee, the Trust, the Depositor, the Owner Trustee,
the Collateral Agent, the Noteholders and the Note Insurer (in their individual
and trust capacities) and their successors, assigns, agents and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against any Indemnified Party in any way relating to or arising out of a breach
by the Unaffiliated Seller or the related Originator of the representations or
warranties herein. The indemnities contained in this Section 3.05 shall survive
the resignation or termination of the Owner Trustee or the termination of this
Agreement.

            (h) Each of the Originators and the Unaffiliated Seller shall be
jointly and severally responsible for any repurchase, cure or substitution
obligation of any of the Originators or the Unaffiliated Seller under this
Agreement, the Indenture and the Sale and Servicing Agreement.

            (i) Any cause of action against the Unaffiliated Seller or an
Originator relating to or arising out of the breach of any representations and
warranties or covenants made in Sections 2.06, 3.02 or 3.03 shall accrue as to
any Mortgage Loan upon (i) discovery of such breach by any party and notice
thereof to the Unaffiliated Seller or such Originator, (ii) failure by the
Unaffiliated Seller or such Originator to cure such breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Unaffiliated Seller or such Originator by the Indenture Trustee for all amounts
payable in respect of such Mortgage Loan.

Article IV

                             THE UNAFFILIATED SELLER

            Section 4.01 Covenants of the Originators and the Unaffiliated
Seller. Each of the Originators and the Unaffiliated Seller covenants to the
Depositor as follows:

            (a) The Originators and the Unaffiliated Seller shall cooperate with
      the Depositor and the firm of independent certified public accountants
      retained with respect to the issuance of the Notes in making available all
      information and taking all steps reasonably necessary to permit the
      accountants' letters required hereunder to be delivered within the times
      set for delivery herein.

            (b) The Unaffiliated Seller agrees to satisfy or cause to be
      satisfied on or prior to the Closing Date, all of the conditions to the
      Depositor's obligations set forth in Section 5.01 hereof that are within
      the Unaffiliated Seller's (or its agents') control.

            (c) The Originators and the Unaffiliated Seller hereby agree to do
      all acts, transactions, and things and to execute and deliver all
      agreements, documents, instruments, and papers by and on behalf of the
      Originators or the Unaffiliated Seller as the Depositor or its counsel may
      reasonably request in order to consummate the transfer

                                       28

<PAGE>

      of the Mortgage Loans to the Depositor and the subsequent transfer thereof
      to the Indenture Trustee, and the rating, issuance and sale of the Notes.

            Section 4.02 Merger or Consolidation. Each of the Originators and
the Unaffiliated Seller will keep in full effect its existence, rights and
franchises as a corporation and will obtain and preserve its qualification to do
business as a foreign corporation, in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement. Any Person into which any of the
Originators or the Unaffiliated Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Originators or the Unaffiliated Seller shall be a party, or any Person
succeeding to the business of the Originators or the Unaffiliated Seller, shall
be approved by the Note Insurer which approval shall not be unreasonably
withheld. If the approval of the Note Insurer is not required, the successor
shall be an established mortgage loan servicing institution that is a Permitted
Transferee and in all events shall be the successor of the Originators or the
Unaffiliated Seller 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 Originators and the Unaffiliated Seller shall send notice
of any such merger or consolidation to the Indenture Trustee and the Note
Insurer.

            Section 4.03 Costs. In connection with the transactions contemplated
under this Agreement, the Trust Agreement, the Indenture and the Sale and
Servicing Agreement, the Unaffiliated Seller shall promptly pay (or shall
promptly reimburse the Depositor to the extent that the Depositor shall have
paid or otherwise incurred): (a) the fees and disbursements of the Depositor's
(50% of fees up to $30,000 and then 100% thereafter), the Unaffiliated Seller's
and the Originators' counsel; (b) the fees of S&P, DCR and Moody's; (c) any of
the fees of the Indenture Trustee and the fees and disbursements of the
Indenture Trustee's counsel; (d) any of the fees of the Owner Trustee and the
fees and disbursements of the Owner Trustee's counsel; (e) expenses incurred in
connection with printing the Prospectus, the Prospectus Supplement, any
amendment or supplement thereto, any preliminary prospectus and the Notes; (f)
fees and expenses relating to the filing of documents with the Commission
(including without limitation periodic reports under the Exchange Act); (g) the
shelf registration amortization fee of 0.04% of the Note Principal Balance of
the Notes on the Closing Date, paid in connection with the issuance of Notes;
(h) the fees and disbursements for Deloitte & Touche LLP, accountants for the
Originators; and (i) all of the initial expenses (not to exceed $65,000) of the
Note Insurer including, without limitation, legal fees and expenses, accountant
fees and expenses and expenses in connection with due diligence conducted on the
Mortgage Files but not including the initial premium paid to the Note Insurer.
For the avoidance of doubt, the parties hereto acknowledge that it is the
intention of the parties that the Depositor shall not pay any of the Indenture
Trustee's or Owner Trustee's fees and expenses in connection with the
transactions contemplated by this Agreement, the Trust Agreement, the Indenture
and the Sale and Servicing Agreement. All other costs and expenses in connection
with the transactions contemplated hereunder shall be borne by the party
incurring such expenses.

            Section 4.04 Indemnification. (a) The Originators and the
Unaffiliated Seller, jointly and severally, agree

                                       29

<PAGE>

            (i) to indemnify and hold harmless the Depositor, each of its
      directors, each of its officers who have signed the Registration
      Statement, and each of its directors and each person or entity who
      controls the Depositor or any such person, within the meaning of Section
      15 of the Securities Act, against any and all losses, claims, damages or
      liabilities, joint and several, to which the Depositor or any such person
      or entity may become subject, under the Securities Act or otherwise, and
      will reimburse the Depositor and each such controlling person for any
      legal or other expenses incurred by the Depositor or such controlling
      person in connection with investigating or defending any such loss, claim,
      damage, liability or action, insofar as such losses, claims, damages or
      liabilities (or actions in respect thereof) arise out of or are based upon
      any untrue statement or alleged untrue statement of any material fact
      contained in the Prospectus Supplement or any amendment or supplement to
      the Prospectus Supplement or the omission or the alleged omission to state
      therein a material fact required to be stated therein or necessary to make
      the statements in the Prospectus Supplement or any amendment or supplement
      to the Prospectus Supplement approved in writing by the Originators or the
      Unaffiliated Seller, in light of the circumstances under which they were
      made, not misleading, but only to the extent that such untrue statement or
      alleged untrue statement or omission or alleged omission relates to the
      information contained in the Prospectus Supplement referred to in Section
      3.01(d). This indemnity agreement will be in addition to any liability
      which the Originators and the Unaffiliated Seller may otherwise have; and

            (ii) to indemnify and to hold the Depositor harmless against any and
      all claims, losses, penalties, fines, forfeitures, legal fees and related
      costs, judgments, and any other costs, fees and expenses that the
      Depositor may sustain in any way related to the failure of any of the
      Originators or the Unaffiliated Seller to perform its duties in compliance
      with the terms of this Agreement. The Originators or the Unaffiliated
      Seller shall immediately notify the Depositor if a claim is made by a
      third party with respect to this Agreement, and the Originators or the
      Unaffiliated Seller shall assume the defense of any such claim and pay all
      expenses in connection therewith, including reasonable counsel fees, and
      promptly pay, discharge and satisfy any judgment or decree which may be
      entered against the Depositor in respect of such claim. Pursuant to the
      Indenture, the Indenture Trustee shall reimburse the Unaffiliated Seller
      in accordance with the Indenture for all amounts advanced by the
      Unaffiliated Seller pursuant to the preceding sentence except when the
      claim relates directly to the failure of the Unaffiliated Seller to
      perform its duties in compliance with the terms of this Agreement.

            (b) The Depositor agrees to indemnify and hold harmless each of the
Originators and the Unaffiliated Seller, each of their respective directors and
each person or entity who controls the Originators or the Unaffiliated Seller or
any such person, within the meaning of Section 15 of the Securities Act, against
any and all losses, claims, damages or liabilities, joint and several, to which
the Originators or the Unaffiliated Seller or any such person or entity may
become subject, under the Securities Act or otherwise, and will reimburse the
Originators and the Unaffiliated Seller and any such director or controlling
person for any legal or other expenses incurred by such party or any such
director or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or

                                       30

<PAGE>

are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, the Prospectus
Supplement, any amendment or supplement to the Prospectus or the Prospectus
Supplement or the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, but
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission is other than a statement or omission relating to
the information set forth in subsection (a)(i) of this Section 4.04; provided,
however, that in no event shall the Depositor be liable to the Unaffiliated
Seller under this paragraph (b) in an amount in excess of the Depositor's resale
profit or the underwriting fee on the sale of the Notes. This indemnity
agreement will be in addition to any liability which the Depositor may otherwise
have.

            (c) Promptly after receipt by an indemnified party under this
Section 4.04 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 4.04, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 4.04 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. The indemnifying party shall not be liable for the
expenses of more than one separate counsel.

            (d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 4.04 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
subsection (b) of this Section 4.04 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) subject to the limits set forth in subsection (a)
and subsection (b) of this Section 4.04; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by the Originators and the

                                       31

<PAGE>

Unaffiliated Seller on the one hand, and the Depositor on the other, the
Originators', the Unaffiliated Seller's and the Depositor's relative knowledge
and access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate in the circumstances. The
Originators, the Unaffiliated Seller and the Depositor agree that it would not
be equitable if the amount of such contribution were determined by pro rata or
per capita allocation. For purposes of this Section 4.04, each director of the
Depositor, each officer of the Depositor who signed the Registration Statement,
and each person, if any who controls the Depositor within the meaning of Section
15 of the Securities Act, shall have the same rights to contribution as the
Depositor, and each director of the Originators or the Unaffiliated Seller, and
each person, if any who controls the Originators or the Unaffiliated Seller
within the meaning of Section 15 of the Securities Act, shall have the same
rights to contribution as the Originators and the Unaffiliated Seller.

                                   ARTICLE V

                              CONDITIONS OF CLOSING

            Section 5.01 Conditions of Depositor's Obligations. The obligations
of the Depositor to purchase the Mortgage Loans will be subject to the
satisfaction on the Closing Date of the following conditions. Upon payment of
the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.

            (a) Each of the obligations of the Unaffiliated Seller required to
be performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Unaffiliated Seller and the Originators
under this Agreement shall be true and correct as of the Closing Date and no
event shall have occurred which, with notice or the passage of time, would
constitute a default under this Agreement, and the Depositor shall have received
a certificate to the effect of the foregoing signed by an authorized officer of
the Unaffiliated Seller and the Originators.

            (b) The Depositor shall have received a letter dated the date of
this Agreement, in form and substance acceptable to the Depositor and its
counsel, prepared by Deloitte & Touche LLP, independent certified public
accountants, regarding the numerical information contained in the Prospectus
Supplement including, but not limited to the information under the captions
"Prepayment and Yield Considerations" and "The Mortgage Loan Pools" regarding
any numerical information in any marketing materials relating to the Notes and
regarding any other information as reasonably requested by the Depositor.

            (c) The Mortgage Loans will be acceptable to the Depositor, in its
sole reasonable discretion.

            (d) The Depositor shall have received the following additional
closing documents, in form and substance reasonably satisfactory to the
Depositor and its counsel:

            (i) the Mortgage Loan Schedule;

                                       32
<PAGE>

            (ii) this Agreement, the Sale and Servicing Agreement, the
      Indenture, the Trust Agreement, and the Underwriting Agreement dated as of
      March 15, 2000 between the Depositor and Prudential Securities
      Incorporated and all documents required thereunder, duly executed and
      delivered by each of the parties thereto other than the Depositor;

            (iii) officer's certificates of an officer of each of the
      Originators and the Unaffiliated Seller, dated as of the Closing Date, and
      attached thereto resolutions of the board of directors and a copy of the
      charter and by-laws;

            (iv) copy of each of the Originators and the Unaffiliated Seller's
      charter and all amendments, revisions, and supplements thereof, certified
      by a secretary of each entity;

            (v) an opinion of the counsel for the Originators and the
      Unaffiliated Seller as to various corporate matters in a form acceptable
      to the Depositor, its counsel, the Note Insurer, S&P, DCR and Moody's (it
      being agreed that the opinion shall expressly provide that the Indenture
      Trustee shall be entitled to rely on the opinion);

            (vi) opinions of counsel for the Unaffiliated Seller, in forms
      acceptable to the Depositor, its counsel, the Note Insurer, S&P and
      Moody's as to such matters as shall be required for the assignment of a
      rating to the Notes of "AAA" by S&P, "AAA" by DCR, and "AAA" by Moody's
      (it being agreed that such opinions shall expressly provide that the
      Indenture Trustee shall be entitled to rely on such opinions);

            (vii) a letter from Moody's to the effect that it has assigned a
      rating of "Aaa" to the Notes;

            (viii) a letter from S&P to the effect that it has assigned a rating
      of "AAA" to the Notes;

            (ix) a copy of a letter from DCR to the Depositor to the effect that
      it has assigned a rating of "AAA" to the Notes;

            (x) an opinion of counsel for the Indenture Trustee in form and
      substance acceptable to the Depositor, its counsel, the Note Insurer,
      Moody's, DCR and S&P (it being agreed that the opinion shall expressly
      provide that the Unaffiliated Seller shall be entitled to rely on the
      opinion);

            (xi) an opinion of counsel for the Owner Trustee in form and
      substance acceptable to the Depositor, its counsel, the Note Insurer,
      Moody's, DCR and S&P (it being agreed that the opinion shall expressly
      provide that the Unaffiliated Seller shall be entitled to rely on the
      opinion);

            (xii) an opinion or opinions of counsel for the Servicer, in form
      and substance acceptable to the Depositor, its counsel, the Note Insurer,
      Moody's, DCR and S&P (it being agreed that the opinion shall expressly
      provide that the Unaffiliated Seller shall be entitled to rely on the
      opinion); and

                                       33

<PAGE>

            (xiii) an opinion or opinions of counsel for the Note Insurer, in
      each case in form and substance acceptable to the Depositor, its counsel,
      Moody's, DCR and S&P (it being agreed that the opinion shall expressly
      provide that the Unaffiliated Seller shall be entitled to rely on the
      opinion).

            (e) The Policy shall have been duly executed, delivered and issued
with respect to the Notes.

            (f) All proceedings in connection with the transactions contemplated
by this Agreement and all documents incident hereto shall be satisfactory in
form and substance to the Depositor and its counsel.

            (g) The Unaffiliated Seller shall have furnished the Depositor with
such other certificates of its officers or others and such other documents or
opinions as the Depositor or its counsel may reasonably request.

            Section 5.02 Conditions of Unaffiliated Seller's Obligations. The
obligations of the Unaffiliated Seller under this Agreement shall be subject to
the satisfaction, on the Closing Date, of the following conditions:

            (a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Depositor contained in this Agreement
shall be true and correct as of the Closing Date and the Unaffiliated Seller
shall have received a certificate to that effect signed by an authorized officer
of the Depositor.

            (b) The Unaffiliated Seller shall have received the following
additional documents:

            (i) this Agreement and the Sale and Servicing Agreement, and all
      documents required thereunder, in each case executed by the Depositor as
      applicable; and

            (ii) a copy of a letter from Moody's to the Depositor to the effect
      that it has assigned a rating of "Aaa" to the Notes , a copy of a letter
      from DCR to the Depositor to the effect that it has assigned a rating of
      "AAA" to the Notes and a copy of a letter from S&P to the Depositor to the
      effect that it has assigned a rating of "AAA" to the Notes.

            (iii) an opinion of counsel for the Indenture Trustee in form and
      substance acceptable to the Unaffiliated Seller and its counsel;

            (iv) an opinion of counsel for the Owner Trustee in form and
      substance acceptable to the Unaffiliated Seller and its counsel;

            (v) an opinion of counsel for the Note Insurer in form and substance
      acceptable to the Unaffiliated Seller and its counsel;

                                       34

<PAGE>

            (vi) an opinion of the counsel for the Depositor as to securities
      and tax matters; and

            (vii) an opinion of the counsel for the Depositor as to true sale
      matters.

            (c) The Depositor shall have furnished the Unaffiliated Seller with
such other certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Agreement as the
Unaffiliated Seller may reasonably request.

            Section 5.03 Termination of Depositor's Obligations. The Depositor
may terminate its obligations hereunder by notice to the Unaffiliated Seller at
any time before delivery of and payment of the purchase price for the Mortgage
Loans if: (a) any of the conditions set forth in Section 5.01 are not satisfied
when and as provided therein; (b) there shall have been the entry of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Unaffiliated Seller, or for the
winding up or liquidation of the affairs of the Unaffiliated Seller; (c) there
shall have been the consent by the Unaffiliated Seller to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Unaffiliated Seller or of or relating to substantially all of the property
of the Unaffiliated Seller; (d) any purchase and assumption agreement with
respect to the Unaffiliated Seller or the assets and properties of the
Unaffiliated Seller shall have been entered into; or (e) a Termination Event
shall have occurred. The termination of the Depositor's obligations hereunder
shall not terminate the Depositor's rights hereunder or its right to exercise
any remedy available to it at law or in equity.

                                   ARTICLE VI

                                  MISCELLANEOUS

            Section 6.01 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by telex or telegraph and confirmed by a similar mailed writing, if
to the Depositor, addressed to the Depositor at Prudential Securities Secured
Financing Corporation, One New York Plaza, 14th Floor, New York, New York 10292,
Attention: Managing Director - Asset Backed Finance Group, or to such other
address as the Depositor may designate in writing to the Unaffiliated Seller and
the Originators and if to the Unaffiliated Seller or an Originator, addressed to
the Unaffiliated Seller, 3411 Silverside Road, 103 Springer Bldg., Wilmington,
Delaware 19810, Attention: Jeffrey Ruben, or to such Originator at Balapointe
Office Centre, 111 Presidential Boulevard, Suite 127, Bala Cynwyd, Pennsylvania
19004, Attention: Mr. Anthony Santilli, Jr., or to such other address as the
Unaffiliated Seller or such Originator may designate in writing to the
Depositor.

            Section 6.02 Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or

                                       35

<PAGE>

covenant of this Agreement which is prohibited or unenforceable or is held to be
void or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto waive any provision
of law which prohibits or renders void or unenforceable any provision hereof.

            Section 6.03 Agreement of Unaffiliated Seller. The Unaffiliated
Seller agrees to execute and deliver such instruments and take such actions as
the Depositor may, from time to time, reasonably request in order to effectuate
the purpose and to carry out the terms of this Agreement.

            Section 6.04 Survival. The parties to this Agreement agree that the
representations, warranties and agreements made by each of them herein and in
any Note or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Mortgage Loans.

            Section 6.05 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 6.06 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, this Agreement may not be assigned, pledged or hypothecated by any party
hereto to a third party without the written consent of the other party to this
Agreement and the Note Insurer; provided, however, that the Depositor may assign
its rights hereunder without the consent of the Unaffiliated Seller.

            Section 6.07 Confirmation of Intent; Grant of Security Interest. It
is the express intent of the parties hereto that the conveyance of the Mortgage
Loans by the Originators to the Unaffiliated Seller as contemplated by this
Unaffiliated Seller's Agreement be, and be treated for all purposes as, a sale
of the Mortgage Loans and that the conveyance of the Mortgage Loans by the
Unaffiliated Seller to the Depositor as contemplated by this Unaffiliated
Seller's Agreement be, and be treated for accounting purposes as, a sale of the
Mortgage Loans. It is, further, not the intention of the parties that any such
conveyance be deemed a pledge of the Mortgage Loans by the Originators to the
Unaffiliated Seller or by the Unaffiliated Seller to the Depositor to secure a
debt or other obligation of the Originators or the Unaffiliated Seller, as the
case may be. However, in the event that, notwithstanding the intent of the
parties, the Mortgage Loans are held to continue to be property of the
Originators or the Unaffiliated Seller then (a) this Unaffiliated Seller's
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code; (b) the transfer of the
Mortgage Loans provided for herein shall be deemed to be a grant by the
Originators to the Unaffiliated Seller and by the Unaffiliated Seller to the
Depositor of a security interest in all of such parties' right,

                                       36

<PAGE>

title and interest in and to the Mortgage Loans and all amounts payable on the
Mortgage Loans in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property; (c) the possession by the Depositor (or its
assignee) of Mortgage Notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the Uniform Commercial Code; and (d)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Depositor (or its
assignee) for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Depositor pursuant to any provision
hereof shall also be deemed to be an assignment of any security interest created
hereby. The Originators, the Unaffiliated Seller and the Depositor shall, to the
extent consistent with this Unaffiliated Seller's Agreement, take such actions
as may be necessary to ensure that, if this Unaffiliated Seller's Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement.

