Document:

<PAGE>

                                EXHIBIT (4)(a)(1)

                           FORM OF POLICY ENDORSEMENT
                         (ADDITIONAL DEATH DISTRIBUTION)
<PAGE>

                                                                    Home Office:
                                                         4333 Edgewood Road N.E.
                                                        Cedar Rapids, Iowa 52499
                                                                  (319) 398-8511

[LOGO] TRANSAMERICA LIFE

                  (Hereafter called the Company, we, our or us)

                         ADDITIONAL DEATH BENEFIT RIDER

We issued this rider as a part of the contract to which it is attached.

This rider will pay an Additional Death Benefit amount equal to a percentage of
the gains accumulated in the certificate since the rider was added. This
additional death benefit will be paid whenever death proceeds are payable on the
base certificate to which this rider is attached.

This rider will be considered terminated with respect to each certificate when
the certificate is annuitized or surrendered, or an additional death benefit is
paid under the terms of this rider. The rider, with respect to each certificate
may also be terminated at any time by notifying us at our service center. Once
terminated, this rider may be re-elected. However, a new rider will be issued
and the Additional Death Benefit amount will be re-determined.

DEFINITIONS

Rider Anniversary
The anniversary of the Rider Date for each year the rider remains in force.

Rider Date
The date that this rider is added to the certificate.

Rider Earnings
The certificate gains accrued and not previously withdrawn since the Rider Date.
On a given date, this amount is equal to: the death proceeds of the base
certificate; minus the Policy Value of the base certificate on the Rider Date;
minus premiums paid after the rider date; plus amounts withdrawn from the Policy
Value after the Rider Date that exceed the Rider Earnings on the date of the
withdrawal.

ADDITIONAL DEATH BENEFIT AMOUNT
If death proceeds are payable under the terms of the base certificate to which
the rider is attached, this rider will pay an Additional Death Benefit equal to
the Additional Death Benefit Factor multiplied by the Rider Earnings on the date
used to calculate the death proceeds.

ADDITIONAL DEATH BENEFIT PREMIUM
We will deduct a fee from the Policy Value of each certificate on each Rider
Anniversary and a pro-rated fee on the termination date of the rider. The Rider
Fee is equal to the Policy Value at the time the fee is deducted, multiplied by
the Rider Fee Percentage. The fee will be deducted from each subaccount and
fixed account in proportion to the amount of Policy Value in each account with
respect to each certificate. This fee will not be deducted after the certificate
is annuitized.

RTPG 2 301MP

<PAGE>

SPOUSAL CONTINUATION
If a death occurs and the deceased's spouse, if any, is continuing the base
certificate in lieu of receiving the death proceeds, the continuing spouse has
the following options:

 .    Terminate the Additional Death Benefit Rider and receive a one-time Policy
     Value increase equal to the amount of the Additional Death Benefit. All
     future surrender charges on this amount, if any, will be waived.
 .    Continue the Additional Death Benefit Rider without the one-time Policy
     Value increase. An Additional Death Benefit Amount would then be paid upon
     the death of the continuing spouse.

                        Signed for Us at our Home Office.

        /s/ Craig D. Vermie                              /s/ Larry N. Norman
            SECRETARY                                        PRESIDENT

RTPG 2 301MP(2)<PAGE>

                                EXHIBIT (4)(b)(1)

                           FORM OF POLICY ENDORSEMENT
                         (ADDITIONAL DEATH DISTRIBUTION)
<PAGE>

                                                        Home Office:
                                                        4333 Edgewood Road N.E.
                                                        Cedar Rapids, Iowa 52499
                                                        (319) 398-8511

[LOGO] TRANSAMERICA LIFE

                  (Hereafter called the Company, we, our or us)

                         ADDITIONAL DEATH BENEFIT RIDER

We issued this rider as a part of the Certificate to which it is attached.

This rider will pay an Additional Death Benefit amount equal to a percentage of
the gains accumulated in the Certificate since the rider was added. This
additional death benefit will be paid whenever death proceeds are payable on the
base Certificate to which this rider is attached.

This rider will be considered terminated when the Certificate is annuitized or
surrendered, or an additional death benefit is paid under the terms of this
rider. You may also terminate this benefit at any time by notifying us at our
service center. Once terminated, this rider may be re-elected. However, a new
rider will be issued and the Additional Death Benefit amount will be
re-determined.

Certificate Number:                                  [123456]
Rider Date:                                          [11-14-2000]
Additional Death Benefit Factor:                     [10.00]%
Rider Fee Percentage:                                [0.75]%

DEFINITIONS

Rider Anniversary
The anniversary of the Rider Date for each year the rider remains in force.

Rider Date
The date that this rider is added to the Certificate.

Rider Earnings
The Certificate gains accrued and not previously withdrawn since the Rider Date.
On a given date, this amount is equal to: the death proceeds of the base
Certificate; minus the Policy Value of the base Certificate on the Rider Date;
minus premiums paid after the rider date; plus amounts withdrawn from the Policy
Value after the Rider Date that exceed the Rider Earnings on the date of the
withdrawal.

ADDITIONAL DEATH BENEFIT AMOUNT
If death proceeds are payable under the terms of the base Certificate to which
this rider is attached, this rider will pay an Additional Death Benefit equal to
the Additional Death Benefit Factor multiplied by the Rider Earnings on the date
used to calculate the death proceeds.

ADDITIONAL DEATH BENEFIT PREMIUM
We will deduct a fee from the Policy Value on each Rider Anniversary and a
pro-rated fee on the termination date of the rider. The Rider Fee is equal to
the Policy Value at the time the fee is deducted, multiplied by the Rider Fee
Percentage shown on the first page of this rider. The fee will be deducted from
each subaccount and fixed account in proportion to the amount of Policy Value in
each account. This fee will not be deducted after the Certificate is annuitized.

RTPG 2 301
<PAGE>
SPOUSAL CONTINUATION
If a death occurs and the deceased's spouse, if any, is continuing the base
Certificate in lieu of receiving the death proceeds, the continuing spouse has
the following options:

 .    Terminate the Additional Death Benefit Rider and receive a one-time Policy
     Value increase equal to the amount of the Additional Death Benefit. All
     future surrender charges on this amount, if any, will be waived.
 .    Continue the Additional Death Benefit Rider without the one-time Policy
     Value increase. An Additional Death Benefit Amount would then be paid upon
     the death of the continuing spouse.

Additional Death Benefit Example:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

Additional Death Benefit Example Assumptions:
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                                                      <C>
Policy Value at rider issue                                                                                              $100,000
Premium payments after rider issue                                                                                       $ 25,000
Rider Earnings withdrawn                                                                                                 $ 35,000
Death proceeds on base Certificate                                                                                       $225,000
Additional Death Benefit Factor                                                                                          10%

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

Additional Death Benefit Calculations:
------------------------------------------------------------------------------------------------------------------------------------

Rider Earnings = death proceeds - Policy Value on the Rider Date - premium payments after the Rider Date +
withdrawals that exceed Rider Earnings on date of withdrawal = $225,000 - $100,000 - $25,000 + $0                        $100,000

Additional Death Benefit Amount = Additional Death Benefit Factor * Rider Earnings = 10% * $100,000                      $ 10,000

Total death proceeds = death proceeds on base Certificate + Additional Death Benefit Amount = $225,000 + $10,000         $235,000
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                        Signed for Us at our Home Office.

     /s/ Craig D. Vermie                              /s/ Larry N. Norman
          SECRETARY                                        PRESIDENT