            Section 6.08 Miscellaneous. This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof.

            Section 6.09 Amendments. (a) This Agreement may be amended from time
to time by the Originators, the Unaffiliated Seller and the Depositor by written
agreement, upon the prior written consent of the Note Insurer, without notice to
or consent of the Noteholders, and with prior written notice to the Owner
Trustee to cure any ambiguity, to correct or supplement any provisions herein,
to comply with any changes in the Code, or to make any other provisions with
respect to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by (i) an Opinion of Counsel, at the expense of
the party requesting the change, delivered to the Indenture Trustee or (ii) a
letter from each Rating Agency confirming that such amendment will not result in
the reduction, qualification or withdrawal of the then current rating of the
Notes, adversely affect in any material respect the interests of any Noteholder;
and provided, further, that no such amendment shall reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Note without the consent of the Holder of such
Note, or change the rights or obligations of any other party hereto without the
consent of such party.

            (b) This Agreement may be amended from time to time by the
Originators, the Unaffiliated Seller and the Depositor with the consent of the
Note Insurer, the Majority Noteholders and the Holders of the majority of the
Percentage Interest in the Trust Certificates and with prior written notice to
the Owner Trustee for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders; provided, however, that no such amendment
shall reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any Note
without the consent of the Holder of such Note or reduce the percentage for each
Class the Holders of which are required to consent to any

                                       37

<PAGE>

such amendment without the consent of the Holders of 100% of each Class of Notes
affected thereby.

            (c) It shall not be necessary for the consent of Holders under this
Section 6.09 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.

            Section 6.10 Third-Party Beneficiaries. The parties agree that each
of the Trust, the Owner Trustee, the Note Insurer and the Indenture Trustee is
an intended third-party beneficiary of this Agreement to the extent necessary to
enforce the rights and to obtain the benefit of the remedies of the Depositor
under this Agreement which are assigned to the Trust and then to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer, pursuant to
the Sale and Servicing Agreement and the Indenture, respectively, and to the
extent necessary to obtain the benefit of the enforcement of the obligations and
covenants of the Unaffiliated Seller under Section 4.01 and 4.04(a)(ii) of this
Agreement. The parties further agree that Prudential Securities Incorporated and
each of its directors and each person or entity who controls Prudential
Securities Incorporated or any such person, within the meaning of Section 15 of
the Securities Act (each, an "Underwriter Entity") is an intended third-party
beneficiary of this Agreement to the extent necessary to obtain the benefit of
the enforcement of the obligations and covenants of the Unaffiliated Seller with
respect to each Underwriter Entity under Section 4.04(a)(i) of this Agreement.

            Section 6.11 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.

            (b) THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH
HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF
MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 6.01 OF THIS
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER
THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAIL, POSTAGE PREPAID. THE
ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED
SELLER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
EITHERS' RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER
JURISDICTION.

                                       38

<PAGE>

            (c) THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH
HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED
IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

            Section 6.12 Execution in Counterparts. This Agreement 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.

                 [Remainder of Page Intentionally Left Blank]

                                       39

<PAGE>

            IN WITNESS WHEREOF, the parties to this Unaffiliated Seller's
Agreement have caused their names to be signed by their respective officers
thereunto duly authorized as of the date first above written.

                                    PRUDENTIAL SECURITIES SECURED FINANCING
                                       CORPORATION

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

                                    ABFS 2000-1, INC.

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

                                    AMERICAN BUSINESS CREDIT, INC.

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

                                    HOMEAMERICAN CREDIT, INC., D/B/A UPLAND
                                       MORTGAGE

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

                                    NEW JERSEY MORTGAGE AND INVESTMENT CORP.

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

<PAGE>

                                                                      SCHEDULE I

                             MORTGAGE LOAN SCHEDULE

<PAGE>

                                                                       EXHIBIT A

                               FORM OF SUBSEQUENT
                               TRANSFER AGREEMENT

      This SUBSEQUENT TRANSFER AGREEMENT, dated as of ________, 2000 (the
"Subsequent Transfer Date"), is entered into by and among ABFS 2000-1, INC., as
unaffiliated seller (the "Unaffiliated Seller"), AMERICAN BUSINESS CREDIT, INC.,
as an originator ("ABC"), HOMEAMERICAN CREDIT, INC. D/B/A UPLAND MORTGAGE, as an
originator ("Upland"), NEW JERSEY MORTGAGE AND INVESTMENT CORP., as an
originator ("NJMIC") (ABC, Upland and NJMIC are collectively referred to herein
as the "Originators"), and PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as depositor (the "Depositor").

                             W I T N E S S E T H:

      Reference is hereby made to (x) that certain Unaffiliated Seller's
Agreement, dated as of March 1, 2000 (the "Unaffiliated Seller's Agreement"), by
and among the Unaffiliated Seller, the Originators and the Depositor, and (y)
that certain Indenture, dated as of March 1, 2000 (the "Indenture"), by and
between the ABFS Mortgage Loan Trust 2000-1 (the "Trust") and The Chase
Manhattan Bank, as indenture trustee (the "Indenture Trustee"). Pursuant to the
Unaffiliated Seller's Agreement, the Originators have agreed to sell, assign and
transfer, and the Unaffiliated Seller has agreed to accept, from time to time,
Subsequent Mortgage Loans (as defined below), and the Unaffiliated Seller has
agreed to sell, assign and transfer, and the Depositor has agreed to accept,
from time to time, such Subsequent Mortgage Loans. The Unaffiliated Seller's
Agreement provides that each such sale of Subsequent Mortgage Loans be evidenced
by the execution and delivery of a Subsequent Transfer Agreement such as this
Subsequent Transfer Agreement.

      The assets sold to the Unaffiliated Seller, and then sold to the Depositor
pursuant to this Subsequent Transfer Agreement consist of (a) the Subsequent
Mortgage Loans in Pool I and Pool II listed in the Mortgage Loan Schedule
attached hereto (including property that secures a Subsequent Mortgage Loan that
becomes an REO Property), including the related Mortgage Files delivered or to
be delivered to the Collateral Agent, on behalf of the Indenture Trustee,
including all payments of principal received, collected or otherwise recovered
after the Subsequent Cut-Off Date for each Subsequent Mortgage Loan, all
payments of interest due on each Subsequent Mortgage Loan after the Subsequent
Cut-Off Date therefor whenever received and all other proceeds received in
respect of such Subsequent Mortgage Loans, (b) the Insurance Policies relating
to the Subsequent Mortgage Loans, and (c) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
assets, including, without limitation, all insurance proceeds and condemnation
awards.

      The "Subsequent Mortgage Loans" are those listed on the Schedule of
Mortgage Loans attached hereto. The Aggregate Principal Balance of such
Subsequent Mortgage Loans as of the Subsequent Cut-Off Date is $__________ in
Pool I and $__________ in Pool II.

<PAGE>

      NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:

      Section 1. Definitions. For the purposes of this Subsequent Transfer
Agreement, capitalized terms used herein but not otherwise defined shall have
the respective meanings assigned to such terms in Appendix I to the Indenture.

      Section 2. Sale, Assignment and Transfer. In consideration of the receipt
of $__________ (such amount being approximately 100% of the Aggregate Principal
Balance of the Subsequent Mortgage Loans) from the Unaffiliated Seller, each of
the Originators hereby sells, assigns and transfers to the Unaffiliated Seller,
without recourse, all of their respective right, title and interest in, to, and
under the Subsequent Mortgage Loans and related assets described above, whether
now existing or hereafter arising.

      In consideration of receipt of $__________ (such amount being
approximately 100% of the Aggregate Principal Balance of the Subsequent Mortgage
Loans) from the Depositor, the Unaffiliated Seller hereby sells, assigns and
transfers to the Depositor, without recourse, all of its right, title and
interest in, to, and under the Subsequent Mortgage Loans and related assets
described above, whether now existing or hereafter arising.

      In connection with each such sale, assignment and transfer, the
Originators and the Unaffiliated Seller shall satisfy the document delivery
requirements set forth in Section 2.05 of the Sale and Servicing Agreement with
respect to each Subsequent Mortgage Loan.

      Section 3. Representations and Warranties of the Originators and the
Unaffiliated Seller. With respect to each Subsequent Mortgage Loan, each of the
Originators and the Unaffiliated Seller hereby remake each of the
representations, warranties and covenants made by the Originators and the
Unaffiliated Seller in Section 3.03 of the Unaffiliated Seller's Agreement, on
which the Depositor relies in accepting the Subsequent Mortgage Loans. Such
representations and warranties speak as of the Subsequent Transfer Date unless
otherwise indicated, and shall survive each sale, assignment, transfer and
conveyance of the Subsequent Mortgage Loans to the Depositor.

      Each of the Originators and the Unaffiliated Seller hereby acknowledge
that the Depositor is transferring the Subsequent Mortgage Loans to the Trust,
and that the Trust is pledging the Subsequent Mortgage Loans to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer, on the date
hereof. Each of the Originators and the Unaffiliated Seller hereby acknowledge
and agree that the Depositor may assign to the Trust, and the Trust may assign
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, its interest in the representations and warranties set forth in this
Section 3. Each of the Originators and the Unaffiliated Seller agrees that, upon
such assignment to the Trust and pledge to the Indenture Trustee, such
representations, warranties, agreements and covenants will run to and be for the
benefit of the Indenture Trustee and the Indenture Trustee may enforce, without
joinder of the Depositor or the Trust, the repurchase and indemnification
obligations of the Unaffiliated Seller and the Originators set forth herein with
respect to breaches of such representations, warranties, agreements and
covenants.

                                       2

<PAGE>

      Section 4. Repurchase of Subsequent Mortgage Loans. Upon discovery by any
of the Depositor, the Unaffiliated Seller, an Originator, the Indenture Trustee,
the Servicer on behalf of the Trust, the Note Insurer or any Noteholder of a
breach of any of the representations and warranties made by the Originators and
the Unaffiliated Seller pursuant to Section 3.03 of the Unaffiliated Seller's
Agreement or this Section 3, the party discovering such breach shall give prompt
written notice to each other Person; provided, that the Indenture Trustee shall
have no duty to inquire or to investigate the breach of any such representations
and warranties. The Originators and the Unaffiliated Seller will be obligated to
repurchase a Subsequent Mortgage Loan which breaches a representation or
warranty in accordance with the provisions of Section 4.02 of the Sale and
Servicing Agreement or to indemnify as described in Section 3.05(g) of the
Unaffiliated Seller's Agreement. Such repurchase and indemnification obligation
of the Originators and the Unaffiliated Seller shall constitute the sole remedy
against the Originators and the Unaffiliated Seller, and the Trust for such
breach available to the Servicer, the Trust, the Owner Trustee, the Depositor,
the Indenture Trustee, the Note Insurer and the Noteholders.

      Section 5. Amendment. This Subsequent Transfer Agreement may be amended
from time to time by the Originators, the Unaffiliated Seller and the Depositor
only with the prior written consent of the Note Insurer (or, in the event of a
Note Insurer Default, the Majority Holders), and to the extent such amendment
materially affects the interests of the Owner Trustee, upon written notice to
the Owner Trustee.

      Section 6. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS SUBSEQUENT TRANSFER
AGREEMENT AND ANY AMENDMENT HEREOF PURSUANT TO SECTION 5 SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSEQUENT TRANSFER AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM THEREIN.

      Section 7. Counterparts. This Subsequent Transfer Agreement may be
executed in counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which shall constitute one and
the same instrument.

      Section 8. Binding Effect; Third-Party Beneficiaries. This Subsequent
Transfer Agreement will inure to the benefit of and be binding upon the parties
hereto, the Note Insurer, the Trust, the Owner Trustee, the Noteholders, and
their respective successors and permitted assigns.

      Section 9. Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.

      Section 10. Exhibits. The exhibits attached hereto and referred to herein
shall constitute a part of this Subsequent Transfer Agreement and are
incorporated into this Subsequent Transfer Agreement for all purposes.

                                       3

<PAGE>

      Section 11. Intent of the Parties; Security Agreement. The Originators,
the Unaffiliated Seller and the Depositor intend that the conveyance of all
right, title and interest in and to the Subsequent Mortgage Loans and related
assets described above by the Originators to the Unaffiliated Seller and by the
Unaffiliated Seller to the Depositor pursuant to this Subsequent Transfer
Agreement shall be, and be construed as, a sale of the Subsequent Mortgage Loans
from the Originators to the Unaffiliated Seller and from the Unaffiliated Seller
to the Depositor.

      It is, further, not intended that such conveyances be deemed to be pledges
of the Subsequent Mortgage Loans by the Originators to the Unaffiliated Seller
and by the Unaffiliated Seller to the Depositor to secure a debt or other
obligation of the Originators or of the Unaffiliated Seller, as the case may be.
However, in the event that the Subsequent Mortgage Loans are held to be property
of the Originators or the Unaffiliated Seller, or if for any reason this
Subsequent Transfer Agreement is held or deemed to create a security interest in
the Subsequent Mortgage Loans, then it is intended that: (a) this Subsequent
Transfer Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the Uniform Commercial Code of any other
applicable jurisdiction; (b) the conveyance provided for in this Subsequent
Transfer Agreement shall be deemed to be a grant by the Originators to the
Unaffiliated Seller and by the Unaffiliated Seller to the Depositor of a
security interest in all of the Originators' and the Unaffiliated Seller's
respective right, title and interest, whether now owned or hereafter acquired,
in and to the Subsequent Mortgage Loans and related assets described above. The
Originators and the Unaffiliated Seller, as applicable, shall, to the extent
consistent with this Subsequent Transfer Agreement, take such reasonable actions
as may be necessary to ensure that, if this Subsequent Transfer Agreement were
deemed to create a security interest in the Subsequent Mortgage Loans and the
other property described above, such interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of this Subsequent Transfer Agreement.

                  [Remainder of Page Intentionally Left Blank]

                                       4

<PAGE>

IN WITNESS WHEREOF, the Originators, the Unaffiliated Seller and the Depositor
have caused this Subsequent Transfer Agreement to be duly executed by their
respective officers as of the day and year first above written.

                                    AMERICAN BUSINESS CREDIT, INC.

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

                                    HOMEAMERICAN CREDIT, INC. D/B/A
                                         UPLAND MORTGAGE

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

                                    NEW JERSEY MORTGAGE AND
                                         INVESTMENT, INC.

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

                                    ABFS 2000-1, INC.

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

                                    PRUDENTIAL SECURITIES SECURED
                                         FINANCING CORPORATION

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

              [Signature Page to Subsequent Transfer Agreement]<PAGE>

                                                                     EXHIBIT 4.3

                          SALE AND SERVICING AGREEMENT

                            dated as of March 1, 2000

                                  by and among

              PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
                                  as Depositor,

                        ABFS MORTGAGE LOAN TRUST 2000-1,
                                   as Issuer,

                         AMERICAN BUSINESS CREDIT, INC.,
                                  as Servicer,

                           CHASE BANK OF TEXAS, N.A.,
                              as Collateral Agent,

                                       and

                            THE CHASE MANHATTAN BANK,
                              as Indenture Trustee

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I DEFINITIONS........................................................1

  Section 1.01. Certain Defined Terms........................................1
  Section 1.02. Provisions of General Application............................1
  Section 1.03. Business Day Certificate.....................................2

ARTICLE II SALE AND CONVEYANCE OF THE MORTGAGE LOANS.........................2

  Section 2.01. Purchase and Sale of Initial Mortgage Loans..................2
  Section 2.02. Purchase and Sale of Subsequent Mortgage Loans...............3
  Section 2.03. Purchase Price...............................................3
  Section 2.04. Possession of Mortgage Files; Access to Mortgage Files.......4
  Section 2.05. Delivery of Mortgage Loan Documents..........................4
  Section 2.06. Acceptance of the Trust Estate; Certain Substitutions;
                  Certification by the Collateral Agent......................7
  Section 2.07. Grant of Security Interest...................................9
  Section 2.08. Further Action Evidencing Assignments.......................10
  Section 2.09. Assignment of Agreement.....................................10

ARTICLE III REPRESENTATIONS AND WARRANTIES..................................11

  Section 3.01. Representations of the Servicer.............................11
  Section 3.02. Representations, Warranties and Covenants of the
                  Depositor.................................................12
  Section 3.03. Representations, Warranties and Covenants of the
                  Collateral Agent..........................................13
  Section 3.04. Representations, Warranties and Covenants of the
                  Indenture Trustee.........................................13

ARTICLE IV THE MORTGAGE LOANS...............................................14

  Section 4.01. Representations and Warranties Concerning the Mortgage
                  Loans.....................................................14
  Section 4.02. Purchase and Substitution...................................14

ARTICLE V ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS................16

  Section 5.01. The Servicer................................................16
  Section 5.02. Collection of Certain Mortgage Loan Payments;
                  Collection Account........................................17
  Section 5.03. Permitted Withdrawals from the Collection Account...........18
  Section 5.04. Hazard Insurance Policies; Property Protection Expenses.....19
  Section 5.05. Assumption and Modification Agreements......................20
  Section 5.06. Realization Upon Defaulted Mortgage Loans...................20
  Section 5.07. Indenture Trustee to Cooperate..............................22
  Section 5.08. Servicing Compensation; Payment of Certain Expenses by
                  Servicer..................................................22
  Section 5.09. Annual Statement as to Compliance...........................22
  Section 5.10. Annual Independent Public Accountants' Servicing Report.....23
  Section 5.11. Access to Certain Documentation.............................23
  Section 5.12. Maintenance of Fidelity Bond................................23

                                      (i)

<PAGE>

  Section 5.13. The Subservicers............................................23
  Section 5.14. Reports to the Indenture Trustee; Collection Account
                  Statements................................................24
  Section 5.15. Optional Purchase of Defaulted Mortgage Loans...............24
  Section 5.16. Reports to be Provided by the Servicer......................25
  Section 5.17. Adjustment of Servicing Compensation in Respect of
                  Prepaid Mortgage Loans....................................26
  Section 5.18. Periodic Advances; Special Advance..........................26
  Section 5.19. Indemnification; Third Party Claims.........................27
  Section 5.20. Maintenance of Corporate Existence and Licenses; Merger
                  or Consolidation of the Servicer..........................28
  Section 5.21. Assignment of Agreement by Servicer; Servicer Not to
                  Resign....................................................29
  Section 5.22. Periodic Filings with the Securities and Exchange
                  Commission; Additional Information........................29

ARTICLE VI APPLICATION OF FUNDS.............................................29

  Section 6.01. Deposits to the Payment Account.............................29
  Section 6.02. Collection of Money.........................................30
  Section 6.03. Application of Principal and Interest.......................30
  Section 6.04. Information Concerning the Mortgage Loans...................30
  Section 6.05. Compensating Interest.......................................30
  Section 6.06. Effect of Payments by the Note Insurer; Subrogation.........30

ARTICLE VII SERVICER DEFAULT................................................31

  Section 7.01. Servicer Events of Default..................................31
  Section 7.02. Indenture Trustee to Act; Appointment of Successor..........33
  Section 7.03. Waiver of Defaults..........................................35
  Section 7.04. Rights of the Note Insurer to Exercise Rights of the
                  Noteholders...............................................35
  Section 7.05. Indenture Trustee To Act Solely with Consent of the
                  Note Insurer..............................................36
  Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for
                  Benefit of the Note Insurer...............................36
  Section 7.07. Note Insurer Default........................................36

ARTICLE VIII TERMINATION....................................................37

  Section 8.01. Termination.................................................37
  Section 8.02. Additional Termination Requirements.........................38
  Section 8.03. Accounting Upon Termination of Servicer.....................38

ARTICLE IX THE COLLATERAL AGENT.............................................38

  Section 9.01. Duties of the Collateral Agent..............................38
  Section 9.02. Certain Matters Affecting the Collateral Agent..............40
  Section 9.03. Collateral Agent Not Liable for Notes or Mortgage Loans.....41
  Section 9.04. Collateral Agent May Own Notes..............................41
  Section 9.05. Collateral Agent's Fees and Expenses; Indemnity.............41
  Section 9.06. Eligibility Requirements for Collateral Agent...............42
  Section 9.07. Resignation and Removal of the Collateral Agent.............42

                                      (ii)

<PAGE>

  Section 9.08. Successor Collateral Agent..................................42
  Section 9.09. Merger or Consolidation of Collateral Agent.................43

ARTICLE X MISCELLANEOUS PROVISIONS..........................................43

  Section 10.01. Limitation on Liability....................................43
  Section 10.02. Acts of Noteholders........................................44
  Section 10.03. Amendment..................................................44
  Section 10.04. Recordation of Agreement...................................45
  Section 10.05. Duration of Agreement......................................45
  Section 10.06. Notices....................................................45
  Section 10.07. Severability of Provisions.................................46
  Section 10.08. No Partnership.............................................46
  Section 10.09. Counterparts...............................................46
  Section 10.10. Successors and Assigns.....................................46
  Section 10.11. Headings...................................................46
  Section 10.12. The Note Insurer Default...................................47
  Section 10.13. Third Party Beneficiary....................................47
  Section 10.14. Intent of the Parties......................................47
  Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
                 TRIAL......................................................47

                                    EXHIBITS

EXHIBIT A       Contents of the Mortgage File
EXHIBIT B       Indenture Trustee's Acknowledgement of Receipt
EXHIBIT C       Collateral Agent's Acknowledgement of Receipt
EXHIBIT D       Initial Certification of Collateral Agent
EXHIBIT E       Final Certification of Collateral Agent
EXHIBIT F       Request for Release of Documents
EXHIBIT G       Form of Subsequent Contribution Agreement

SCHEDULES

SCHEDULE I      Mortgage Loan Schedule

                                     (iii)

<PAGE>

            SALE AND SERVICING AGREEMENT, dated as of March 1, 2000 (this
"Agreement"), by and among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
a Delaware corporation, as depositor (the "Depositor"), ABFS MORTGAGE LOAN TRUST
2000-1, a Delaware statutory business trust, as issuer (the "Trust"), AMERICAN
BUSINESS CREDIT, INC., a Pennsylvania corporation, as servicer (the "Servicer"),
CHASE BANK OF TEXAS, N.A., a national banking association, as collateral agent
(the "Collateral Agent"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as indenture trustee (the "Indenture Trustee").