RTPG 2 301(2)EXHIBIT 4.1

================================================================================

                   MORGAN STANLEY DEAN WITTER CAPITAL I INC.,

                                   Depositor,

                            OCWEN FEDERAL BANK FSB,

                                   Servicer,

                            NC CAPITAL CORPORATION,

                               Responsible Party,

                                      and

                        U.S. BANK NATIONAL ASSOCIATION,

                                    Trustee,

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

                         POOLING AND SERVICING AGREEMENT

                          Dated as of November 1, 2001

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

            MORGAN STANLEY DEAN WITTER CAPITAL I INC. TRUST 2001-NC3

                       MORTGAGE PASS-THROUGH CERTIFICATES,
                                 SERIES 2001-NC3

================================================================================

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

                                    ARTICLE I

                                   DEFINITIONS

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

Section 2.01  Conveyance of Mortgage Loans....................................32
Section 2.02  Acceptance by the Trustee of the Mortgage Loans.................35
Section 2.03  Representations, Warranties and Covenants of the
                Responsible Party and the Servicer ...........................36
Section 2.04  The Depositor and the Mortgage Loans............................38
Section 2.05  Delivery of Opinion of Counsel in Connection with
                Substitution and Repurchase, Non-Qualified Mortgages .........38
Section 2.06  Execution and Delivery of Certificates..........................39
Section 2.07  REMIC Matters...................................................39
Section 2.08  Representations and Warranties of the Depositor.................39

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

Section 3.01  Servicer to Service Mortgage Loans..............................41
Section 3.02  Subservicing Agreements Between the Servicer and Subservicers...42
Section 3.03  Successor Subservicers..........................................43
Section 3.04  Liability of the Servicer.......................................44
Section 3.05  No Contractual Relationship Between Subservicers and
                the Trustee ..................................................44
Section 3.06  Assumption or Termination of Subservicing Agreements by
                Trustee ......................................................44
Section 3.07  Collection of Certain Mortgage Loan Payments....................45
Section 3.08  Subservicing Accounts...........................................47
Section 3.09  Collection of Taxes, Assessments and Similar Items;
                Escrow Accounts ..............................................48
Section 3.10  Collection Account..............................................49
Section 3.11  Withdrawals from the Collection Account.........................50
Section 3.12  Investment of Funds in the Collection Account...................51
Section 3.13  Maintenance of Hazard Insurance and Errors and Omissions
                and Fidelity Coverage ........................................52
Section 3.14  Enforcement of Due-On-Sale Clauses Assumption Agreements........53

                                      -i-
<PAGE>

Section 3.15  Realization Upon Defaulted Mortgage Loans.......................54
Section 3.16  Release of Mortgage Files.......................................56
Section 3.17  Title, Conservation and Disposition of REO Property.............57
Section 3.18  Notification of Adjustments.....................................58
Section 3.19  Access to Certain Documentation and Information Regarding
                the Mortgage Loans ...........................................59
Section 3.20  Documents, Records and Funds in Possession of the Servicer
                to be Held for the Trustee ...................................59
Section 3.21  Servicing Compensation..........................................59
Section 3.22  Annual Statement as to Compliance...............................60
Section 3.23  Annual Independent Public Accountants' Servicing Statement;
                Financial Statements .........................................60
Section 3.24  Trustee to Act as Servicer......................................61
Section 3.25  Compensating Interest...........................................61
Section 3.26  Credit Reporting; Gramm-Leach-Bliley Act........................62

                                   ARTICLE IV

                                DISTRIBUTIONS AND
                            ADVANCES BY THE SERVICER

Section 4.01   Advances.......................................................62
Section 4.02   Priorities of Distribution.....................................63
Section 4.03   Monthly Statements to Certificateholders.......................67
Section 4.04   Certain Matters Relating to the Determination of LIBOR.........69
Section 4.05   Allocation of Applied Realized Loss Amounts....................70
Section 4.06   Policy Matters.................................................70

                                    ARTICLE V

                                THE CERTIFICATES

Section 5.01   The Certificates...............................................74
Section 5.02   Certificate Register; Registration of Transfer and Exchange
                 of Certificates .............................................75
Section 5.03   Mutilated, Destroyed, Lost or Stolen Certificates..............80
Section 5.04   Persons Deemed Owners..........................................80
Section 5.05   Access to List of Certificateholders' Names and Addresses......80
Section 5.06   Maintenance of Office or Agency................................80

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

Section 6.01   Respective Liabilities of the Depositor and the Servicer.......81
Section 6.02   Merger or Consolidation of the Depositor or the Servicer.......81