                               W I T N E S S E T H
                               - - - - - - - - - -

            WHEREAS, the Depositor desires to sell to the Trust, and the Trust
desires to purchase from the Depositor, the mortgage loans (the "Mortgage
Loans") listed on Schedule I to this Agreement;

            WHEREAS, immediately after such purchase, the Trust will pledge such
Mortgage Loans to the Indenture Trustee pursuant to the terms of an Indenture,
dated as of March 1, 2000 (the "Indenture"), between the Trust and the Indenture
Trustee, and issue the ABFS Mortgage Loan Trust 2000-1, Mortgage Backed Notes
(the "Notes");

            WHEREAS,  the Servicer  has agreed to service the Mortgage  Loans,
which constitute the principal assets of the Trust;

            WHEREAS, the Collateral Agent will hold, on behalf of the Indenture
Trustee, the Mortgage Loans and certain other assets pledged to the Indenture
Trustee pursuant to the Indenture; and

            WHEREAS, Ambac Assurance Corporation (the "Note Insurer") is
intended to be a third-party beneficiary of this Agreement, and is hereby
recognized by the parties hereto as a third-party beneficiary of this Agreement.

            NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Trust, the Depositor, the Servicer, the
Collateral Agent and the Indenture Trustee hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

            Section 1.01. Certain Defined Terms. Capitalized terms used herein
but not defined herein shall have the meanings ascribed to such terms in
Appendix I attached hereto.

            Section 1.02. Provisions of General Application. (a) All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.

            (b) The terms defined herein and in Appendix I to the Indenture
include the plural as well as the singular.

                                       1

<PAGE>

            (c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.

            (d) Any reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.

            (e) All calculations of interest with respect to the Class A-1 Notes
provided for herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All calculations of interest with respect to the Class A-2
Notes provided for herein shall be on the basis of a 360-day year and the actual
number of days elapsed in the related Accrual Period. All calculations of
interest with respect to any Mortgage Loan provided for herein shall be made in
accordance with the terms of the related Mortgage Note and Mortgage or, if such
documents do not specify the basis upon which interest accrues thereon, on the
basis of a 360-day year consisting of twelve 30-day months, to the extent
permitted by applicable law.

            (f) Any Mortgage Loan payment is deemed to be received on the date
such payment is actually received by the Servicer; provided, however, that, for
purposes of calculating payments on the Notes, prepayments with respect to any
Mortgage Loan are deemed to be received on the date they are applied in
accordance with Accepted Servicing Practices consistent with the terms of the
related Mortgage Note and Mortgage to reduce the outstanding Principal Balance
of such Mortgage Loan on which interest accrues.

            Section 1.03. Business Day Certificate. On the Closing Date (with
respect to the calendar year 2000) and thereafter, within fifteen (15) days
prior to the end of each calendar year while this Agreement remains in effect
(with respect to the succeeding calendar years), the Servicer shall provide to
the Indenture Trustee and the Collateral Agent a certificate of a Servicing
Officer specifying the days on which banking institutions in the Commonwealth of
Pennsylvania are authorized or obligated by law, executive order or governmental
decree to be closed.

                                   ARTICLE II

                    SALE AND CONVEYANCE OF THE MORTGAGE LOANS

            Section 2.01. Purchase and Sale of Initial Mortgage Loans. The
Depositor does hereby sell, transfer, assign, set over and convey to the Trust,
without recourse, but subject to the terms and provisions of this Agreement, all
of the right, title and interest of the Depositor in and to the Initial Mortgage
Loans, including the outstanding principal of, and interest due on, such Initial
Mortgage Loans listed on Schedule I attached hereto, and all other assets
included or to be included in the Trust Estate. In connection with such transfer
and assignment, and pursuant to Section 2.07 of the Unaffiliated Seller's
Agreement, the Depositor does hereby also irrevocably transfer, assign, set over
and otherwise convey to the Trust all of its rights under the Unaffiliated
Seller's Agreement, including, without limitation, its right to exercise the
remedies created by Sections 2.06 and 3.05 of the Unaffiliated Seller's
Agreement for defective documentation and for breaches of representations and
warranties, agreements and covenants of the Unaffiliated

                                       2

<PAGE>

Seller and the Originators contained in Sections 3.01, 3.02 and 3.03 of the
Unaffiliated Seller's Agreement.

            Section 2.02. Purchase and Sale of Subsequent Mortgage Loans. (a)
Subject to the satisfaction of the conditions set forth in Section 2.14(b) of
the Indenture, in consideration of the Trust's delivery on the related
Subsequent Transfer Dates to or upon the order of the Depositor of all or a
portion of the balance of funds in the related Pre-Funding Account, the
Depositor shall on any Subsequent Transfer Date sell, transfer, assign, set over
and convey to the Trust without recourse, but subject to terms and provisions of
this Agreement, all of the right, title and interest of the Depositor in and to
the Subsequent Mortgage Loans in the related Pool, including the outstanding
principal of, and interest due on, such Subsequent Mortgage Loans, and all other
assets included or to be included in the Trust Estate. In connection with such
transfer and assignment, and pursuant to Section 2.07 of the Unaffiliated
Seller's Agreement, the Depositor will also irrevocably transfer, assign, set
over and otherwise convey to the Trust all of its rights under the Unaffiliated
Seller's Agreement and the related Subsequent Transfer Agreement, including,
without limitation, its right to exercise the remedies created by Sections 2.06
and 3.05 of the Unaffiliated Seller's Agreement for defective documentation and
for breaches of representations and warranties, agreements and covenants of the
Unaffiliated Seller and the Originators contained in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement.

            The amount released from a Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans to the related Pool shall be one-hundred
percent (100%) of the Aggregate Principal Balances of the Subsequent Mortgage
Loans so transferred, as of the related Subsequent Cut-Off Date.

            (b) In connection with the transfer and assignment of the Subsequent
Mortgage Loans to the Trust, the Depositor shall cause the Unaffiliated Seller
to satisfy the document delivery requirements set forth in Section 2.05 hereof.

            (c) For any Subsequent Mortgage Loan that has a first Due Date that
occurs later than the last day of the Due Period following the Due Period in
which the Subsequent Mortgage Loan was sold to the Trust, on each applicable
Servicer Payment Date, the Servicer will deposit into the Payment Account 30
days' interest at the related Mortgage Interest Rate, net of the Servicing Fee,
for each month after the month in which the Subsequent Transfer occurs until,
but not including, the month in which such first Due Date occurs.

            Section 2.03. Purchase Price. On the Closing Date, as full
consideration for the Depositor's sale of the Initial Mortgage Loans to the
Trust, the Underwriter, on behalf of the Trust, will deliver to, or at the
direction of, the Depositor (i) an amount in cash equal to the sum of (A) 99.70%
and 99.70% of the Original Note Principal Balance as of the Closing Date of the
Class A-1 Notes and the Class A-2 Notes, respectively, plus (B) accrued interest
on the Original Note Principal Balance of the Class A-1 Notes at the rate of
7.925% per annum from (and including) March 1, 2000 to (but not including) the
Closing Date, minus (C) the Original Pre-Funded Amount and the Original
Capitalized Interest Amount with respect to each Class of Notes, payable by wire
transfer of same day funds, and (ii) the Trust Certificates to be issued
pursuant to the Trust Agreement.

                                       3

<PAGE>

            Section 2.04. Possession of Mortgage Files; Access to Mortgage
Files. (a) Upon the receipt by the Depositor, or its designee, of the purchase
price for the Initial Mortgage Loans set forth in Section 2.03 hereof and the
issuance of the Notes pursuant to the Indenture, the ownership of each Mortgage
Note, each Mortgage and the contents of the Mortgage File related to each
Initial Mortgage Loan will be vested in the Trust, and will be pledged to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.

            (b) Pursuant to Section 2.05 hereof and Section 2.05 of the
Unaffiliated Seller's Agreement, the Unaffiliated Seller has delivered or caused
to be delivered the Indenture Trustee's Mortgage File related to each Initial
Mortgage Loan to the Collateral Agent, on behalf of the Indenture Trustee.

            (c) The Collateral Agent will be the custodian, on behalf of the
Indenture Trustee, to hold the Indenture Trustee's Mortgage Files in trust for
the benefit of all present and future Noteholders and the Note Insurer. In the
event the Collateral Agent resigns or is removed, the Indenture Trustee shall
either (x) hold the Indenture Trustee's Mortgage Files, or (y) appoint a
successor Collateral Agent to hold the Indenture Trustee's Mortgage Files as set
forth in Section 9.08 hereof.

            (d) The Collateral Agent shall afford the Depositor, the Trust, the
Note Insurer and the Servicer reasonable access to all records and documentation
regarding the Mortgage Loans relating to this Agreement, such access being
afforded at customary charges, upon reasonable prior written request and during
normal business hours at the offices of the Collateral Agent.

            Section 2.05. Delivery of Mortgage Loan Documents. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Depositor shall on
or before the Closing Date, with respect to the Initial Mortgage Loans, and
shall on or before the Subsequent Transfer Date with respect to Subsequent
Mortgage Loans, deliver, or cause the Unaffiliated Seller to deliver, to the
Collateral Agent, on behalf of the Indenture Trustee (as pledgee of the Trust
pursuant to the Indenture), the following documents or instruments with respect
to each Mortgage Loan so transferred or assigned:

            (i) the original Mortgage Note, endorsed without recourse in blank
      by the related Originator, including all intervening endorsements showing
      a complete chain of endorsement;

            (ii) the related original Mortgage with evidence of recording
      indicated thereon or a copy thereof certified by the applicable recording
      office;

            (iii) the recorded mortgage assignment, or copy thereof certified by
      the applicable recording office, if any, showing a complete chain of
      assignment from the originator of the related Mortgage Loan to the related
      Originator (which assignment may, at such Originator's option, be combined
      with the assignment referred to in subpart (iv) hereof, in which case it
      must be in recordable form, but need not have been previously recorded);

                                       4

<PAGE>

            (iv) a mortgage assignment in recordable form (which, if acceptable
      for recording in the relevant jurisdiction, may be included in a blanket
      assignment or assignments) of each Mortgage from the related Originator to
      the Indenture Trustee;

            (v) originals of all assumption, modification and substitution
      agreements in those instances where the terms or provisions of a Mortgage
      or Mortgage Note have been modified or such Mortgage or Mortgage Note has
      been assumed; and

            (vi) an original title insurance policy (or (A) a copy of the title
      insurance policy, or (B) a binder thereof or copy of such binder together
      with a certificate from the related Originator that the original Mortgage
      has been delivered to the title insurance company that issued such binder
      for recordation).

            In instances where the original recorded Mortgage and a completed
assignment thereof in recordable form cannot be delivered by the related
Originator to the Unaffiliated Seller, and by the Unaffiliated Seller to the
Collateral Agent, on behalf of the Indenture Trustee prior to or concurrently
with the execution and delivery of this Agreement (or, with respect to
Subsequent Mortgage Loans, prior to or on the related Subsequent Transfer Date),
due to a delay in connection with recording, the related Originator may:

            (x) in lieu of delivering such original recorded Mortgage, deliver
to the Collateral Agent, on behalf of the Indenture Trustee, a copy thereof;
provided, that the related Originator certifies that the original Mortgage has
been delivered to a title insurance company for recordation after receipt of its
policy of title insurance or binder therefor; and

            (y) in lieu of delivering the completed assignment in recordable
form, deliver to the Collateral Agent, on behalf of the Indenture Trustee, the
assignment in recordable form, otherwise complete except for recording
information.

            The Collateral Agent, at the direction and authority of the parties
to this Agreement, on behalf of the Indenture Trustee, shall promptly upon
receipt thereof, with respect to each Mortgage Note described in Section
2.05(a)(i) hereof and each assignment described in Section 2.05(a)(iv) hereof,
endorse such Mortgage Note and assignment as follows: "The Chase Manhattan Bank,
as Indenture Trustee under the Indenture dated as of March 1, 2000, ABFS
Mortgage Loan Trust 2000-1."

            (b) As promptly as practicable, but in any event within thirty (30)
days from the Closing Date or the Subsequent Transfer Date, as applicable, the
Unaffiliated Seller shall promptly submit, or cause to be submitted by the
related Originator, for recording in the appropriate public office for real
property records, each assignment referred to in Section 2.05(a)(iv). The
Collateral Agent, on behalf of the Indenture Trustee, shall retain a copy of
each assignment submitted for recording. In the event that any such assignment
is lost or returned unrecorded because of a defect therein, the Unaffiliated
Seller or such Originator shall promptly prepare a substitute assignment or cure
such defect, as the case may be, and thereafter the Unaffiliated Seller or such
Originator shall submit each such assignment for recording. The costs relating
to the delivery and recordation of the documents in connection with the Mortgage
Loans as specified in this Article II shall be borne by the Unaffiliated Seller.

                                       5

<PAGE>

            (c) The Unaffiliated Seller or the related Originator shall, within
five (5) Business Days after the receipt thereof, deliver, or cause to be
delivered, to the Collateral Agent, on behalf of the Indenture Trustee: (i) the
original recorded Mortgage and related power of attorney, if any, in those
instances where a copy thereof certified by the related Originator was delivered
to the Collateral Agent, on behalf of the Indenture Trustee; (ii) the original
recorded assignment of Mortgage from the related Originator to the Indenture
Trustee, which, together with any intervening assignments of Mortgage, evidences
a complete chain of assignment from the originator of the Mortgage Loan to the
Indenture Trustee, in those instances where copies of such assignments certified
by the related Originator were delivered to the Collateral Agent, on behalf of
the Indenture Trustee, and (iii) the title insurance policy or title opinion
required in Section 2.05(a)(vi). The Collateral Agent shall review the recorded
assignment to confirm the information contained therein. The Collateral Agent
shall notify the Indenture Trustee, the Note Insurer and the Servicer, of any
defect in such assignment based on such review. The Servicer shall have a period
of sixty (60) days following such notice to correct or cure such defect.

            Notwithstanding anything to the contrary contained in this Section
2.05, in those instances where the public recording office retains the original
Mortgage, power of attorney, if any, assignment or assignment of Mortgage after
it has been recorded or such original has been lost, the Unaffiliated Seller or
the related Originator shall be deemed to have satisfied its obligations
hereunder upon delivery to the Collateral Agent, on behalf of the Indenture
Trustee, of a copy of such Mortgage, power of attorney, if any, assignment or
assignment of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.

            From time to time the Unaffiliated Seller or the related Originator
may forward, or cause to be forwarded, to the Collateral Agent, on behalf of the
Indenture Trustee, additional original documents evidencing any assumption or
modification of a Mortgage Loan.

            (d) All original documents relating to the Mortgage Loans that are
not delivered to the Collateral Agent, on behalf of the Indenture Trustee, as
permitted by Section 2.05(a) hereof are, and shall be, held by the Servicer, the
Unaffiliated Seller or the related Originator, as the case may be, in trust for
the benefit of the Indenture Trustee, on behalf of the Noteholders and the Note
Insurer. In the event that any such original document is required pursuant to
the terms of this Section 2.05 to be a part of an Indenture Trustee's Mortgage
File, such document shall be delivered promptly to the Collateral Agent, on
behalf of the Indenture Trustee. From and after the sale of the Mortgage Loans
to the Trust pursuant hereto, to the extent that the Unaffiliated Seller or the
related Originator retains legal title of record to any Mortgage Loans prior to
the vesting of legal title in the Trust, such title shall be retained in trust
for the Trust as the owner of the Mortgage Loans, and the Indenture Trustee, as
the pledgee of the Trust under the Indenture. In acting as custodian of any
original document which is part of the Indenture Trustee's Mortgage Files, the
Servicer agrees further that it does not and will not have or assert any
beneficial ownership interest in the related Mortgage Loans or the Mortgage
Files. Promptly upon the Servicer's receipt of any such original document, the
Servicer, on behalf of the Trust, shall mark conspicuously each such original
document, and its master data processing records with a legend evidencing that
the Trust has purchased the related Mortgage Loan and all right and title
thereto and interest therein, and pledged such Mortgage Loan and all right and
title thereto and interest therein to the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer.

                                       6

<PAGE>

            Section 2.06. Acceptance of the Trust Estate; Certain Substitutions;
Certification by the Collateral Agent. (a) The Indenture Trustee agrees to
execute and deliver to the Depositor, the Note Insurer, the Collateral Agent and
the Servicer on or prior to the Closing Date an acknowledgement of receipt of
the Policy in the form attached as Exhibit B hereto.

            (b) The Collateral Agent is authorized and directed, on behalf of
the Indenture Trustee, to do the following:

            (i) execute and deliver to the Depositor, the Note Insurer, the
      Indenture Trustee, the Servicer and the Unaffiliated Seller, on or prior
      to the Closing Date or any Subsequent Transfer Date, as applicable, with
      respect to each Mortgage Loan transferred on such date, an acknowledgement
      of receipt of the Mortgage File containing the original Mortgage Note
      (with any exceptions noted), in the form attached as Exhibit C hereto, and
      declares that it will hold such documents and any amendments, replacements
      or supplements thereto, as well as any other assets included in the
      definition of Trust Estate and delivered to the Collateral Agent, on
      behalf of the Indenture Trustee, subject to the conditions set forth
      herein, for the benefit of the Noteholders and the Note Insurer.