                                      -ii-

<PAGE>

Section 6.03   Limitation on Liability of the Depositor, the Servicer
                 and Others ..................................................81
Section 6.04   Limitation on Resignation of the Servicer......................82
Section 6.05   Additional Indemnification by the Servicer;
                 Third Party Claims............................. .............82

                                   ARTICLE VII

                                     DEFAULT

Section 7.01   Events of Default..............................................83
Section 7.02   Trustee to Act; Appointment of Successor.......................85
Section 7.03   Notification to Certificateholders.............................86

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

Section 8.01   Duties of the Trustee..........................................86
Section 8.02   Certain Matters Affecting the Trustee..........................87
Section 8.03   Trustee Not Liable for Certificates or Mortgage Loans..........88
Section 8.04   Trustee May Own Certificates...................................88
Section 8.05   Trustee's Fees and Expenses....................................88
Section 8.06   Eligibility Requirements for the Trustee.......................89
Section 8.07   Resignation and Removal of the Trustee.........................90
Section 8.08   Successor Trustee..............................................90
Section 8.09   Merger or Consolidation of the Trustee.........................91
Section 8.10   Appointment of Co-Trustee or Separate Trustee..................91
Section 8.11   Tax Matters....................................................92
Section 8.12   Periodic Filings...............................................95
Section 8.13   Tax Classification of the Excess Reserve Fund Account..........95

                                   ARTICLE IX

                                   TERMINATION

Section 9.01   Termination upon Liquidation or Purchase of the
                 Mortgage Loans ..............................................95
Section 9.02   Final Distribution on the Certificates.........................96
Section 9.03   Additional Termination Requirements............................97

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

Section 10.01  Amendment......................................................98
Section 10.02  Recordation of Agreement; Counterparts.........................99
Section 10.03  Governing Law.................................................100

                                     -iii-
<PAGE>

Section 10.04  Intention of Parties..........................................100
Section 10.05  Notices.......................................................100
Section 10.06  Severability of Provisions....................................101
Section 10.07  Assignment....................................................102
Section 10.08  Limitation on Rights of Certificateholders....................102
Section 10.09  Inspection and Audit Rights...................................102
Section 10.10  Certificates Nonassessable and Fully Paid.....................103

                                      -iv-
<PAGE>

SCHEDULES

Schedule I        Mortgage Loan Schedule

Schedule II       Representations and Warranties of the Servicer

Schedule III      Representations and Warranties as to the Mortgage Loans

Schedule IV       Representations and Warranties as to the Responsible Party

EXHIBITS

Exhibit A         Form of Class A, Class M, Class B-1 Certificate

Exhibit B         Form of Class P Certificate

Exhibit C         Form of Class R Certificate

Exhibit D         Form of Class X Certificate

Exhibit E         Form of Initial Certification of Trustee

Exhibit F         Form of Document Certification and Exception Report of Trustee

Exhibit G         Form of Transfer Affidavit

Exhibit H         Form of Transferor Certificate

Exhibit I         Form of Rule 144A Letter

Exhibit J         Form of Request for Release

Exhibit K         Form of Contents for Each Mortgage File

Exhibit L         Form of Certificate Insurance Policy

                                      -v-

<PAGE>

              THIS  POOLING  AND  SERVICING  AGREEMENT,  dated as of November 1,
2001,  among MORGAN STANLEY DEAN WITTER CAPITAL I INC., a Delaware  corporation,
as depositor (the "DEPOSITOR"),  OCWEN FEDERAL BANK FSB, a federal savings bank,
as servicer (the "SERVICER"),  NC CAPITAL CORPORATION, a California corporation,
as responsible party ("RESPONSIBLE PARTY") and U.S. BANK NATIONAL ASSOCIATION, a
national banking association, as trustee (the "TRUSTEE"),

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

              In consideration of the mutual agreements  herein  contained,  the
parties hereto agree as follows:

                              PRELIMINARY STATEMENT

              The Trustee shall elect that two segregated asset pools within the
Trust Fund be treated for federal  income tax purposes as comprising  two REMICs
(each a "REMIC" or, in the alternative,  the Lower Tier REMIC and the Upper Tier
REMIC,  respectively).  Each  Certificate,  other  than the  Class P and Class R
Certificates, represents ownership of a regular interest in the Upper Tier REMIC
for  purposes  of the  REMIC  Provisions.  The  Class R  Certificate  represents
ownership of the sole class of residual interest in each of the Lower Tier REMIC
and the Upper Tier REMIC for purposes of the REMIC  Provisions.  The Startup Day
for each  REMIC  described  herein is the  Closing  Date.  The  latest  possible
maturity  date for each  Certificate  is the latest date  referenced  in Section
9.01.  The  Upper  Tier  REMIC  shall  hold as assets  the  several  classes  of
uncertificated Lower Tier Regular Interests, set out below. Each such Lower Tier
Regular  Interest is hereby  designated as a regular  interest in the Lower Tier
REMIC. Class LT-A1, Class LT-A2, Class LT-M-1, Class LT-M-2 and Class LT-B-1 are
hereby  designated the LT Accretion  Directed  Classes.  The Class P Certificate
represents beneficial ownership of the Prepayment Charges,  which portion of the
Trust Fund shall be treated as a grantor trust.

<TABLE>
<CAPTION>

        LOWER TIER           LOWER TIER INTEREST               INITIAL LOWER TIER               CORRESPONDING UPPER
     CLASS DESIGNATION               RATE                       PRINCIPAL AMOUNT                  TIER REMIC CLASS
     -----------------       -------------------               ------------------               -------------------
<S>                                  <C>           <C>                                                  <C>

Class LT-A-1                         (1)           1/2 initial Corresponding Upper Tier REMIC           A-1
                                                   initial principal balance
Class LT-A-2                         (1)           1/2 initial Corresponding Upper Tier REMIC           A-2
                                                   initial principal balance
Class LT-A-3                         (1)           1/2 initial Corresponding Upper Tier REMIC           A-3
                                                   initial principal balance
Class LT-M-1                         (1)           1/2 initial Corresponding Upper Tier REMIC           M-1
                                                   initial principal balance
Class LT-M-2                         (1)           1/2 initial Corresponding Upper Tier REMIC           M-2
                                                   initial principal balance
Class LT-B-1                         (1)           1/2 initial Corresponding Upper Tier REMIC           B-1
                                                   initial principal balance
Class LT-Accrual                     (1)           1/2 Pool Balance plus 1/2 Subordinated Amount
Class LT-R                           (2)                              (2)

</TABLE>

                                      L-1

<PAGE>

(1)  The interest rate with respect to any Distribution Date for these interests
     is a per annum variable rate equal to the WAC Cap.

(2)  The Class LT-R Interest is the sole class of residual interest in the Lower
     Tier REMIC and it does not have a principal amount or an interest rate.

              The  Lower  Tier  REMIC  shall  hold as assets  all of the  assets
included in the Trust Fund other than  Prepayment  Charges,  the Excess  Reserve
Fund Account, and the Lower Tier Regular Interests.

              On each Distribution Date, 50% of the increase in the Subordinated
Amount  will be payable  as a  reduction  of the  principal  balances  of the LT
Accretion  Directed  Classes (each such Class will be reduced by an amount equal
to 50% of any  increase in the  Subordinated  Amount that is  attributable  to a
reduction  in the  principal  balance  of its  Corresponding  Class) and will be
accrued  and added to the  principal  balance of the LT Accrual  Class.  On each
Distribution Date, the increase in the principal balance of the LT Accrual Class
may not exceed interest  accruals for such  Distribution Date for the LT Accrual
Class.  In the event that:  (i) 50% of the increase in the  Subordinated  Amount
exceeds (ii)  interest  accruals on the LT Accrual  Class for such  Distribution
Date, the excess for such  Distribution Date (accumulated with all such excesses
for  all  prior  Distribution  Dates)  will  be  added  to any  increase  in the
Subordinated  Amount for purposes of determining the amount of interest  accrual
on the LT  Accrual  Class  payable as  principal  on the LT  Accretion  Directed
Classes on the next  Distribution  Date  pursuant to the first  sentence of this
paragraph.  All payments of scheduled  principal  and  prepayments  of principal
generated by the Mortgage  Loans shall be allocated 50% to the LT Accrual Class,
and 50% to the LT  Accretion  Directed  Classes  (principal  payments  shall  be
allocated among such LT Accretion  Directed Classes in an amount equal to 50% of
the principal  amounts  allocated to their  respective  Corresponding  Classes),
until paid in full.  Notwithstanding the above,  principal payments allocated to
the Class X Certificates that result in the reduction in the Subordinated Amount
shall be allocated to the LT Accrual Class (until paid in full). Realized losses
shall  be  applied  so that  after  all  distributions  have  been  made on each
Distribution  Date  (i) the  principal  balances  of  each  of the LT  Accretion
Directed Class is equal to 50% of the principal  balance of their  Corresponding
Class, and (ii) the LT Accrual Class is equal to 50% of the aggregate  principal
balance of the Mortgage Pool plus 50% of the Subordinated Amount.