            (ii) to review (or cause to be reviewed) each Indenture Trustee's
      Mortgage File within thirty (30) days after the Closing Date or any
      Subsequent Transfer Date, as applicable (or, with respect to any Qualified
      Substitute Mortgage Loans, within thirty (30) days after the receipt by
      the Collateral Agent, on behalf of the Indenture Trustee, thereof), and to
      deliver to the Unaffiliated Seller, the Servicer, the Depositor, the
      Indenture Trustee and the Note Insurer a certification, in the form
      attached hereto as Exhibit D, to the effect that, except as otherwise
      noted, as to each Mortgage Loan listed in the related Mortgage Loan
      Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
      specifically identified in such certification as not covered by such
      certification), (i) all documents required to be delivered to it pursuant
      to Section 2.05 are in its possession, (ii) each such document has been
      reviewed by it and appears, on its face, not to have been mutilated,
      damaged, torn or otherwise physically altered (handwritten additions,
      changes or corrections shall not constitute physical alteration if they
      reasonably appear to have been initialed), appears regular on its face and
      relates to such Mortgage Loan, and (iii) based on its examination and only
      as to the foregoing documents, the information set forth on the Mortgage
      Loan Schedule as to the information set forth in (i), (ii), (v) and (vi)
      of the definition of "Mortgage Loan Schedule" accurately reflects the
      information set forth in the Indenture Trustee's Mortgage File delivered
      on such date.

            (iii) to review (or cause to be reviewed) each Indenture Trustee's
      Mortgage File within ninety (90) days after the Closing Date or any
      Subsequent Transfer Date, as applicable (or, with respect to any Qualified
      Substitute Mortgage Loans, within ninety (90) days after the receipt by
      the Collateral Agent, on behalf of the Indenture Trustee, thereof), and to
      deliver to the Unaffiliated Seller, the Servicer, the Depositor, the
      Indenture Trustee, the Rating Agencies and the Note Insurer a
      certification in the form attached hereto as Exhibit E to the effect that,
      except as otherwise noted, as to each Mortgage Loan listed in the related
      Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
      Mortgage Loan specifically identified in such certification as not

                                       7

<PAGE>

      covered by such certification), (i) all documents required to be delivered
      to it pursuant to Section 2.05 are in its possession, (ii) each such
      document has been reviewed by it and has not been mutilated, damaged, torn
      or otherwise physically altered (handwritten additions, changes or
      corrections shall not constitute physical alteration if they reasonably
      appear to be initialed by the Mortgagor), appears regular on its face and
      relates to such Mortgage Loan, and (iii) based on its examination and only
      as to the foregoing documents, the information set forth in the definition
      of "Mortgage Loan Schedule" accurately reflects the information set forth
      in the Indenture Trustee's Mortgage File delivered on such date.

            In performing any such review, the Collateral Agent may conclusively
rely on the Unaffiliated Seller as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Collateral Agent's review of the Indenture Trustee's Mortgage Files is limited
solely to confirming that the documents listed in Section 2.05 have been
executed and received and relate to the Indenture Trustee's Mortgage Files
identified in the related Mortgage Loan Schedule. The Collateral Agent shall be
under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face.

            (c) If the Collateral Agent during the process of reviewing the
Indenture Trustee's Mortgage Files finds any document constituting a part of a
Indenture Trustee's Mortgage File which is not executed, has not been received,
is unrelated to the Mortgage Loan identified in the related Mortgage Loan
Schedule, or does not conform to the requirements of Section 2.05 or the
description thereof as set forth in the related Mortgage Loan Schedule, the
Collateral Agent shall promptly so notify the Servicer, the Unaffiliated Seller,
the Originators, the Note Insurer and the Indenture Trustee. Pursuant to Section
2.06(b) of the Unaffiliated Seller's Agreement, the Unaffiliated Seller and the
Originators have agreed to use reasonable efforts to cause to be remedied a
material defect in a document constituting part of an Indenture Trustee's
Mortgage File of which it is so notified by the Collateral Agent. If, however,
within sixty (60) days after the Collateral Agent's notice to it respecting such
defect the Unaffiliated Seller or the Originators have not caused to be remedied
the defect and the defect materially and adversely affects the interest of the
Noteholders and the Note Insurer in the related Mortgage Loan, the Unaffiliated
Seller and the Originators will be obligated, pursuant to Section 3.05 of the
Unaffiliated Seller's Agreement, to either (i) substitute in lieu of such
Mortgage Loan a Qualified Substitute Mortgage Loan in the manner and subject to
the conditions set forth in Section 3.05 of the Unaffiliated Seller's Agreement
or (ii) purchase such Mortgage Loan at a purchase price equal to the Loan
Repurchase Price. Upon receipt by the Collateral Agent and the Indenture Trustee
of a certification, in the form attached hereto as Exhibit F, of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt by the Collateral Agent, on behalf of the Indenture Trustee, of the
related Indenture Trustee's Mortgage File, and the deposit of the amounts
described above in the Collection Account, the Collateral Agent shall release to
the Servicer for release to the Unaffiliated Seller the related Indenture
Trustee's Mortgage File and the Indenture Trustee shall execute, without
recourse, and deliver such instruments of transfer furnished by the Unaffiliated
Seller as may be necessary to transfer such Mortgage Loan to the Unaffiliated
Seller. The Collateral Agent shall report to the Indenture

                                       8

<PAGE>

Trustee, who shall notify the Note Insurer if the Unaffiliated Seller fails to
repurchase or substitute for a Mortgage Loan in accordance with the foregoing.

            Section 2.07. Grant of Security Interest. (a) It is intended that
the conveyance of the Mortgage Loans and other property by the Depositor to the
Trust as provided in this Article II be, and be construed as, a sale of the
Mortgage Loans and such other property by the Depositor to the Trust. It is,
further, not intended that such conveyance be deemed a pledge of the Mortgage
Loans or such other property by the Depositor to the Trust to secure a debt or
other obligation of the Depositor. However, in the event that the Mortgage Loans
or any of such other property are held to be property of the Depositor, or if
for any reason this Agreement is held or deemed to create a security interest in
the Mortgage Loans or any of such other property, then it is intended that: (i)
this Agreement shall also be deemed to be a security agreement within the
meaning of the Uniform Commercial Code; (ii) the conveyance provided for in this
Article II shall be deemed to be a grant by the Depositor to the Trust of a
security interest in all of the Depositor's right, title and interest in and to
the Mortgage Loans and such other property and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including, without limitation,
all amounts from time to time held or invested in the Payment Account, whether
in the form of cash, instruments, securities or other property; (iii) the
possession by the Collateral Agent, on behalf of the Indenture Trustee, of the
Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to the Uniform Commercial Code; and (iv) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from financial intermediaries, bailees or agents, as applicable,
of the Indenture Trustee for the purpose of perfecting such security interest
under applicable law. The Depositor, the Servicer, on behalf of the Trust, the
Collateral Agent and the Indenture Trustee, shall, to the extent consistent with
this Agreement, take such actions as may be reasonably necessary to ensure that,
if this Agreement were deemed to create a security interest in the Mortgage
Loans or any of such other property, such security interest would be deemed to
be a perfected security interest of first priority under applicable law and will
be maintained as such throughout the term of this Agreement.

            (b) The Unaffiliated Seller, the Depositor and the Servicer shall
take no action inconsistent with the Trust's ownership of the Trust Estate and
each shall indicate or shall cause to be indicated in its records and records
held on its behalf that ownership of each Mortgage Loan and the other assets in
the Trust Estate are held by the Collateral Agent, on behalf of the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer. The Collateral
Agent is authorized to act, pursuant to the terms of this Agreement, as agent
and bailee of the Indenture Trustee for the benefit of the Noteholders and Note
Insurer and shall be authorized to act at the direction of such parties. In
addition, the Unaffiliated Seller, the Depositor and the Servicer shall respond
to any inquiries from third parties with respect to ownership of a Mortgage Loan
or any other asset in the Trust Estate by stating that it is not the owner of
such asset and that the Trust is the owner of such Mortgage Loan or other asset
in the Trust Estate, which is held by the Collateral Agent, on behalf of the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.

                                       9

<PAGE>

            Section 2.08. Further Action Evidencing Assignments. (a) The
Servicer agrees that, from time to time, at its expense, it shall cause the
Unaffiliated Seller to (and the Depositor on behalf of itself also agrees that
it shall), promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or appropriate, or that the
Servicer, the Indenture Trustee or the Collateral Agent may reasonably request,
in order to perfect, protect or more fully evidence the transfer of ownership of
the Mortgage Loans and other assets in the Trust Estate or to enable the
Collateral Agent, on behalf of the Indenture Trustee, to exercise or enforce any
of its rights hereunder. Without limiting the generality of the foregoing, the
Servicer and the Depositor will, upon the request of the Servicer, the Indenture
Trustee or the Collateral Agent execute and file (or cause to be executed and
filed) such real estate filings, financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate.

            (b) The Depositor hereby grants to the Servicer, the Indenture
Trustee and the Collateral Agent powers of attorney to execute all documents on
its behalf under this Agreement and the Unaffiliated Seller's Agreement as may
be necessary or desirable to effectuate the foregoing.

            Section 2.09. Assignment of Agreement. The Depositor hereby
acknowledges and agrees that the Trust may assign its interest under this
Agreement to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, as may be required to effect the purposes of the Indenture,
without further notice to, or consent of, the Depositor, and the Indenture
Trustee shall succeed to such of the rights and obligations of the Trust
hereunder as shall be so assigned. The Trust shall, pursuant to the Indenture,
assign all of its right, title and interest in and to the Mortgage Loans and its
right to exercise the remedies created by Section 2.06 and 3.05 of the
Unaffiliated Seller's Agreement for breaches of the representations, warranties,
agreements and covenants of the Unaffiliated Seller or the Originators contained
in Sections 2.05, 2.06, 3.02 and 3.03 of the Unaffiliated Seller's Agreement,
assign such right, title and interest to the Indenture Trustee, for the benefit
of the Noteholders and the Note Insurer. The Depositor agrees that, upon such
assignment to the Indenture Trustee, such representations, warranties,
agreements and covenants will run to and be for the benefit of the Indenture
Trustee and the Indenture Trustee may enforce, without joinder of the Depositor
or the Trust, the repurchase obligations of the Unaffiliated Seller and the
Originators set forth herein with respect to breaches of such representations,
warranties, agreements and covenants.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

            Section 3.01. Representations of the Servicer. The Servicer hereby
represents and warrants to the Indenture Trustee, the Depositor, the Collateral
Agent, the Trust, the Note Insurer and the Noteholders as of the Closing Date
and during the term of this Agreement that:

            (a) Each of the Servicer and the Subservicers is duly organized,
validly existing and in good standing under the laws of their respective states
of incorporation and has the power to own its assets and to transact the
business in which it is currently engaged. Each of the Servicer and the
Subservicers is duly qualified to do business as a foreign corporation and is

                                       10

<PAGE>

in good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it or the performance of its
obligations hereunder requires such qualification and in which the failure so to
qualify could reasonably be expected to have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the Servicer
or the Subservicers or the performance of their respective obligations
hereunder;

            (b) The Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under this Agreement, and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement, and assuming the due
authorization, execution and delivery hereof by the other parties hereto
constitutes, or will constitute, the legal, valid and binding obligation of the
Servicer, enforceable in accordance with its terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);

            (c) The Servicer is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency which consent
already has not been obtained in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except such as have
been obtained prior to the Closing Date;

            (d) The execution, delivery and performance of this Agreement by the
Servicer will not violate any provision of any existing law or regulation or any
order or decree of any court or the charter or bylaws of the Servicer, or
constitute a breach of any mortgage, indenture, contract or other Agreement to
which the Servicer is a party or by which it may be bound;

            (e) There is no action, suit, proceeding or investigation pending or
threatened against the Servicer or the Subservicers which, either in any one
instance or in the aggregate, is, in the Servicer's judgment, likely to result
in any material adverse change in the business, operations, financial condition,
properties, or assets of the Servicer or the Subservicers, or in any material
impairment of the right or ability of any of them to carry on its business
substantially as now conducted, or in any material liability on the part of any
of them, or which would draw into question the validity of this Agreement, the
Notes, or the Mortgage Loans or of any action taken or to be taken in connection
with the obligations of the Servicer or the Subservicers contemplated herein or
therein, or which would be likely to impair materially the ability of the
Servicer or the Subservicers to perform their respective obligations hereunder;

            (f) Neither this Agreement nor any statement, report, or other
document furnished by the Servicer or the Subservicers pursuant to this
Agreement or in connection with the transactions contemplated hereby, including,
without limitation, the sale or placement of the Notes, contains any untrue
statement of fact provided by or on behalf of the Servicer or omits to state a
fact necessary to make the statements provided by or on behalf of the Servicer
contained herein or therein not misleading:

                                       11

<PAGE>

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

            (h) None of the Servicer or the Subservicers is an "investment
company" or a company "controlled by an investment company," within the meaning
of the Investment Company Act of 1940, as amended.

            It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.01 shall survive the delivery of the
respective Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be, and inure
to the benefit of the Indenture Trustee.

            Section 3.02. Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Indenture Trustee, the Trust, the Collateral Agent and the Servicer that as of
the date of this Agreement or as of such date specifically provided herein:

            (a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;

            (b) The Depositor has the corporate power and authority to convey
the Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate transactions contemplated by this Agreement;

            (c) This Agreement has been duly and validly authorized, executed
and delivered by the Depositor, all requisite corporate action having been
taken, and, assuming the due authorization, execution and delivery hereof by the
other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);

            (d) No consent, approval, authorization or order of or registration
or filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Depositor
with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been made on or prior to the
Closing Date;

            (e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the

                                       12

<PAGE>

Depositor or its subsidiaries; or (iii) results in the creation or imposition of
any lien, charge or encumbrance which would have a material adverse effect upon
the Mortgage Loans or any documents or instruments evidencing or securing the
Mortgage Loans;

            (f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement; and

            (g) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that may materially and adversely affect its
performance hereunder.

            It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be, and shall
inure to the benefit of the Indenture Trustee.

            Section 3.03. Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent hereby represents, warrants and covenants
to the Indenture Trustee, the Trust, the Servicer and the Depositor that as of
the date of this Agreement or as of such date specifically provided herein:

            (a) The Collateral Agent is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America;

            (b) The Collateral Agent has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement; and

            (c) This Agreement has been duly and validly authorized, executed
and delivered by the Collateral Agent, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Collateral Agent, enforceable against the Collateral
Agent in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).

            It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.03(b) and 3.03(c) shall survive delivery
of the respective Indenture Trustee's Mortgage Files to the Collateral Agent, on
behalf of the Indenture Trustee or to another custodian, as the case may be, and
shall inure to the benefit of the Indenture Trustee.

            Section 3.04. Representations, Warranties and Covenants of the
Indenture Trustee. The Indenture Trustee hereby represents, warrants and
covenants to the Collateral

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Agent, the Trust, the Servicer and the Depositor that as of the date of this
Agreement or as of such date specifically provided herein:

            (a) The Indenture Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York;

            (b) The Indenture Trustee has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement;

            (c) This Agreement has been duly and validly authorized, executed
and delivered by the Indenture Trustee, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);

            It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be.

                                   ARTICLE IV

                               THE MORTGAGE LOANS

            Section 4.01. Representations and Warranties Concerning the Mortgage
Loans. With respect to each Mortgage Loan, the Depositor hereby assigns to the
Trust, pursuant to Section 2.07 of the Unaffiliated Seller's Agreement, the
representations, warranties and covenants of the Unaffiliated Seller and the
Originators set forth in Sections 3.01, 3.02 and 3.03 of the Unaffiliated
Seller's Agreement. Such representations, warranties and covenants are made or
deemed to be made (x) with respect to the Initial Mortgage Loans, as of the
Initial Cut-Off Date and (y) with respect to the Subsequent Mortgage Loans, as
of the related Subsequent Cut-Off Date.

            Section 4.02. Purchase and Substitution. (a) It is understood and
agreed that the representations and warranties set forth in Sections 3.01, 3.02
and 3.03 of the Unaffiliated Seller's Agreement shall survive the purchase by
the Depositor of the Mortgage Loans, the subsequent transfer thereof by the
Depositor to the Trust, the subsequent pledge thereof by the Trust to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, and
the delivery of the Notes to the Noteholders, and shall continue in full force
and effect, notwithstanding any restrictive or qualified endorsement on the
Mortgage Notes and notwithstanding subsequent termination of this Agreement or
the Unaffiliated Seller's Agreement.

                                       14

<PAGE>

            (b) Upon discovery by the Unaffiliated Seller, the Depositor, the
Servicer, any Subservicer, the Indenture Trustee, the Note Insurer or a
Noteholder of a breach of any of the representations and warranties in Sections
3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement which materially and
adversely affects the value of the Mortgage Loans or the interest of the
Noteholders or the Note Insurer, or which materially and adversely affects the
interests of the Note Insurer or the Noteholders in the related Mortgage Loan in
the case of a representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the
Unaffiliated Seller's or the Originator's best knowledge), the party discovering
such breach or failure shall promptly (and in any event within five (5) days of
the discovery) give written notice thereof to the others. Within forty-five (45)
days of the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Servicer shall, or shall cause the Unaffiliated
Seller or an Originator to, (a) promptly cure such breach in all material
respects, (b) purchase such Mortgage Loan on the next succeeding Servicer
Payment Date, in the manner and at the price specified in Section 2.06(b) and
this Section 4.02, or (c) remove such Mortgage Loan from the Trust Estate (in
which case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner specified in Section 2.06(b)
and this Section 4.02. The Collateral Agent shall give prompt written notice to
the Indenture Trustee, who shall deliver such notice to the Note Insurer and the
Rating Agencies of any repurchase or substitution made pursuant to this Section
4.02 or Section 2.06(b).

            (c) As to any Deleted Mortgage Loan for which the Unaffiliated
Seller substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer
shall cause the Unaffiliated Seller or an Originator, as applicable, to effect
such substitution by delivering to the Indenture Trustee a certification, in the
form attached hereto as Exhibit F, executed by a Servicing Officer, and the
documents described in Sections 2.05(a)(i)-(vi) for such Qualified Substitute
Mortgage Loan or Loans.

            (d) The Servicer shall deposit in the Payment Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Mortgage Loan or Loans on or before the date of
substitution will be retained by the Unaffiliated Seller. The Trust will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Unaffiliated Seller shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted Mortgage Loan. The
Servicer shall give written notice to the Indenture Trustee, the Collateral
Agent and the Note Insurer that such substitution has taken place and shall
amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the terms of this Agreement and the substitution of the Qualified
Substitute Mortgage Loan or Loans. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects.

            (e) With respect to any Mortgage Loan that has been converted to an
REO Mortgage Loan, all references in this Section 4.02 or Section 2.06 to
"Mortgage Loan" shall be deemed to also refer to the REO Mortgage Loan. With
respect to any Mortgage Loan that the Servicer, Originator or Unaffiliated
Seller is required to repurchase that is or becomes a Liquidated Mortgage Loan,
in lieu of repurchasing such Mortgage Loan, the Servicer, Originator or
Unaffiliated Seller shall deposit into the related Payment Account, pursuant to
Section 8.01 of

                                       15

<PAGE>

the Indenture, an amount equal to the amount of the Liquidated Loan Loss, if
any, incurred in connection with the liquidation of such Mortgage Loan within
the same time period in which the Servicer, Originator or Unaffiliated Seller
would have otherwise been required to repurchase such Mortgage Loan.

            (f) It is understood and agreed that the obligations of the
Unaffiliated Seller and the Originators set forth in Sections 2.06 and 3.05 of
the Unaffiliated Seller's Agreement to, and the Servicer's obligation set forth
in this Section 4.02 to cause the Unaffiliated Seller and the Originators to,
cure, purchase or substitute for a defective Mortgage Loan, or to indemnify as
described in Section 3.05(g) of the Unaffiliated Seller's Agreement, constitute
the sole remedies of the Indenture Trustee, the Collateral Agent, the Note
Insurer and the Noteholders respecting a breach of the representations and
warranties of the Unaffiliated Seller and the Originators set forth in Sections
3.01, 3.02 and 3.03 of the Unaffiliated Seller's Agreement.

            (g) Pursuant to Section 3.05(g) of the Unaffiliated Seller's
Agreement, the Unaffiliated Seller and the Originators shall be obligated to
indemnify the Indenture Trustee, the Depositor, the Trust, the Owner Trustee,
the Collateral Agent, the Noteholders and the Note Insurer for any third party
claims arising out of a breach by the Unaffiliated Seller or the related
Originator of representations or warranties regarding the Mortgage Loans.

            (h) Pursuant to Section 3.05(h) of the Unaffiliated Seller's
Agreement, the Unaffiliated Seller and each of the Originators shall be jointly
and severally responsible for any repurchase, cure or substitution obligation of
the Unaffiliated Seller or any of the Originators under this Agreement, the
Unaffiliated Seller's Agreement or the Indenture.

                                   ARTICLE V

               ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

            Section 5.01. The Servicer. The Servicer shall service and
administer the Mortgage Loans in accordance with the Accepted Servicing
Practices and shall have full power and authority to do any and all things not
inconsistent therewith in connection with such servicing and administration
which it may deem necessary or desirable subject to the limitations set forth in
this Agreement. The Indenture Trustee shall furnish the Servicer with any powers
of attorney and other documents necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties hereunder. Without limiting
the generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered by the Indenture Trustee, to execute and deliver, on
behalf of itself, the Noteholders and the Indenture Trustee or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, and to effect such
modifications, waivers, indulgences and other like matters as are in its
judgment necessary or desirable, with respect to the Mortgage Loans and the
Mortgaged Properties and the servicing and administration thereof. The Servicer
shall notify the Indenture Trustee of any such waiver, release, discharge,
modification, indulgence or other such matter by delivering to the Indenture
Trustee an Officer's Certificate certifying that such agreement is in compliance
with this Section 5.01 together with the original copy of any written agreement
or other document executed in connection therewith, all of which written
agreements or documents shall, for all purposes, be considered a part of the

                                       16

<PAGE>

related Indenture Trustee's Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. Notwithstanding anything
in this Agreement to the contrary, the Servicer shall not permit any
modification with respect to any Mortgage Loan unless (i) the modifications do
not decrease the Mortgage Interest Rate, reduce or increase the principal
balance, decrease the lien priority, increase the current LTV above the lesser
of the current LTV or the original LTV, or change the final maturity date on or
of such Mortgage Loan and (ii) the Note Insurer consents to such modifications
in writing; provided, however, that the Servicer shall be permitted to extend
the final maturity date on a Mortgage Loan by 180 days or less without the
consent of the Note Insurer.

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

            Section 5.02. Collection of Certain Mortgage Loan Payments;
Collection Account. (a) The Servicer shall make its reasonable efforts to
collect all payments called for under the terms and provisions of the Mortgage
Loans, and shall, to the extent such procedures shall be consistent with this
Agreement, follow Accepted Servicing Practices. Consistent with the foregoing,
the Servicer may in its discretion waive any assumption fees or other fees which
may be collected in the ordinary course of servicing such Mortgage Loans.

            (b) The Servicer shall establish and maintain, in the name of the
Indenture Trustee, the Collection Account, in trust for the benefit of the
Noteholders and the Note Insurer. The Collection Account shall be established
and maintained as an Eligible Account.

            (c) The Servicer shall deposit in the Collection Account any amounts
representing Monthly Payments on the Mortgage Loans due or to be applied as of a
date after the related Cut-Off Date, and thereafter, on each Business Day
(except as otherwise permitted herein), the following payments and collections
received or made by it (other than in respect of principal collected and
interest due on the Mortgage Loans on or before the related Cut-Off Date):

            (i) payments of interest on the Mortgage Loans;

            (ii) payments of principal of the Mortgage Loans;

            (iii) the Loan Repurchase Price of Mortgage Loans repurchased
      pursuant to Sections 2.06, 4.02 or 5.05;

            (iv) the Substitution Adjustment received in connection with
      Mortgage Loans for which Qualified Substitute Mortgage Loans are received
      pursuant to Sections 2.06, 4.02 and 3.03;

            (v) all Liquidation Proceeds; and

            (vi) all Insurance Proceeds (including, for this purpose, any
      amounts required to be deposited by the Servicer pursuant to Section 5.04
      hereof).

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<PAGE>

It is understood that the Servicer need not deposit amounts representing fees,
prepayment premiums, late payment charges or extension or other administrative
charges payable by Mortgagors, or amounts received by the Servicer for the
account of Mortgagors for application towards the payment of taxes, insurance
premiums, assessments and similar items.

            (d) The Servicer shall invest any funds in the Collection Account in
Permitted Investments, which shall mature not later than the Business Day next
preceding the Servicer Payment Date next following the date of such investment
(except that any investment held by the Indenture Trustee may mature on such
Servicer Payment Date) and shall not be sold or disposed of prior to its
maturity. All net income and gain realized from any such investment shall be for
the benefit of the Servicer and shall be subject to its withdrawal or order on a
Servicer Payment Date. The Servicer shall deposit from its own funds the amount
of any loss, to the extent not offset by investment income or earnings, in the
Collection Account upon the realization of such loss.

            Section 5.03. Permitted Withdrawals from the Collection Account. The
Servicer may make withdrawals from the Collection Account, on or prior to any
Servicer Payment Date, for the following purposes:

            (a) to reimburse the Servicer for Liquidation Expenses theretofore
incurred in respect of any Mortgage Loan in an amount not to exceed the amount
of the sum of the related Insurance Proceeds and Liquidation Proceeds deposited
in the Collection Account pursuant to Section 5.02(c)(v)-(vi);

            (b) to reimburse the Servicer for amounts expended by it pursuant to
Section 5.04 in good faith in connection with the restoration of damaged
property, in an amount not to exceed the amount of the related Insurance
Proceeds and Liquidation Proceeds (net of withdrawals pursuant to Section
5.03(a)) and amounts representing proceeds of other insurance policies covering
the property subject to the related Mortgage deposited in the Collection Account
pursuant to Section 5.02(c)(v)-(vi);

            (c) to pay to the Unaffiliated Seller amounts received in respect of
any Defective Mortgage Loan purchased or substituted for by the Unaffiliated
Seller to the extent that the payment of any such amounts on the Servicer
Payment Date upon which the proceeds of such purchase are paid would make the
total amount distributed in respect of any such Mortgage Loan on such Servicer
Payment Date greater than the Loan Repurchase Price or the Substitution
Adjustment therefor;

            (d) to reimburse the Servicer for unreimbursed Servicing Advances,
without interest, with respect to the Mortgage Loans for which it has made a
Servicing Advance, from subsequent collections with respect to interest on such
Mortgage Loans and from Liquidation Proceeds, Insurance Proceeds and/or the Loan
Repurchase Price or Substitution Adjustment of or relating to such Mortgage
Loans;

            (e) to reimburse the Servicer for any Periodic Advances determined
in good faith to have become Nonrecoverable Advances, such reimbursement to be
made from any funds in the Collection Account;

                                       18

<PAGE>

            (f) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;

            (g) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein; and

            (h) to pay the Servicer the Servicing Compensation pursuant to
Section 5.08 hereof to the extent not retained or paid.

            The Servicer shall keep and maintain a separate accounting for each
Mortgage Loan for the purpose of accounting for withdrawals from the Collection
Account pursuant to this Section 5.03.

            Section 5.04. Hazard Insurance Policies; Property Protection
Expenses. (a) The Servicer shall cause to be maintained for each Mortgage Loan a
hazard insurance policy with extended coverage which contains a standard
mortgagee's clause with an appropriate endorsement in an amount equal to the
lesser of (x) the maximum insurable value of the related Mortgaged Property or
(y) the sum of the Principal Balance of such Mortgage Loan plus the outstanding
balance of any mortgage loan senior to such Mortgage Loan, but in no event shall
such amount be less than is necessary to prevent the Mortgagor from becoming a
coinsurer thereunder. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property or (ii) the sum of the Principal Balance of such Mortgage Loan and the
principal balance of any mortgage loan senior to such Mortgage Loan at the time
of such foreclosure plus accrued interest and the good-faith estimate of the
Servicer of related Liquidation Expenses to be incurred in connection therewith.
Amounts collected by the Servicer under any such policies shall be deposited in
the Collection Account to the extent that they constitute Liquidation Proceeds
or Insurance Proceeds. Each hazard insurance policy shall contain a standard
mortgage clause naming the Originator, its successors and assigns, as mortgagee.
The Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or flood or other additional insurance and shall be under no
obligation itself to maintain any such additional insurance on property acquired
in respect of a Mortgage Loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance.

            (b) If the Servicer shall obtain and maintain a blanket policy
issued by an insurer acceptable to the Rating Agencies and the Note Insurer
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section
5.04(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Section 5.04(a), and there shall have been a loss which would
have been covered by such policy, deposit in the Collection Account the amount
not otherwise payable under the blanket policy because of such deductible
clause.

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<PAGE>

            (c) If the Mortgaged Property or REO Property is located at the time
of origination of the Mortgage Loan in a federally designated special flood
hazard area (and if the flood insurance policy referenced herein has been made
available), the Servicer will cause to be maintained flood insurance in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the sum of the Principal Balance of the related Mortgage Loan and the principal
balance of the related first lien, if any, (ii) the maximum insurable value of
the related Mortgaged Property, and (iii) 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).

            Section 5.05. Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall exercise its right to accelerate the maturity of the related
Mortgage Loan and require that the Principal Balance thereof be paid in full on
or prior to such conveyance by the Mortgagor under any "due-on-sale" clause
applicable thereto. If such "due-on-sale" clause, by its terms, is not operable
or the Servicer is prevented, as provided in the last paragraph of this Section
5.05, from enforcing any such clause, the Servicer is authorized, subject to the
consent of the Note Insurer, to take or enter into an assumption and
modification agreement from or with the Person to whom such property has been or
is about to be conveyed, pursuant to which such Person becomes liable under the
Mortgage Note and the Mortgagor remains liable thereon or, if the Servicer in
its reasonable judgment finds it appropriate, is released from liability
thereon. The Servicer shall notify the Indenture Trustee and the Collateral
Agent that any assumption and modification agreement has been completed by
delivering to the Indenture Trustee, the Collateral Agent and the Note Insurer
an Officer's Certificate certifying that such agreement is in compliance with
this Section 5.05 together with the original copy of such assumption and
modification agreement. Any such assumption and modification agreement shall,
for all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. In
connection with any such agreement, the then current Mortgage Interest Rate
thereon shall not be increased or decreased. Any fee collected by the Servicer
for entering into any such agreement will be retained by the Servicer as
additional servicing compensation. At its sole election, the Servicer may
purchase from the Trust any Mortgage Loan that has been assumed in accordance
with this Section 5.05 within one month after the date of such assumption at a
price equal to the greater of (i) the fair market value of such Mortgage Loan
(as determined by the Servicer in its good faith judgment) and (ii) the Loan
Repurchase Price. Such amount, if any, shall be deposited into the Collection
Account in the Due Period in which such repurchase is made.

            Notwithstanding the foregoing paragraph of this Section 5.05 or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan, or transfer of any Mortgaged Property without
the assumption thereof, by operation of law or any assumption or transfer which
the Servicer reasonably believes it may be restricted by law from preventing for
any reason whatsoever.

            Section 5.06. Realization Upon Defaulted Mortgage Loans. (a) The
Servicer shall foreclose upon or otherwise comparably convert to ownership
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no

                                       20

<PAGE>

satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 5.02(a). Prior to conducting any sale in a foreclosure
proceeding or accepting a deed-in-lieu of foreclosure with respect to any
Mortgaged Property, the Servicer shall cause an environmental review to be
performed, in accordance with Accepted Servicing Practices on the Mortgaged
Property by a company such as Equifax, Inc. or Toxicheck. If such review reveals
that the Mortgaged Property has on it, under it or is near hazardous or toxic
material or waste or reveals any other environmental problem, the Servicer shall
not foreclose or accept a deed-in-lieu of foreclosure, without the prior written
consent of the Note Insurer. In connection with such foreclosure or other
conversion, the 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) and procedures which are consistent with Accepted Servicing
Practices as it shall deem necessary or advisable and as shall be normal and
usual in its general first and second mortgage loan servicing activities.
Notwithstanding the foregoing, the Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the correction of any
default on a related senior mortgage loan or restoration of any property unless,
in the reasonable judgment of the Servicer, such expenses will be recoverable
from Liquidation Proceeds.

            (b) 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 to the Indenture Trustee, or to its nominee, on behalf of
Noteholders and the Note Insurer.

            (c) Any Insurance Proceeds or Liquidation Proceeds received with
respect to a Mortgage Loan or REO Property (other than received in connection
with a purchase by the Trust Certificateholders of all the Mortgage Loans and
REO Properties in the Trust Estate pursuant to Section 10.01 of the Indenture)
will be applied in the following order of priority, in each case to the extent
of Available Funds: first, to pay the Servicer any accrued and unpaid Servicing
Fees relating to such Mortgage Loan; second, to reimburse the Servicer or any
Subservicer for any related unreimbursed Servicing Advances, and any related
unreimbursed Periodic Advances theretofore funded by the Servicer or any
Subservicer from its own funds, in each case, with respect to the related
Mortgage Loan; third, to accrued and unpaid interest on the Mortgage Loan, at
the Mortgage Interest Rate (or at such lesser rate as may be in effect for such
Mortgage Loan pursuant to application of the Relief Act) on the Principal
Balance of such Mortgage Loan, to the date such Mortgage Loan is determined to
be a Liquidated Mortgage Loan if it is a Liquidated Mortgage Loan, or to the Due
Date in the Due Period prior to the Payment Date on which such amounts are to be
paid if such determination has not yet been made, minus any unpaid Servicing
Fees with respect to such Mortgage Loan; fourth, to the extent of the Principal
Balance of the Mortgage Loan outstanding immediately prior to the receipt of
such proceeds, as a recovery of principal of the related Mortgage Loan; and
fifth, to any prepayment or late payment charges or penalty interest payable in
connection with the receipt of such proceeds and to all other fees and charges
due and payable with respect to such Mortgage Loan. The amount of any gross
Insurance Proceeds and Liquidation Proceeds received with respect to any
Mortgage Loan or REO Property minus the amount of any unreimbursed Servicing
Advances, unreimbursed Periodic Advances or unpaid Servicing Fees, in each case,
with respect to the related Mortgage Loan, are the "Net Recovery Proceeds" with
respect to such Mortgage Loan or REO Property.

                                       21

<PAGE>

            Section 5.07. Indenture Trustee to Cooperate. Upon the payment in
full of the Principal Balance of any Mortgage Loan, the Servicer will notify the
Indenture Trustee and the Collateral Agent by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 5.02 have been so deposited) of a
Servicing Officer. Upon any such payment in full, the Servicer is authorized to
execute, pursuant to the authorization contained in Section 5.01, an instrument
of satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Servicer if required by applicable law and be delivered
to the Person entitled thereto, it being understood and agreed that no expenses
incurred in connection with such instrument of satisfaction shall be reimbursed
from the Collection Account. From time to time and as appropriate for the
servicing or foreclosure of any Mortgage Loan, the Collateral Agent shall, upon
request of the Servicer and delivery to the Collateral Agent of a Request for
Release signed by a Servicing Officer, release the related Mortgage File to the
Servicer and shall execute, as Collateral Agent on behalf of the Indenture
Trustee, such documents as shall be necessary for the prosecution of any such
proceedings. Such Request for Release shall obligate the Servicer to return the
Indenture Trustee's Mortgage File to the Collateral Agent when the need therefor
by the Servicer no longer exists unless the Mortgage Loan shall be liquidated,
in which case, upon receipt of a certificate of a Servicing Officer similar to
that hereinabove specified, the Request for Release shall be released by the
Collateral Agent to the Servicer.

            Section 5.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. On each Payment Date, the Servicer shall be entitled to receive, and
the Indenture Trustee shall pay, out of collections on the Mortgage Loans for
the Due Period, as servicing compensation for such Due Period, an amount (the
"Monthly Servicing Fee") equal to the product of one-twelfth of the Servicing
Fee Rate and the aggregate outstanding Principal Balance of each Pool of
Mortgage Loans as of the beginning of such Due Period. Additional servicing
compensation in the form of assumption fees, late payment charges or extension
and other administrative charges shall be retained by the Servicer. The Servicer
shall be required to pay all expenses incurred by it in connection with its
activities hereunder (including payment of all fees and expenses of the
Subservicer, payment of the Indenture Trustee Fee and payment of the Collateral
Agent Fee to the extent that monies in the Collection Account are insufficient
therefor, as provided in Section 6.16 of the Indenture and Section 9.05 hereof,
and all other fees and expenses not expressly stated hereunder to be payable by
or from another source) and shall not be entitled to reimbursement therefor
except as specifically provided herein.

            Section 5.09. Annual Statement as to Compliance. The Servicer will
deliver to the Indenture Trustee, the Collateral Agent, the Rating Agencies, the
Note Insurer and each Noteholder, on or before April 30 of each year, beginning
April 30, 2001, an Officer's Certificate of the Servicer stating that (a) a
review of the activities of the Servicer during the preceding calendar year and
of its performance under this Agreement has been made under such officer's
supervision and (b) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its material obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.

                                       22

<PAGE>

            Section 5.10. Annual Independent Public Accountants' Servicing
Report. On or before April 30 of each year, beginning April 30, 2001, the
Servicer at its expense shall cause a firm of independent public accountants
that is a member of the American Institute of Certified Public Accountants (who
may also render other services to the Servicer) to furnish a report to the
Indenture Trustee, the Collateral Agent, the Rating Agencies and each Noteholder
to the effect that such firm has examined certain documents and records relating
to the servicing of mortgage loans under servicing agreements (including this
Agreement) substantially similar to this Agreement, and that such examination,
which has been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers (to the extent that the procedures in
such audit guide are applicable to the servicing obligations set forth in such
agreements), has disclosed no items of noncompliance with the provisions of this
Agreement which, in the opinion of such firm, are material, except for such
items of noncompliance as shall be set forth in such report.

            Section 5.11. Access to Certain Documentation. The Servicer shall
permit the designated agents or representatives of each Noteholder, the Note
Insurer, the Collateral Agent and the Indenture Trustee (i) to examine and make
copies of and abstracts from all books, records and documents (including
computer tapes and disks) in the possession or under the control of the Servicer
relating to the Mortgage Loans and (ii) to visit the offices and properties of
the Servicer for the purpose of examining such materials and to discuss matters
relating to the Mortgage Loans and the Servicer's performance under this
Agreement with any of the officers or employees of the Servicer having knowledge
thereof and with the independent public accountants of the Servicer (and by this
provision the Servicer authorizes its accountants to discuss their respective
finances and affairs), all at such reasonable times, as often as may be
reasonably requested and without charge to such Noteholder, the Note Insurer,
the Collateral Agent or the Indenture Trustee.

            Section 5.12. Maintenance of Fidelity Bond. The Servicer shall
during the term of its service as Servicer maintain in force a fidelity bond and
errors and omissions insurance in respect of its officers, employees or agents.
Such bond and insurance shall comply with the requirements from time to time of
the FNMA for Persons performing servicing for mortgage loans purchased by such
association.

            Section 5.13. The Subservicers. The parties acknowledge that the
Servicer intends to appoint the Subservicers as the Servicer's agents for the
purpose of servicing on the Servicer's behalf such of the Mortgage Loans as were
originated in the States of New Jersey, Pennsylvania and New York. The Servicer
agrees to cause the Subservicers to service such Mortgage Loans in a manner
consistent with the Accepted Servicing Practices set forth in this Agreement,
and agrees that receipt by the Subservicers of any and all amounts which by the
terms hereof are required to be deposited in the Collection Account shall
constitute receipt thereof by the Servicer for all purposes hereof as of the
date so received by the Subservicers. Notwithstanding such designation of the
Subservicers, the Servicer agrees that it is, and it shall remain, fully
obligated under the terms hereof as Servicer with respect to all such Mortgage
Loans, and nothing herein shall relieve or release the Servicer from its
obligations to the other parties hereto to service such Mortgage Loans in the
manner provided in this Agreement.