              The  Upper  Tier  REMIC  shall  issue  the  following  classes  of
interests and each Upper Tier Interest,  other than the Class UT-R Interest,  is
hereby designated as a regular interest in the Upper Tier REMIC.

<TABLE>
<CAPTION>

                                                               INITIAL UPPER TIER
UPPER TIER CLASS DESIGNATION    UPPER TIER INTEREST RATE        PRINCIPAL AMOUNT        CORRESPONDING CERTIFICATE
----------------------------    ------------------------       ------------------       -------------------------
<S>                                          <C>               <C>                         <C>
Class A-1                                    (1)               $348,167,000                Class A-1(7)
Class A-2                                    (2)               $ 68,000,000                Class A-2(7)
Class A-3                                    (3)               $121,377,000                Class A-3(7)
Class M-1                                    (4)               $ 45,355,000                Class M-1(7)
Class M-2                                    (4)               $ 40,316,000                Class M-2(7)
Class B-1                                    (4)               $ 35,276,000                Class B-1(7)
Class X                                      (5)                        (5)                Class X(5)
Class UT-R                                   (6)                                           Class R

</TABLE>

                                      -2-
<PAGE>

(1)  The Class A-1 Interests  will bear interest  during their initial  Interest
     Accrual  Period at 2.41813% per annum.  The Class A-1  Interests  will bear
     interest during each Interest Accrual Period thereafter at a per annum rate
     equal to (a) on or prior to the Optional Termination Date, the least of (i)
     LIBOR plus  0.310%,  (ii) 16%,  (iii) the Loan Group I Cap and (iv) the WAC
     Cap or (b) after the Optional Termination Date, the least of (i) LIBOR plus
     0.620%, (ii) 16%, (iii) the Loan Group I Cap and (iv) the WAC Cap.

(2)  The Class A-2 Interests  will bear interest  during their initial  Interest
     Accrual  Period at 2.50813% per annum.  The Class A-2  Interests  will bear
     interest during each Interest Accrual Period thereafter at a per annum rate
     equal to (a) on or prior to the Optional Termination Date, the least of (i)
     LIBOR plus 0.400%,  (ii) 16%,  (iii) the Loan Group II Cap and (iv) the WAC
     Cap or (b) after the Optional Termination Date, the least of (i) LIBOR plus
     0.800%, (ii) 16%, (iii) the Loan Group II Cap and (iv) the WAC Cap.

(3)  The Class A-3 Interests  will bear interest  during their initial  Interest
     Accrual  Period at 2.43813% per annum.  The Class A-3  Interests  will bear
     interest during each Interest Accrual Period thereafter at a per annum rate
     equal to (a) on or prior to the Optional  Termination  Date,  the lesser of
     (i) LIBOR plus 0.330% and (ii) (A) the least of (1) 16%, (2) the Loan Group
     II Cap and (3) the WAC Cap minus (B) the  Class A-3  Insurance  Rate or (b)
     after the Optional  Termination  Date,  the least of (i) LIBOR plus 0.660%,
     (ii) 16%, (iii) the Loan Group II Cap and (iv) the WAC Cap.