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<PAGE>

            Section 5.14. Reports to the Indenture Trustee; Collection Account
Statements. Not later than fifteen (15) days after each Payment Date, the
Servicer shall provide to the Indenture Trustee, the Collateral Agent and the
Note Insurer a statement, certified by a Servicing Officer, setting forth the
status of the Collection Account as of the close of business on the related
Payment Date, stating that all payments required by this Agreement to be made by
the Servicer on behalf of the Indenture Trustee have been made (or if any
required payment has not been made by the Servicer, specifying the nature and
status thereof) and showing, for the period covered by such statement, the
aggregate of deposits into and withdrawals from the Collection Account for each
category of deposit specified in Section 5.02 and each category of withdrawal
specified in Section 5.03 and the aggregate of deposits into the Collection
Account as specified in Section 6.01. Such statement shall also state the
aggregate unpaid principal balance of all the Mortgage Loans as of the close of
business on the last day of the month preceding the month in which such Payment
Date occurs. Copies of such statement shall be provided by the Indenture Trustee
to any Noteholder upon request.

            Section 5.15. Optional Purchase of Defaulted Mortgage Loans. (a)
Subject to Sections 5.15(b) and 5.15(c), the Unaffiliated Seller or any
Affiliate of the Unaffiliated Seller, in its sole discretion, shall have the
right to elect (by written notice sent to the Servicer, the Indenture Trustee
and the Note Insurer), but shall not be obligated, to purchase for its own
account from the Trust any Mortgage Loan which is ninety (90) days or more
Delinquent in the manner and at the Loan Purchase Price (except that the amount
described in clause (ii) of the definition of Loan Purchase Price shall in no
case be net of the Servicing Fee). The purchase price for any Mortgage Loan
purchased hereunder shall be deposited in the Collection Account and the
Collateral Agent, upon the Indenture Trustee's receipt of such deposit, shall
release or cause to be released to the purchaser of such Mortgage Loan the
related Indenture Trustee's Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the purchaser of such Mortgage
Loan, in each case without recourse, as shall be necessary to vest in the
purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto and
the purchaser of such Mortgage Loan shall succeed to all the Indenture Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The purchaser of such Mortgage Loan shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation to
the Indenture Trustee, the Collateral Agent, the Note Insurer or the Noteholders
with respect thereto. The purchaser of such Mortgage Loan shall give written
notice to the Note Insurer of the means by which any Mortgage Loan purchased
pursuant to this Section 5.15 is ultimately disposed of.

            (b) After the Unaffiliated Seller or an Affiliate of the
Unaffiliated Seller has repurchased any Mortgage Loans which are 90 days or more
Delinquent in an Aggregate Principal Balance equal to 1% of the Maximum
Collateral Amount, then notwithstanding the foregoing, unless the Note Insurer
consents, any such Unaffiliated Seller or Affiliate of the Unaffiliated Seller
may only exercise its option pursuant to this Section 5.15 with respect to the
Mortgage Loan or Mortgage Loans that have been Delinquent for the longest period
at the time of such repurchase. Any request by the Unaffiliated Seller or
Affiliate to the Note Insurer for consent to repurchase Mortgage Loans that are
not the most Delinquent shall be accompanied by a description of the Mortgage
Loans that have been Delinquent longer than the Mortgage Loan or Mortgage Loans
the Unaffiliated Seller or such Affiliate proposes to repurchase. If the Note

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<PAGE>

Insurer fails to respond to such request within ten (10) Business Days after
receipt thereof, the Unaffiliated Seller or such Affiliate may repurchase the
Mortgage Loan or Mortgage Loans proposed to be repurchased without the consent
of, or any further action by, the Note Insurer. Notice to the Note Insurer shall
be delivered in accordance with the terms of the Insurance and Indemnity
Agreement.

            (c) After the Unaffiliated Seller or an Affiliate of the
Unaffiliated Seller has repurchased any Mortgage Loans which are 90 days or more
Delinquent in an Aggregate Principal Balance equal to 5% of the Maximum
Collateral Amount, then notwithstanding the foregoing, unless the Note Insurer
consents, any such Unaffiliated Seller or Affiliate of the Unaffiliated Seller
may not repurchase such additional Mortgage Loans.

            Section 5.16. Reports to be Provided by the Servicer.

            (a) On each Servicer Payment Date, the Servicer shall deliver to the
Indenture Trustee and the Note Insurer (i) a Noteholder Statement and (ii) a
Servicer Remittance Report for such Servicer Payment Date setting forth the
following information with respect to all Mortgage Loans as well as a break out
as to (x) consumer purpose and business purpose Mortgage Loans and (y) each
Mortgage Loan Group, in each case, as of the close of business on the last
Business Day of the prior calendar month (except as otherwise provided in clause
(v) below):

            (i) the total number of Mortgage Loans and the Aggregate Principal
      Balances thereof, together with the number, Aggregate principal balances
      of such Mortgage Loans and the percentage (based on the Aggregate
      Principal Balances of the Mortgage Loans) of the Aggregate Principal
      Balances of such Mortgage Loans to the Aggregate Principal Balance of all
      Mortgage Loans (A) 31-59 days Delinquent, (B) 60-89 days Delinquent and
      (C) 90 or more days Delinquent;

            (ii) the number, Aggregate Principal Balances of all Mortgage Loans
      and percentage (based on the Aggregate Principal Balances of the Mortgage
      Loans) of the Aggregate Principal Balances of such Mortgage Loans to the
      aggregate Principal Balance of all Mortgage Loans in foreclosure
      proceedings and the number, Aggregate Principal Balances of all Mortgage
      Loans and percentage (based on the Aggregate Principal Balances of the
      Mortgage Loans) of any such Mortgage Loans also included in any of the
      statistics described in the foregoing clause (i);

            (iii) the number, Aggregate Principal Balances of all Mortgage Loans
      and percentage (based on the Aggregate Principal Balances of the Mortgage
      Loans) of the Aggregate Principal Balances of such Mortgage Loans to the
      Aggregate Principal Balance of all Mortgage Loans relating to Mortgagors
      in bankruptcy proceedings and the number, Aggregate Principal Balances of
      all Mortgage Loans and percentage (based on the Aggregate Principal
      Balances of the Mortgage Loans) of any such Mortgage Loans also included
      in any of the statistics described in the foregoing clause (i);

            (iv) the number, Aggregate Principal Balances of all Mortgage Loans
      and percentage (based on the Aggregate Principal Balances of the Mortgage
      Loans) of the Aggregate Principal Balances of such Mortgage Loans to the
      Aggregate Principal

                                       25

<PAGE>

      Balance of all Mortgage Loans relating to REO Properties and the number,
      Aggregate Principal Balances of all Mortgage Loans and percentage (based
      on the Aggregate Principal Balances of the Mortgage Loans) of any such
      Mortgage Loans also included in any of the statistics described in the
      foregoing clause (i);

            (v) the weighted average Mortgage Interest Rate as of the Due Date
      occurring in the Due Period related to such Payment Date;

            (vi) the weighted average remaining term to stated maturity of all
      Mortgage Loans;

            (vii) the book value of any REO Property;

            (viii) the Cumulative Loan Losses and the aggregate Cumulative Loan
      Losses since the Closing Date; and

            (ix) the total number of Mortgage Loans and the Pool Principal
      Balance.

            (b) In connection with the transfer of the Notes, the Indenture
Trustee on behalf of any Noteholder may request that the Servicer make available
to any prospective Noteholder annual audited financial statements of the
Servicer for one or more of the most recently completed five (5) fiscal years
for which such statements are publicly available, which request shall not be
unreasonably denied or unreasonably delayed. Such annual audited financial
statements also shall be made available to the Note Insurer upon request.

            (c) The Servicer also agrees to make available on a reasonable basis
to the Note Insurer or any prospective Noteholder a knowledgeable financial or
accounting officer for the purpose of answering reasonable questions respecting
recent developments affecting the Servicer or the financial statements of the
Servicer and to permit the Note Insurer or any prospective Noteholder to inspect
the Servicer's servicing facilities during normal business hours for the purpose
of satisfying the Note Insurer or such prospective Noteholder that the Servicer
has the ability to service the Mortgage Loans in accordance with this Agreement.

            Section 5.17. Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans. The Monthly Servicing Fee that the Servicer shall be
entitled to receive with respect to each Mortgage Loan and each Payment Date
shall be offset on such Payment Date by an amount equal to the Prepayment
Interest Shortfall with respect to such Mortgage Loan to the extent that it is
the subject of Principal Prepayments during the month preceding the month of
such Payment Date. The amount of any offset against the Monthly Servicing Fee
with respect to any Payment Date under this Section 5.17 shall be limited to the
Monthly Servicing Fee otherwise payable to the Servicer (without adjustment on
account of Prepayment Interest Shortfalls) with respect to such Mortgage Loan,
and the rights of the Noteholders to the offset of the aggregate Prepayment
Interest Shortfalls against the Monthly Servicing Fee shall not be cumulative.

            Section 5.18. Periodic Advances; Special Advance. (a) If, on any
Servicer Payment Date, the Servicer determines that any Monthly Payments due on
the Due Date immediately preceding such Servicer Payment Date have not been
received as of the end of the

                                       26

<PAGE>

related Due Period, the Servicer shall determine the amount of any Periodic
Advance required to be made with respect to the related Payment Date. The
Servicer shall, one (1) Business Day after such Servicer Payment Date, deliver a
magnetic tape or diskette to the Indenture Trustee indicating the payment status
of each Mortgage Loan as of such Servicer Payment Date. The Servicer shall
include in the amount to be deposited in the Collection Account on such Servicer
Payment Date an amount equal to the Periodic Advance, if any, which deposit may
be made in whole or in part from funds in the Collection Account being held for
future payment or withdrawal on or in connection with Payment Dates in
subsequent months. Any funds being held for future payment to Noteholders and so
used shall be replaced by the Servicer from its own funds by deposit in the
Collection Account on or before the Business Day preceding any such future
Servicer Payment Date to the extent that funds in the Collection Account on such
Servicer Payment Date shall be less than payments to Noteholders required to be
made on such date; provided, however, that at no time may the aggregate
outstanding amount of Periodic Advances funded by such amounts held for future
payment exceed the sum of (i) the aggregate amount of Monthly Payments due and
received after the end of the most recently ended Due Period and on or prior to
the most recent Servicer Payment Date and (ii) 15% of unscheduled principal
collections received after the end of the most recently ended Due Period and on
or prior to the most recent Servicer Payment Date and to the extent that the
aggregate outstanding amount of Periodic Advances funded by such amounts held
for future payments exceeds the sum of the amounts specified in clauses (i) and
(ii) above, the Servicer shall immediately make a payment from its own funds to
the Collection Account of an amount equal to such excess.

            The Servicer shall designate on its records the specific Mortgage
Loans and related installments (or portions thereof) as to which such Periodic
Advance shall be deemed to have been made, such determination being conclusive
for purposes of withdrawals from the Collection Account pursuant to Section 5.03
hereof.

            (b) In addition to the Periodic Advances, the Servicer shall make
special advances ("Special Advances") on the Servicer Payment Date occurring in
April 2000, of $611,239.97, with respect to interest on Mortgage Loans in Pool I
not having their first payment due until after March 2000 and $108,178.53, with
respect to interest on Mortgage Loans in Pool II not having their first payment
due until after March 2000. The Special Advances shall be made without regard to
recoverability, and shall not be reimbursable. In no event shall the Indenture
Trustee, as successor Servicer, be liable for the payment of the Special
Advances.

            On each Subsequent Transfer Date, the Servicer will make the Special
Advance set forth in the related subsequent Pledge Agreement.

            Section 5.19. Indemnification; Third Party Claims. (a) The Servicer
agrees to indemnify and to hold each of the Trust, the Owner Trustee, the
Depositor, the Indenture Trustee, the Collateral Agent, the Unaffiliated Seller,
the Note Insurer and each Noteholder harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Trust, the Owner Trustee, the
Depositor, the Indenture Trustee, the Collateral Agent, the Unaffiliated Seller,
the Note Insurer and any Noteholder may sustain in any way related to the
failure of the Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement and the other Basic Documents. Each
indemnified party and the Servicer shall immediately notify the

                                       27

<PAGE>

other indemnified parties if a claim is made by a third party with respect to
this Agreement and the other Basic Documents, and the Servicer shall assume the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Trust, the Owner Trustee,
the Depositor, the Servicer, the Indenture Trustee, the Collateral Agent, the
Unaffiliated Seller, the Note Insurer and/or a Noteholder in respect of such
claim. The Indenture Trustee shall reimburse the Servicer in accordance with
Section 5.08 hereof, out of collections on the Mortgage Loans for the Due
Period, for all amounts advanced by it pursuant to the preceding sentence except
to the extent that the claim relates directly to the failure of the Servicer to
service and administer the Mortgages in compliance with the terms of this
Agreement; provided, that the Servicer's indemnity hereunder shall not be in any
manner conditioned on the availability of funds for such reimbursement. The
obligations of the Servicer under this Section 5.19 arising prior to any
resignation or termination of the Servicer hereunder shall survive the
resignation or termination of the Servicer.

            (b) The Indenture Trustee may, if necessary, reimburse the Servicer
from amounts otherwise distributable on the Trust Certificates for all amounts
advanced by it pursuant to Section 4.04(a)(ii) of the Unaffiliated Seller's
Agreement, except to the extent that the claim relates directly to the failure
of the Servicer, if it is the Unaffiliated Seller, or is an Affiliate of the
Unaffiliated Seller, to perform its obligations to service and administer the
Mortgages in compliance with the terms of the Unaffiliated Seller's Agreement
and this Agreement, or the failure of the Unaffiliated Seller to perform its
duties in compliance with the terms of this Agreement.

            (c) The Indenture Trustee shall reimburse the Unaffiliated Seller
from amounts otherwise distributable on the Trust Certificates for all amounts
advanced by the Unaffiliated Seller pursuant to the second sentence of Section
4.04(a)(ii) of the Unaffiliated Seller's Agreement except when the relevant
claim relates directly to the failure of the Unaffiliated Seller to perform its
duties in compliance with the terms of the Unaffiliated Seller's Agreement.

            Section 5.20. Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer. (a) The Servicer will keep in full
effect its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 to be true and correct at all
times under this Agreement.

            (b) Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer, shall be an established mortgage loan servicing
institution that has a net worth of at least $15,000,000 and is a Permitted
Transferee, and in all events shall be the successor of the Servicer 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 Servicer
shall send notice of any such merger or consolidation to the Owner Trustee, the
Indenture Trustee, the Collateral Agent and the Note Insurer.

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<PAGE>

            Section 5.21. Assignment of Agreement by Servicer; Servicer Not to
Resign. The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Owner Trustee, on behalf of the Trust, at the direction of the Trust
Certificateholders, the Depositor, the Servicer, the Unaffiliated Seller, the
Note Insurer, the Collateral Agent and the Indenture Trustee or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law and that such incapacity cannot be cured by the Servicer
without incurring, in the reasonable judgment of the Note Insurer, unreasonable
expense. Any such determination that the Servicer's duties hereunder are no
longer permissible under applicable law permitting the resignation of the
Servicer shall be evidenced by a written Opinion of Counsel (who may be counsel
for the Servicer) to such effect delivered to the Indenture Trustee, the
Collateral Agent, the Unaffiliated Seller, the Trust, the Depositor and the Note
Insurer. No such resignation shall become effective until the Indenture Trustee
or a successor appointed in accordance with the terms of this Agreement has
assumed the Servicer's responsibilities and obligations hereunder in accordance
with Section 7.02. The Servicer shall provide the Indenture Trustee, the
Collateral Agent, the Rating Agencies and the Note Insurer with 30 days' prior
written notice of its intention to resign pursuant to this Section 5.21.

            Section 5.22. Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Indenture Trustee shall prepare or cause
to be prepared for filing with the Commission (other than the initial Current
Report on Form 8-K to be filed by the Depositor in connection with the issuance
of the Notes) any and all reports, statements and information respecting the
Trust and/or the Notes required to be filed, and shall solicit any and all
proxies of the Noteholders whenever such proxies are required to be solicited,
pursuant to the Securities Exchange Act of 1934, as amended. The Depositor shall
promptly file, and exercise its reasonable best efforts to obtain a favorable
response to, no-action requests with, or other appropriate exemptive relief
from, the Commission seeking the usual and customary exemption from such
reporting requirements granted to issuers of securities similar to the Notes.
Fees and expenses incurred by the Indenture Trustee in connection with the
foregoing shall be reimbursed pursuant to Section 6.16 of the Indenture and
shall not be paid by the Trust.

            The Servicer and the Depositor each agree to promptly furnish to the
Indenture Trustee, from time to time upon request, such further information,
reports and financial statements as the Indenture Trustee deems appropriate to
prepare and file all necessary reports with the Commission.

                                   ARTICLE VI

                              APPLICATION OF FUNDS

            Section 6.01. Deposits to the Payment Account. On each Servicer
Payment Date, the Servicer shall cause to be deposited in the Payment Account,
from funds on deposit in the Collection Account, (a) an amount equal to the
Servicer Remittance Amount and (b) Net Foreclosure Profits, if any with respect
to the related Payment Date, minus any portion thereof payable to the Servicer
pursuant to Section 5.03. On each Servicer Payment Date, the Servicer shall also
deposit into the Payment Account any Periodic Advances with respect to the
related Payment Date calculated in accordance with Section 5.18 and any amounts
required to be

                                       29

<PAGE>

deposited in connection with a Subsequent Mortgage Loan pursuant to Section
2.14(b) of the Indenture; on the Servicer Payment Date occurring in April 2000,
the Servicer also will deposit the related Special Advance pursuant to Section
5.18(b).

            Section 6.02. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Indenture Trustee
pursuant to this Agreement, including (a) all payments due on the Mortgage Loans
in accordance with the respective terms and conditions of such Mortgage Loans
and required to be paid over to the Indenture Trustee by the Servicer or by any
Subservicer and (b) Insured Payments. The Indenture Trustee shall hold all such
money and property received by it, as part of the Trust Estate and shall apply
it as provided in the Indenture.

            Section 6.03. Application of Principal and Interest. In the event
that Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than the
Principal Balance of the related Mortgage Loan plus accrued interest thereon, or
any Mortgagor makes a partial payment of any Monthly Payment due on a Mortgage
Loan, such Net Liquidation Proceeds or partial payment shall be applied to
payment of the related Mortgage Note as provided therein, and if not so
provided, first to interest accrued at the Mortgage Interest Rate and then to
principal.

            Section 6.04. Information Concerning the Mortgage Loans. No later
than 12:00 noon Pennsylvania time on the fourth Business Day preceding each
Payment Date, the Servicer shall deliver to the Indenture Trustee a report in
computer-readable form containing such information as to each Mortgage Loan and
as to each Mortgage Loan Pool as of such Payment Date and such other information
as the Indenture Trustee shall reasonably require.

            Section 6.05. Compensating Interest. Not later than the close of
business on the third Business Day prior to the Payment Date, the Servicer shall
remit to the Indenture Trustee (without right to reimbursement therefor) for
deposit into the related Payment Account, an amount equal to, for each Mortgage
Loan, the lesser of (a) the Prepayment Interest Shortfall for such Mortgage Loan
for the related Payment Date resulting from Principal Prepayments during the
related Due Period and (b) its Monthly Servicing Fees with respect to such
Mortgage Loan received in the related Due Period (the "Compensating Interest").

            Section 6.06. Effect of Payments by the Note Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Notes which is made with moneys received
pursuant to the terms of the Policy shall not be considered payment of the Notes
from the Trust Estate. The Depositor, the Servicer, the Trust, the Collateral
Agent and the Indenture Trustee acknowledge and agree, that without the need for
any further action on the part of the Note Insurer, the Depositor, the Servicer,
the Trust, the Collateral Agent, the Indenture Trustee or the Note Registrar (a)
to the extent the Note Insurer makes payments, directly or indirectly, on
account of principal of or interest on the Notes to the Holders of such Notes,
the Note Insurer will be fully subrogated to, and each Noteholder, the Servicer,
the Depositor, the Trust, the Collateral Agent and the Indenture Trustee hereby
delegate and assign to the Note Insurer, to the fullest extent permitted by law,
the rights of such Holders to receive such principal and interest from the Trust
Estate, including, without limitation, any amounts due to the Noteholders in
respect of securities law violations arising from the offer and sale of the
Notes, and (b) the Note Insurer shall be paid such amounts from the sources and
in the

                                       30

<PAGE>

manner provided herein for the payment of such amounts and as provided in the
Insurance Agreement. The Indenture Trustee, the Collateral Agent and the
Servicer shall cooperate in all respects with any reasonable request by the Note
Insurer for action to preserve or enforce the Note Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Holders as otherwise set forth herein.

                                  ARTICLE VII

                                SERVICER DEFAULT

            Section 7.01. Servicer Events of Default. (a) The following events
shall each constitute a "Servicer Event of Default" hereunder:

            (i) any failure by the Servicer to remit to the Indenture Trustee
      any payment required to be made by the Servicer under the terms of this
      Agreement (other than Servicing Advances covered by clause (ii) below),
      which continues unremedied for one (1) Business Day after the date upon
      which written notice of such failure, requiring the same to be remedied,
      shall have been given to the Servicer and the Note Insurer by the
      Indenture Trustee or to the Servicer and the Indenture Trustee by the Note
      Insurer or Noteholders of Notes evidencing Percentage Interests of at
      least 25%;

            (ii) the failure by the Servicer to make any required Servicing
      Advance, which failure continues unremedied for a period of thirty (30)
      days after the date on which written notice of such failure, requiring the
      same to be remedied, shall have been given to the Servicer by the
      Indenture Trustee or to the Servicer and the Indenture Trustee by any
      Noteholder or the Note Insurer;

            (iii) any failure on the part of the Servicer duly to observe or
      perform in any material respect any other of the covenants or agreements
      on the part of the Servicer contained in this Agreement, or the failure of
      any representation and warranty made pursuant to Section 3.01(a) hereof to
      be true and correct which continues unremedied for a period of thirty (30)
      days after the date on which written notice of such failure, requiring the
      same to be remedied, shall have been given to the Servicer by the
      Indenture Trustee or to the Servicer and the Indenture Trustee by any
      Noteholder or the Note Insurer;

            (iv) a decree or order of a court or agency or supervisory authority
      having jurisdiction in an involuntary case under any present or future
      federal or state bankruptcy, insolvency or similar law or for the
      appointment of a conservator or receiver or liquidation 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 Servicer and such decree or order shall have
      remained in force, undischarged or unstayed for a period of ninety (90)
      days;

            (v) the Servicer shall consent to the appointment of a conservator
      or receiver or liquidator in any insolvency, readjustment of debt,
      marshalling of assets and liabilities

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<PAGE>

      or similar proceedings of or relating to the Servicer or of or relating to
      all or substantially all of the Servicer's property;

            (vi) the Servicer shall admit in writing its inability generally to
      pay its debts 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;

            (vii) the Note Insurer shall notify the Indenture Trustee of any
      "event of default" under the Insurance Agreement;

            (viii)if on any Payment Date the Rolling Six Month Delinquency Rate
      exceeds 12.50% of the sum of aggregate outstanding Principal Balance for
      the Mortgage Loans and any amount on deposit in the Pre-Funding Accounts;

            (ix) if on any Payment Date, commencing in March 2001, the Twelve
      Month Loss Amount exceeds 2.50% of the sum of aggregate outstanding
      Principal Balance for the Mortgage Loans and any amount on deposit in the
      Pre-Funding Accounts, as of the close of business on the first day of the
      twelfth preceding calendar month;

            (x) if on any Payment Date, the occurrence of a Company
      Stockholders' Equity Trigger; and

            (xi) the occurrence of an Event of Default under the Indenture.

            (b) So long as a Servicer Event of Default shall have occurred and
not have been remedied: (x) with respect solely to Section 7.01(a)(i), if such
payment is in respect of Periodic Advances or Compensating Interest owing by the
Servicer and such payment is not made by 12:00 noon New York time on the second
Business Day prior to the applicable Payment Date, the Indenture Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic and facsimile notice of such failure to a
Servicing Officer of the Servicer and to the Note Insurer and the Indenture
Trustee shall, with the consent of the Note Insurer, terminate all of the rights
and obligations of the Servicer under this Agreement, except for the Servicer's
indemnification obligation under Section 5.19, and the Indenture Trustee, or a
successor Servicer appointed in accordance with Section 7.02, shall immediately
make such Periodic Advance or payment of Compensating Interest and assume,
pursuant to Section 7.02 hereof, the duties of a successor Servicer; (y) with
respect to that portion of Section 7.01(a)(i) not referred to in the preceding
clause (x) and with respect to clauses (ii), (iii), (iv), (v), (vi) and (vii) of
Section 7.01, the Indenture Trustee shall, but only at the direction of the Note
Insurer or the Majority Noteholders, by notice in writing to the Servicer and a
Responsible Officer of the Indenture Trustee and subject to the prior written
consent of the Note Insurer, in the case of any removal at the direction of the
Majority Noteholders, and in addition to whatever rights such Noteholders may
have at law or equity to damages, including injunctive relief and specific
performance, terminate all the rights and obligations of the Servicer under this
Agreement, except for the Servicer's indemnification obligations under Section
5.19, and in and to the Mortgage Loans and the proceeds thereof, as servicer;
and (z) with respect to clauses (viii)-(x) of Section 7.01(a), the Indenture
Trustee shall, but only at the direction of the

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Note Insurer, after notice in writing to the Servicer and a Responsible Officer
of the Indenture Trustee, terminate all the rights and obligations of the
Servicer under this Agreement, except for the Servicer's indemnification
obligations under Section 5.19, and in and to the Mortgage Loans and the
proceeds thereof, as Servicer. Upon receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Mortgage Loans or otherwise, shall, subject to Section 7.02,
pass to and be vested in the Indenture Trustee, or its designee approved by the
Note Insurer, and the Indenture Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, at the expense of the Servicer, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the transfer and endorsement or assignment of the Mortgage Loans
and related documents. The Servicer agrees to cooperate (and pay any related
costs and expenses) with the Indenture Trustee in effecting the termination of
the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Indenture Trustee, or its designee, for
administration by it of all amounts which shall at the time be credited by the
Servicer to the Collection Account or thereafter received with respect to the
Mortgage Loans. The Indenture Trustee shall promptly notify the Note Insurer and
the Rating Agencies of the occurrence of a Servicer Event of Default.

            Section 7.02. Indenture Trustee to Act; Appointment of Successor(a)
On and after the time the Servicer receives a notice of termination pursuant to
Section 7.01 or the Indenture Trustee receives the resignation of the Servicer
evidenced by an Opinion of Counsel pursuant to Section 5.21, or the Servicer is
removed as Servicer pursuant to this Article VII, in which event the Indenture
Trustee shall promptly notify the Rating Agencies, except as otherwise provided
in Section 7.01, the Indenture Trustee shall be the successor in all respects to
the Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof arising on or after the date of succession;
provided, however, that the Indenture Trustee shall not be liable for any
actions or the representations and warranties of any Servicer prior to it and
including, without limitation, the obligations of the Servicer set forth in
Sections 2.06 and 4.02 hereof. The Indenture Trustee, as successor Servicer,
shall be obligated to pay Compensating Interest pursuant to Section 6.05 in any
event and to make advances pursuant to Section 5.18 unless, and only to the
extent the Indenture Trustee determines reasonably and in good faith that such
advances would not be recoverable pursuant to Section 5.04, such determination
to be evidenced by a certification of a Responsible Officer of the Indenture
Trustee delivered to the Note Insurer.

            (b) Notwithstanding the above, the Indenture Trustee may, if it
shall be unwilling to so act, or shall, if it is unable to so act or if the
Majority Noteholders with the consent of the Note Insurer or the Note Insurer so
requests in writing to the Indenture Trustee, appoint, pursuant to such
direction of the Majority Noteholders and Note Insurer or the Note Insurer, or
if no such direction is provided to the Indenture Trustee, pursuant to the
provisions set forth in Section 7.02(c), or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
acceptable to the Note Insurer that has a net worth of not less than $15,000,000
as the successor to the Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Servicer hereunder.

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<PAGE>

            (c) In the event the Indenture Trustee is the successor Servicer, it
shall be entitled to the same Servicing Compensation (including the Servicing
Fee as adjusted pursuant to the definition thereof) and other funds pursuant to
Section 5.08 hereof as the Servicer if the Servicer had continued to act as
servicer hereunder. In the event the Indenture Trustee is unable or unwilling to
act as successor Servicer, the Indenture Trustee shall solicit, by public
announcement, bids from housing and home finance institutions, banks and
mortgage servicing institutions meeting the qualifications set forth above. Such
public announcement shall specify that the successor servicer shall be entitled
to the full amount of the aggregate Servicing Fees hereunder as servicing
compensation, together with the other Servicing Compensation. Within thirty (30)
days after any such public announcement, the Indenture Trustee shall negotiate
and effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Indenture Trustee shall deduct from any sum received by the
Indenture Trustee from the successor to the Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder and the amount of any unreimbursed Servicing Advances and Periodic
Advances owed to the Indenture Trustee. After such deductions, the remainder of
such sum shall be paid by the Indenture Trustee to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor.

            (d) The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the Indenture Trustee and any
successor Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Indenture
Trustee or such successor Servicer, as applicable, at the Servicer's cost and
expense, all documents and records reasonably requested by it to enable it to
assume the Servicer's functions hereunder and shall promptly also transfer to
the Indenture Trustee or such successor servicer, as applicable, all amounts
that then have been or should have been deposited in the Collection Account by
the Servicer or that are thereafter received with respect to the Mortgage Loans.
Any collections received by the Servicer after such removal or resignation shall
be endorsed by it to the Indenture Trustee and remitted directly to the
Indenture Trustee or, at the direction of the Indenture Trustee, to the
successor Servicer. Neither the Indenture Trustee nor any other successor
Servicer shall be held liable by reason of any failure to make, or any delay in
making, any payment hereunder or any portion thereof caused by (i) the failure
of the Servicer to deliver, or any delay in delivering, cash, documents or
records to it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Servicer hereunder. Notwithstanding anything to the
contrary herein, no appointment of a successor Servicer under this Agreement
shall be effective until the Indenture Trustee and the Note Insurer shall have
consented thereto, and written notice of such proposed appointment shall have
been provided by the Indenture Trustee to the Note Insurer and to each
Noteholder. The Indenture Trustee shall not resign as Servicer until a successor
Servicer reasonably acceptable to the Note Insurer has been appointed. The Note
Insurer shall have the right to remove the Indenture Trustee as successor
Servicer under this Section 7.02 without cause, and the Indenture Trustee shall
appoint such other successor Servicer as directed by the Note Insurer.

            (e) Pending appointment of a successor Servicer hereunder, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of

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<PAGE>

such successor Servicer out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer pursuant to Section 5.08, together with
other Servicing Compensation. The Servicer, the Indenture Trustee and such
successor Servicer shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.

            Section 7.03. Waiver of Defaults. The Majority Noteholders may, on
behalf of all Noteholders, and subject to the consent of the Note Insurer, waive
any events permitting removal of the Servicer as servicer pursuant to this
Article VII; provided, however, that the Majority Noteholders may not waive a
default in making a required payment on a Note without the consent of the Holder
of such Note. Upon any waiver of a past default, such default shall cease to
exist, and any Servicer Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereto
except to the extent expressly so waived. Notice of any such waiver shall be
given by the Indenture Trustee to the Rating Agencies and the Note Insurer.

            Section 7.04. Rights of the Note Insurer to Exercise Rights of the
Noteholders. By accepting its Note, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall be deemed to be the Noteholders
for all purposes (other than with respect to the receipt of payment on the
Notes) and shall have the right to exercise all rights of the Noteholders under
this Agreement and under the Notes without any further consent of the
Noteholders, including, without limitation:

            (a) the right to require the Unaffiliated Seller to repurchase
Mortgage Loans pursuant to Sections 2.06 and 4.02 hereof to the extent set forth
therein;

            (b) the right to give notices of breach or to terminate the rights
and obligations of the Servicer as servicer pursuant to Section 7.01 hereof and
to consent to or direct waivers of Servicer defaults pursuant to Section 7.03
hereof;

            (c) the right to direct the actions of the Indenture Trustee during
the continuance of a Servicer Event of Default pursuant to Sections 7.01 and
7.02 hereof;

            (d) the right to institute proceedings against the Servicer pursuant
to Section 7.01 hereof;

            (e) the right to remove the Indenture Trustee pursuant to Section
6.09 of the Indenture;

            (f) the right to direct foreclosures upon the failure of the
Servicer to do so in accordance with the provisions of Section 5.06 of this
Agreement; and

            (g) any rights or remedies expressly given the Majority Noteholders.

            In addition, each Noteholder agrees that, subject to Section 10.02,
unless a Note Insurer Default exists, the rights specifically enumerated above
may only be exercised by the Noteholders with the prior written consent of the
Note Insurer.

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<PAGE>

            Section 7.05. Indenture Trustee To Act Solely with Consent of the
Note Insurer. Unless a Note Insurer Default exists, the Indenture Trustee shall
not, without the Note Insurer's consent or unless directed by the Note Insurer:

            (a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 7.01 hereof;

            (b) agree to any amendment pursuant to Section 10.03 hereof; or

            (c) undertake any litigation.

            The Note Insurer may, in writing and in its sole discretion renounce
all or any of its rights under Sections 7.04, 7.05 or 7.06 or any requirement
for the Note Insurer's consent for any period of time.

            Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for
Benefit of the Note Insurer. (a) The Indenture Trustee shall hold the Trust
Estate and the Indenture Trustee's Mortgage Files, for the benefit of the
Noteholders and the Note Insurer, and all references in this Agreement and in
the Notes to the benefit of Noteholders shall be deemed to include the Note
Insurer. The Indenture Trustee shall cooperate in all reasonable respects with
any reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interests under this Agreement and the Notes unless, as
stated in an Opinion of Counsel addressed to the Indenture Trustee and the Note
Insurer, such action is adverse to the interests of the Noteholders or
diminishes the rights of the Noteholders or imposes additional burdens or
restrictions on the Noteholders.

            (b) The Servicer hereby acknowledges and agrees that it shall
service the Mortgage Loans for the benefit of the Noteholders and for the
benefit of the Note Insurer, and all references in this Agreement to the benefit
of or actions on behalf of the Noteholders shall be deemed to include the Note
Insurer.

            Section 7.07. Note Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Notes to the contrary, if a Note Insurer
Default exists, or if and to the extent the Note Insurer has delivered its
written renunciation of all of its rights under this Agreement, the provisions
of this Article VII and all other provisions of this Agreement which (a) permit
the Note Insurer to exercise rights of the Noteholders, (b) restrict the ability
of the Noteholders, the Servicer, the Collateral Agent or the Indenture Trustee
to act without the consent or approval of the Note Insurer, (c) provide that a
particular act or thing must be acceptable to the Note Insurer, (d) permit the
Note Insurer to direct (or otherwise to require) the actions of the Indenture
Trustee, the Collateral Agent, the Servicer or the Noteholders, (e) provide that
any action or omission taken with the consent, approval or authorization of the
Note Insurer shall be authorized hereunder or shall not subject the party taking
or omitting to take such action to any liability hereunder or (f) which have a
similar effect, shall be of no further force and effect and the Indenture
Trustee shall administer the Trust Estate and perform its obligations hereunder
solely for the benefit of the Holders of the Notes. Nothing in the foregoing
sentence, nor any action taken pursuant thereto or in compliance therewith,
shall be deemed to have released the Note Insurer from any obligation or
liability it may have to any party or to the Noteholders

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<PAGE>

hereunder, under any other agreement, instrument or document (including, without
limitation, the Policy) or under applicable law.

                                  ARTICLE VIII

                                   TERMINATION

            Section 8.01. Termination. (a) Subject to Section 8.02, this
Agreement shall terminate upon notice to the Indenture Trustee of either: (i)
the disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable to the Note Insurer and the Indenture Trustee or (ii) mutual consent of
the Owner Trustee, on behalf of the Trust, at the direction of the Trust
Certificateholders, the Indenture Trustee, the Collateral Agent, the Servicer,
the Note Insurer and all Noteholders in writing.

            (b) In addition, subject to Section 8.02, certain of the Trust
Certificateholders or the Servicer may, at their respective option and at their
respective sole cost and expense, call the Notes or terminate the Trust in
accordance with the terms of Section 10.01 of the Indenture.

            (c) If on any Payment Date, the Servicer determines that there are
no outstanding Mortgage Loans and no other funds or assets in the Trust Estate
other than funds in the Payment Account, the Servicer shall send a final payment
notice promptly to each Noteholder in accordance with Section 8.01(d).

            (d) Notice of any termination, specifying the Payment Date upon
which the Trust will terminate and the Noteholders shall surrender their Notes
to the Indenture Trustee for final payment and cancellation, shall be given
promptly by the Servicer by letter to Noteholders mailed during the month of
such final payment before the Servicer Payment Date in such month, specifying
(i) the Payment Date upon which final payment of the Notes will be made upon
presentation and surrender of Notes at the office of the Indenture Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Payment Date is not applicable,
payments being made only upon presentation and surrender of the Notes at the
office of the Indenture Trustee therein specified. The Servicer shall give such
notice to the Indenture Trustee therein specified at the time such notice is
given to Noteholders. The obligations of the Note Insurer hereunder shall
terminate upon the deposit by the Servicer with the Indenture Trustee of a sum
sufficient to purchase all of the Mortgage Loans and REO Properties as set forth
in Section 10.01 of the Indenture or when the Note Principal Balance of the
Notes has been reduced to zero.

            (e) In the event that all of the Noteholders do not surrender their
Notes for cancellation within six (6) months after the time specified in the
above-mentioned written notice, the Servicer shall give a second written notice
to the remaining Noteholders to surrender their Notes for cancellation and
receive the final payment with respect thereto. If within six (6) months after
the second notice, all of the Notes shall not have been surrendered for
cancellation, the Indenture Trustee may take appropriate steps, or may appoint
an agent to take appropriate steps, to contact the remaining Noteholders
concerning surrender of their Notes and the cost thereof shall be paid out of
the funds and other assets which remain subject hereto. If within

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<PAGE>

nine (9) months after the second notice all the Notes shall not have been
surrendered for cancellation, the related Trust Certificateholders shall be
entitled to all unclaimed funds and other assets which remain subject hereto and
the Indenture Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Noteholders shall look only to the related
Trust Certificateholders for payment and not to the Note Insurer. Such funds
shall remain uninvested.

            Section 8.02. Additional Termination Requirements. By their
acceptance of the Notes, the Holders thereof hereby agree to appoint the
Servicer as their attorney in fact to: (i) adopt such a plan of complete
liquidation (and the Noteholders hereby appoint the Indenture Trustee as their
attorney in fact to sign such plan) as appropriate or upon the written request
of the Note Insurer and (ii) to take such other action in connection therewith
as may be reasonably required to carry out such plan of complete liquidation all
in accordance with the terms hereof.

            Section 8.03. Accounting Upon Termination of Servicer. Upon
termination of the Servicer, the Servicer shall, at its expense:

            (a) deliver to the successor Servicer or, if none shall yet have
been appointed, to the Indenture Trustee, the funds in any Account;

            (b) deliver to the successor Servicer or, if none shall yet have
been appointed, to the Indenture Trustee all Indenture Trustee's Mortgage Files
and related documents and statements held by it hereunder and a Mortgage Loan
portfolio computer tape;

            (c) deliver to the successor Servicer or, if none shall yet have
been appointed, to the Indenture Trustee and, upon request, to the Noteholders a
full accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and

            (d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to the successor Servicer and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer under this
Agreement.

                                   ARTICLE IX

                              THE COLLATERAL AGENT

            Section 9.01. Duties of the Collateral Agent. (a) The Collateral
Agent, prior to the occurrence of an Event of Default and after the curing of
all Events of Default which may have occurred, undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement. If an
Event of Default has occurred and has not been cured or waived, the Collateral
Agent shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.

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<PAGE>

            (b) The Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Collateral Agent which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Collateral Agent shall not be responsible
for the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by any Person hereunder.
If any such instrument is found not to conform on its face to the requirements
of this Agreement, the Collateral Agent shall note it as such on the Initial
Certification or Final Certification delivered pursuant to Section 2.06(b).