(4)  The Class M-1, Class M-2 and Class B-1 Interests will bear interest  during
     their initial Interest  Accrual Period at 3.05813%,  3.60813% and 4.55813%,
     respectively,  per annum.  The Class M-1, Class M-2 and Class B-1 Interests
     will bear interest during each Interest Accrual Period  thereafter at a per
     annum rate equal to (a) on or prior to the Optional  Termination  Date, the
     least of (i) LIBOR plus 0.950%, 1.500% and 2.450%, respectively,  (ii) 16%,
     and (iii) the WAC Cap or (b) after the Optional Termination Date, the least
     of (i) LIBOR plus  1.425%,2.250%  and 3.675%,  respectively,  (ii) 16%, and
     (iii) the WAC Cap.

(5)  The Class X Interest has an initial principal  balance of $13,438,425,  but
     it will not accrue  interest on such balance but will accrue  interest on a
     notional  principal  balance.  As of any  Distribution  Date,  the  Class X
     Interest shall have a notional  principal balance equal to the aggregate of
     the principal  balances of the Lower Tier Regular Interests as of the first
     day of the related  Interest  Accrual Period.  With respect to any Interest
     Accrual Period, the Class X Interest shall bear interest at a rate equal to
     the  excess,  if any, of the WAC Cap over the product of (i) 2 and (ii) the
     weighted average Pass-Through Rate of the Lower Tier REMIC Interests, where
     the LT  Accrual  Class  is  subject  to a cap  equal  to zero  and  each LT
     Accretion Directed Class is subject to a cap equal to the Pass-Through Rate
     on its Corresponding Class. With respect to any Distribution Date, interest
     that so accrues on the notional  principal  balance of the Class X Interest
     shall be deferred in an amount  equal to any  increase in the  Subordinated
     Amount on such  Distribution  Date. Such deferred interest shall not itself
     bear interest.

(6)  The Class UT-R Interest is the sole class of residual interest in the Upper
     Tier REMIC. The Class UT-R Interest does not have an interest rate.

(7)  Each of these  Certificates  will  represent  not only the ownership of the
     Corresponding  Class of Upper Tier  Regular  Interest but also the right to
     receive  payments  from the Excess  Reserve  Fund Account in respect of any
     Basis Risk  CarryForward  Amounts.  For federal  income tax  purposes,  the
     Trustee will treat a Certificateholder's right to receive payments from the
     Excess  Reserve Fund Account as payments  made pursuant to an interest rate
     cap contract written by the Class X Certificateholder.

              The minimum  denomination  for each Class of  Certificates,  other
than the Class P, Class R and the Class X  Certificates,  will be  $25,000.  The
Class  P,  Class R and the  Class X  Certificates  will  each  represent  a 100%
Percentage Interest in such class.

              Set forth below are designations of Classes of Certificates to the
categories used herein:

Book-Entry  Certificates.........All  Classes  of  Certificates  other  than the
                                 Physical Certificates.

                                      -3-
<PAGE>

Class A Certificates............Class A-1, Class A-2 and Class A-3 Certificates.

Subordinated Certificates.......Class M-1, Class M-2 and Class B Certificates.

Delay Certificates..............None.

ERISA-Restricted
   Certificates.................Class R Certificates,  Class  P  Certificate and
                                Class  X  Certificate;  any certificate  with  a
                                rating  below  the  lowest  applicable permitted
                                rating under the Underwriters' Exemption.

Floating Rate Certificates......Class A and Subordinated Certificates.

LIBOR Certificates..............Class A and Subordinated Certificates.

Non-Delay Certificates..........Class A, Class X and Subordinated Certificates.

Offered Certificates............All  Classes  of  Certificates  other  than  the
                                Private Certificates.

Physical Certificates...........Class P, Class X and Class R Certificates.

Private Certificates............Class   A-1,  Class  P,   Class X  and  Class  R
                                Certificates.

Rating Agencies.................Moody's, Fitch and Standard & Poor's.

Regular Certificates............All Classes of Certificates other than the Class
                                P and Class R Certificates.

Residual Certificates...........Class R Certificates.