            (c) No provision of this Agreement shall be construed to relieve the
Collateral Agent from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:

            (i) prior to the occurrence of an Event of Default, and after the
      curing of all such Events of Default which may have occurred, the duties
      and obligations of the Collateral Agent shall be determined solely by the
      express provisions of this Agreement, the Collateral Agent shall not be
      liable except for the performance of such duties and obligations as are
      specifically set forth in this Agreement, no implied covenants or
      obligations shall be read into this Agreement against the Collateral Agent
      and, in the absence of bad faith on the part of the Collateral Agent, the
      Collateral Agent may conclusively rely, as to the truth of the statements
      and the correctness of the opinions expressed therein, upon any
      certificates or opinions furnished to the Collateral Agent and conforming
      to the requirements of this Agreement;

            (ii) the Collateral Agent shall not be personally liable for an
      error of judgment made in good faith by a Responsible Officer or other
      officers of the Collateral Agent, unless it shall be proved that the
      Collateral Agent was negligent in ascertaining the pertinent facts;

            (iii) the Collateral Agent shall not be personally liable with
      respect to any action taken, suffered or omitted to be taken by it in good
      faith in accordance with the direction of the Note Insurer or the
      Indenture Trustee or with the consent of the Note Insurer or the Indenture
      Trustee;

            (iv) the Collateral Agent shall not be required to expend or risk
      its own funds or otherwise incur financial liability for the performance
      of any of its duties hereunder or the exercise of any of its rights or
      powers if there is reasonable ground for believing that the repayment of
      such funds or adequate indemnity against such risk or liability is not
      reasonably assured to it and none of the provisions contained in this
      Agreement shall in any event require the Collateral Agent to perform, or
      be responsible for the manner of performance of, any of the obligations of
      the Servicer or the Indenture Trustee under this Agreement; and

            (v) subject to the other provisions of this Agreement and without
      limiting the generality of this Section 9.01, the Collateral Agent shall
      have no duty (A) to see to any

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<PAGE>

      recording, filing, or depositing of this Agreement or any agreement
      referred to herein or any financing statement or continuation statement
      evidencing a security interest, or to see to the maintenance of any such
      recording or filing or depositing or to any rerecording, refiling or
      redepositing of any thereof, (B) to see to any insurance, (C) to see to
      the payment or discharge of any tax, assessment, or other governmental
      charge or any lien or encumbrance of any kind owing with respect to,
      assessed or levied against, any part of the Trust, the Trust Estate, the
      Noteholders or the Mortgage Loans, (D) to confirm or verify the contents
      of any reports or certificates of any Person delivered to the Collateral
      Agent pursuant to this Agreement believed by the Collateral Agent to be
      genuine and to have been signed or presented by the proper party or
      parties.

            Section 9.02. Certain Matters Affecting the Collateral Agent. Except
as otherwise provided in Section 9.01 hereof:

            (a) the Collateral Agent may rely and shall be protected in acting
or refraining from acting upon any resolution, Officer's Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;

            (b) the Collateral Agent may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;

            (c) the Collateral Agent shall be under no obligation to exercise
any of the powers vested in it by this Agreement or to institute, conduct or
defend by litigation hereunder or in relation hereto at the request, order or
direction of the Note Insurer or any of the Noteholders, pursuant to the
provisions of this Agreement, unless such Noteholders or the Note Insurer, as
applicable, shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein by the Collateral Agent or thereby; nothing contained herein shall,
however, relieve the Collateral Agent of the obligation, upon the occurrence of
an Event of Default (which has not been cured), to exercise such of the rights
and powers vested in it by this Agreement, and to use the same degree of care
and skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;

            (d) the Collateral Agent shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;

            (e) the Collateral Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Note Insurer or Holders of Class A Notes evidencing Percentage Interests
aggregating not less than 25%; provided, however, that if the payment within a
reasonable time to the Collateral Agent of the costs, expenses or liabilities
likely to be incurred by it in the

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<PAGE>

making of such investigation is, in the opinion of the Collateral Agent, not
reasonably assured to the Collateral Agent by the security afforded to it by the
terms of this Agreement, the Collateral Agent may require reasonable indemnity
against such expense or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by the Servicer or,
if paid by the Collateral Agent, shall be repaid by the Servicer upon demand
from the Servicer's own funds;

            (f) the right of the Collateral Agent to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and the
Collateral Agent shall not be answerable for anything other than its negligence
or willful misconduct in the performance of such act;

            (g) the Collateral Agent may execute any of the powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys.

            Section 9.03. Collateral Agent Not Liable for Notes or Mortgage
Loans. (a) The recitals contained herein shall be taken as the statements of the
Trust and the Servicer, as the case may be, and the Collateral Agent assumes no
responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Collateral Agent shall not be accountable
for the use or application of any funds paid to the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, priority, perfection or sufficiency
of the security for the Notes issued or intended to be issued under the
Indenture.

            Section 9.04. Collateral Agent May Own Notes. (a) The Collateral
Agent in its individual or any other capacity may become the owner or pledgor of
Notes with the same rights it would have if it were not Collateral Agent, and
may otherwise deal with the parties hereto.

            Section 9.05. Collateral Agent's Fees and Expenses; Indemnity. (a)
The Collateral Agent acknowledges that in consideration of the performance of
its duties hereunder it is entitled to receive its fees and expenses from the
Servicer, as separately agreed between the Servicer and the Collateral Agent.
The Trust, the Depositor, the Indenture Trustee and the Note Insurer shall not
pay any of the Collateral Agent fees and expenses in connection with this
transaction. The Collateral Agent shall not be entitled to compensation for any
expense, disbursement or advance as may arise from its negligence or bad faith,
and the Collateral Agent shall have no lien on the Trust Estate for the payment
of its fees and expenses.

            (b) The Collateral Agent and any director, officer, employee or
agent of the Collateral Agent shall be indemnified by the Servicer and held
harmless against any loss, liability, claim, damage or expense arising out of,
or imposed upon the Trust Estate or the Collateral Agent through the Servicer's
acts or omissions in violation of this Agreement, other than any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or negligence of
the Collateral Agent in the performance of its duties hereunder or by reason of
the Collateral Agent 's reckless disregard of obligations and duties hereunder.
The obligations of the Servicer under this Section 9.05 arising prior to any
resignation or termination of the Servicer hereunder shall survive termination
of the Servicer and payment of the Notes.

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<PAGE>

            Section 9.06. Eligibility Requirements for Collateral Agent. The
Collateral Agent hereunder shall at all times be a banking entity (a) organized
and doing business under the laws of any state or the United States of America
subject to supervision or examination by federal or state authority, (b)
authorized under such laws to exercise corporate trust powers, including taking
title to the Trust Estate on behalf of the Indenture Trustee, for the benefit of
the Noteholders and the Note Insurer, (c) having a combined capital and surplus
of at least $50,000,000, (d) whose long-term deposits, if any, shall be rated at
least BBB- by S&P and Baa3 by Moody's (except as provided herein) or such lower
long-term deposit rating as may be approved in writing by the Note Insurer, and
(e) reasonably acceptable to the Note Insurer as evidenced in writing. If such
banking entity publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then
for the purposes of determining an entity's combined capital and surplus for
clause (c) of this Section 9.06, the amount set forth in its most recent report
of condition so published shall be deemed to be its combined capital and
surplus. In case at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of this Section 9.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 9.07.

            Section 9.07. Resignation and Removal of the Collateral Agent. (a)
The Collateral Agent may at any time resign and be discharged from the trusts
hereby created by giving thirty (30) days' written notice thereof to the
Indenture Trustee, the Servicer, and the Note Insurer.

            (b) If at any time the Collateral Agent shall cease to be eligible
in accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Indenture Trustee, the Servicer or the Note
Insurer, or if at any time the Collateral Agent shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Indenture Trustee or the Servicer, with the consent of the Note Insurer, or the
Note Insurer may remove the Collateral Agent.

            (c) If the Collateral Agent fails to perform in accordance with the
terms of this Agreement, the Indenture Trustee, the Servicer or the Majority
Noteholders, with the consent of the Note Insurer, or the Note Insurer may
remove the Collateral Agent.

            (d) Upon removal or receipt of notice of resignation of the
Collateral Agent, the Indenture Trustee shall either (i) take possession of the
Indenture Trustee's Mortgage Files and assume the duties of the Collateral Agent
hereunder or (ii) appoint a successor Collateral Agent pursuant to Section 9.08.
If the Indenture Trustee shall assume the duties of the Collateral Agent
hereunder, it shall notify the Trust, the Depositor, the Servicer and Note
Insurer in writing.

            Section 9.08. Successor Collateral Agent. Upon the resignation or
removal of the Collateral Agent, the Indenture Trustee may appoint a successor
Collateral Agent, with the written approval of the Note Insurer; provided,
however, that the successor Collateral Agent so appointed shall in no event be
the Unaffiliated Seller, the Depositor or the Servicer or any Person known to a
Responsible Officer of the Indenture Trustee to be an Affiliate of the
Unaffiliated Seller, the Depositor or the Servicer and shall be approved by the
Note Insurer. The Indenture

                                       42

<PAGE>

Trustee or such custodian, as the case may be, shall assume the duties of the
Collateral Agent hereunder. Any successor Collateral Agent appointed as provided
in this Section 9.08 shall execute, acknowledge and deliver to the Trust, the
Depositor, the Note Insurer, the Servicer, the Indenture Trustee and to its
predecessor Collateral Agent an instrument accepting such appointment hereunder,
and thereupon the resignation or removal of the predecessor Collateral Agent
shall become effective and such successor Collateral Agent, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as Collateral Agent herein. The predecessor Collateral Agent
shall deliver to the successor Collateral Agent all Indenture Trustee's Mortgage
Files and related documents and statements held by it hereunder, and the
Servicer and the predecessor Collateral Agent shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor Collateral Agent all
such rights, powers, duties and obligations. The cost of any such transfer to
the successor Collateral Agent shall be for the account of the Collateral Agent
in the event of the resignation of the Collateral Agent, and shall be for the
account of the Servicer in the event of the removal of the Collateral Agent. No
successor Collateral Agent shall accept appointment as provided in this Section
9.08 unless at the time of such acceptance such successor Collateral Agent shall
be eligible under the provisions of Section 9.06. Upon acceptance of appointment
by a successor Collateral Agent as provided in this Section 9.08, the Servicer
shall mail notice of the succession of such Collateral Agent hereunder to all
Noteholders at their addresses as shown in the Note Register and to the Rating
Agencies. If the Servicer fails to mail such notice within ten (10) days after
acceptance of appointment by the successor Collateral Agent, the successor
Collateral Agent shall cause such notice to be mailed at the expense of the
Servicer.

            Section 9.09. Merger or Consolidation of Collateral Agent. Any
Person into which the Collateral Agent may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or national banking association
succeeding to the business of the Collateral Agent, shall be the successor of
the Collateral Agent hereunder; provided, that such corporation or national
banking association shall be eligible under the provisions of Section 9.06,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

            Section 10.01. Limitation on Liability. None of the Trust, the Owner
Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee or any of the directors, officers, employees or agents of such Persons
shall be under any liability to the Trust, the Noteholders or the Note Insurer
for any action taken, or for refraining from the taking of any action, in good
faith pursuant to this Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Trust, the Owner Trustee, the
Depositor, the Servicer, the Collateral Agent, the Indenture Trustee or any such
Person against any breach of warranties or

                                       43

<PAGE>

representations made herein by such party, or against any specific liability
imposed on each such party pursuant to this Agreement or against any liability
which would otherwise be imposed upon such party by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations or duties hereunder. The Trust, the
Owner Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee and any director, officer, employee or agent of such Person may rely in
good faith on any document of any kind which, prima facie, is properly executed
and submitted by any appropriate Person respecting any matters arising
hereunder.

            Section 10.02. Acts of Noteholders. (a) Except as otherwise
specifically provided herein, whenever Noteholder action, consent or approval is
required under this Agreement, such action, consent or approval shall be deemed
to have been taken or given on behalf of, and shall be binding upon, all
Noteholders if the Majority Noteholders or the Note Insurer agrees to take such
action or give such consent or approval.

            (b) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Noteholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.

            (c) No Noteholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Notes, be construed
so as to constitute the Noteholders from time to time as partners or members of
an association; nor shall any Noteholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.

            Section 10.03. Amendment. (a) This Agreement may be amended from
time to time by the Owner Trustee, on behalf of the Trust, the Servicer, the
Depositor, the Collateral Agent and the Indenture Trustee by written agreement,
upon the prior written consent of the Note Insurer, without notice to or consent
of the Noteholders to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by (i) an Opinion of Counsel,
at the expense of the party requesting the change, delivered to the Indenture
Trustee or (ii) a letter from each Rating Agency confirming that such action
will not result in the reduction, qualification or withdrawal of the
then-current ratings on the Notes, adversely affect in any material respect the
interests of any Noteholder; and provided further, that no such amendment shall
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be paid on any Note without the consent of
such Noteholder, or change the rights or obligations of any other party hereto
without the consent of such party. The Indenture Trustee shall give prompt
written notice to the Rating Agencies of any amendment made pursuant to this
Section 10.03.

            (b) This Agreement may be amended from time to time by the Owner
Trustee, on behalf of the Trust, the Servicer, the Depositor, the Collateral
Agent and the Indenture

                                       44

<PAGE>

Trustee, with the consent of the Note Insurer, the Majority Noteholders and the
Holder of the majority of the Percentage Interest of the Trust Certificates, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Noteholders; provided, however, that no such amendment shall reduce in
any manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be paid on any Class of Notes without the consent of
the Holders of such Class of Notes or reduce the percentage for the Holders of
which are required to consent to any such amendment without the consent of the
Holders of 100% of such Class of Notes affected thereby.

            (c) It shall not be necessary for the consent of Holders under this
Section 10.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.

            (d) In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by Article IX of the Indenture or the
modifications thereby of the trusts created by the Indenture, the Indenture
Trustee shall be entitled to receive, and (subject to Section 6.01 of the
Indenture) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by the Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties or immunities under the Indenture or
otherwise. The Servicer, on behalf of the Trust, shall cause executed copies of
any supplemental indentures to be delivered to the Note Insurer and the Rating
Agencies.

            Section 10.04. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at the Noteholders' expense on direction and at
the expense of Majority Noteholders requesting such recordation, but only when
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Noteholders or is
necessary for the administration or servicing of the Mortgage Loans.

            Section 10.05. Duration of Agreement. This Agreement shall continue
in existence and effect until terminated as herein provided.

            Section 10.06. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer, the Subservicers or the
Originators, addressed to such Person, c/o American Business Financial Services,
Inc., Balapointe Office Centre, 111 Presidential Boulevard, Suite 127, Bala
Cynwyd, Pennsylvania 19004, Attention: General Counsel; (ii) in the case of the
Unaffiliated Seller, 3411 Silverside Road, 103 Springer Bldg., Wilmington,
Delaware 19810, Attention: Jeffrey Ruben, Executive Vice President; (iii) in the
case of the Trust, ABFS Mortgage Loan Trust 2000-1, c/o the Owner Trustee at its
Corporate Trust Office, Attention: Corporate Trust Administration; (iv) in the
case of the Collateral Agent, Chase Bank of Texas,

                                       45

<PAGE>

N.A., 1111 Fannin, 12th floor, Houston, Texas 77002, Attention: Document Custody
Manager; (v) in the case of the Indenture Trustee, c/o The Chase Manhattan Bank,
450 West 33rd Street, 14th Floor, New York, New York, 10001, Attention: Capital
Markets Fiduciary Services, telephone (212) 946-3200, telecopy (212) 946-7317;
(vi) in the case of the Depositor or the Underwriter, Prudential Securities
Secured Financing Corporation or Prudential Securities Incorporated, One New
York Plaza, New York, New York 10292, Attention: Managing Director- Asset Backed
Finance Group; (vii) in the case of the Note Insurer, Ambac Assurance
Corporation, One State Street Plaza, New York, New York 10004 Attention:
Structure Finance Department- MBS (in each case in which notice or other
communication to the Note Insurer refers to an Event of Default, a Servicer
Event of Default or a claim on the Policy or with respect to which failure on
the part of the Note Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of each of the General Counsel, and shall be marked to
indicate "URGENT MATERIAL ENCLOSED"); (viii) in the case of Standard & Poor's
Rating Services, 55 Water Street, New York, New York 10041 Attention:
Residential Mortgage Surveillance Group; (ix) in the case of Moody's Investors
Service, Inc., 99 Church Street, New York, New York 10007 Attention: Home Equity
Monitoring Group; (x) in the case of Duff & Phelps Credit Rating Co., 17 State
Street, New York, New York 10004 Attention: Residential Mortgage-Backed
Securities Group, and (xi) in the case of the Noteholders, as set forth in the
Note Register. Any such notices shall be deemed to be effective with respect to
any party hereto upon the receipt of such notice by such party, except that
notices to the Noteholders shall be effective upon mailing or personal delivery.

            Section 10.07. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.

            Section 10.08. No Partnership. Nothing herein contained shall be
deemed or construed to create a co-partnership or joint venture between the
parties hereto and the services of the Servicer shall be rendered as an
independent contractor and not as agent for the Noteholders.

            Section 10.09. Counterparts. This Agreement may be executed in one
or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement.

            Section 10.10. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Trust, the Servicer, the Depositor, the
Indenture Trustee, the Collateral Agent and the Noteholders and their respective
successors and permitted assigns.

            Section 10.11. Headings. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.

                                       46

<PAGE>

            Section 10.12. The Note Insurer Default. Any right conferred to the
Note Insurer shall be suspended during any period in which a Note Insurer
Default exists. At such time as the Notes are no longer outstanding hereunder,
and no amounts owed to the Note Insurer hereunder remain unpaid, the Note
Insurer's rights hereunder shall terminate.

            Section 10.13. Third Party Beneficiary. The parties agree that each
of the Owner Trustee, the Unaffiliated Seller and the Note Insurer is intended
and shall have all rights of a third-party beneficiary of this Agreement.

            Section 10.14. Intent of the Parties. It is the intent of the
parties hereto and Noteholders that, for federal income taxes, state and local
income or franchise taxes and other taxes imposed on or measured by income, the
Notes be treated as debt. The parties to this Agreement and the Holder of each
Note, by acceptance of its Note, and each Beneficial Owner thereof, agree to
treat, and to take no action inconsistent with the treatment of, the related
Notes in accordance with the preceding sentence for purposes of federal income
taxes, state and local income and franchise taxes and other taxes imposed on or
measured by income.

            Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.

            (b) THE TRUST, THE SERVICER, THE DEPOSITOR, THE COLLATERAL AGENT AND
THE INDENTURE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN
THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 10.06
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER
THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE
TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT AND THE INDENTURE
TRUSTEE EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION 10.15 SHALL AFFECT THE RIGHT OF THE TRUST, THE
DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT OR THE INDENTURE TRUSTEE TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS
TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.

            (c) THE TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT AND
THE INDENTURE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT.

                                       47

<PAGE>

INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

                 [Remainder of Page Intentionally Left Blank]

                                       48

<PAGE>

            IN WITNESS WHEREOF, the Servicer, the Trust, the Indenture Trustee,
the Collateral Agent and the Depositor have caused their names to be signed
hereto by their respective officers thereunto duly authorized as of the day and
year first above written.

                                    PRUDENTIAL SECURITIES SECURED FINANCING
                                    CORPORATION, as Depositor

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

                                    ABFS MORTGAGE LOAN TRUST 2000-1

                                    By:   FIRST UNION TRUST COMPANY, NATIONAL
                                    ASSOCIATION, not in its individual
                                    capacity, but solely as Owner Trustee
                                    under the Trust Agreement

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

                                    AMERICAN BUSINESS CREDIT, INC., as
                                    Servicer

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

                                    THE CHASE MANHATTAN BANK, as Indenture
                                     Trustee

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

                                    CHASE BANK OF TEXAS, N.A., as Collateral
                                      Agent

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

               [Signature Page to Sales and Servicing Agreement]

<PAGE>

                                                                    SCHEDULE I

                             MORTGAGE LOAN SCHEDULE

               [See Schedule I to Unaffiliated Seller's Agreement]

<PAGE>

                                                                    APPENDIX I

                                  DEFINED TERMS

                          [See Appendix I to Indenture]

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