                                      -4-
<PAGE>

                                   ARTICLE I

                                   DEFINITIONS

              Whenever used in this Agreement,  the following words and phrases,
unless the context otherwise requires, shall have the following meanings:

              60+ DAY DELINQUENT  LOAN: Each Mortgage Loan with respect to which
any  portion  of a  Scheduled  Payment  is,  as of the last day of the prior Due
Period, two months or more past due (without giving effect to any grace period),
each Mortgage Loan in  foreclosure,  all REO Property and each Mortgage Loan for
which the Mortgagor has filed for bankruptcy.

              ACCEPTED SERVICING  PRACTICES:  With respect to any Mortgage Loan,
those mortgage servicing practices set forth in Section 3.01 of this Agreement.

              ACCRUED CERTIFICATE INTEREST  DISTRIBUTION AMOUNT: With respect to
any  Distribution  Date for each Class of  Certificates  (other than the Class X
Certificate), the amount of interest accrued during the related Interest Accrual
Period at the  applicable  Pass-Through  Rate on the related  Class  Certificate
Balance  immediately prior to such Distribution Date, as reduced by such Class's
share of Net Prepayment  Interest  Shortfalls and Relief Act Interest Shortfalls
for the related Due Period allocated to such Class pursuant to Section 4.02.

              ADJUSTABLE RATE MORTGAGE LOAN: An adjustable rate Mortgage.

              ADJUSTED  MORTGAGE RATE: As to each Mortgage Loan and at any time,
the per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.

              ADJUSTED NET MORTGAGE  RATE:  As to each  Mortgage Loan and at any
time, the per annum rate equal to the Mortgage Rate less the Expense Fee Rate.

              ADJUSTMENT  DATE: As to any Mortgage  Loan,  the first Due Date on
which the related  Mortgage  Rate  adjusts as set forth in the related  Mortgage
Note and each Due Date  thereafter  on which the  Mortgage  Rate  adjusts as set
forth in the related Mortgage Note.

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

              AGREEMENT: This Pooling and Servicing Agreement and all amendments
or supplements hereto.

              AMOUNT HELD FOR FUTURE DISTRIBUTION: As to the Certificates on any
Distribution  Date, the aggregate  amount held in the Collection  Account at the
close of business on the related  Determination Date on account of (i) Principal
Prepayments  and  Liquidation  Proceeds on the Mortgage Loans received after the
end of the  related  Prepayment  Period and (ii) all  Scheduled  Payments on the
Mortgage Loans due after the end of the related Due Period.

                                      -5-
<PAGE>

              APPLIED  REALIZED  LOSS AMOUNT:  With respect to any  Distribution
Date, the amount,  if any, by which the aggregate Class  Certificate  Balance of
the Regular  Certificates after  distributions of principal on such Distribution
Date exceeds the aggregate Stated Principal  Balance of the Mortgage Loans as of
the last day of the immediately preceding Due Period.

              APPRAISED  VALUE:  The  value set  forth in an  appraisal  made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.

              ASSIGNMENT OF MORTGAGE:  An assignment of the Mortgage,  notice of
transfer or equivalent instrument in recordable form, (other than the assignee's
name and recording  information  not yet returned  from the  recording  office),
reflecting the sale of the Mortgage to the Trustee.

              AVAILABLE  FUNDS:  With respect to any  Distribution  Date and the
Mortgage  Loans to the extent  received  by the  Trustee  (x) the sum of (i) all
scheduled  installments  of  interest  (net of the  related  Expense  Fees)  and
principal due on the Due Date on such  Mortgage  Loans in the related Due Period
and received  prior to the related  Determination  Date,  together  with any P&I
Advances in respect thereof; (ii) all Condemnation Proceeds,  Insurance Proceeds
and Liquidation Proceeds during the related Prepayment Period (in each case, net
of  unreimbursed   expenses   incurred  in  connection  with  a  liquidation  or
foreclosure and unreimbursed  Servicing Advances,  if any); (iii) all partial or
full  prepayments on the Mortgage Loans received  during the related  Prepayment
Period  together  with all  Compensating  Interest  thereon;  and  (iv)  amounts
received with respect to such Distribution  Date as the Substitution  Adjustment
Amount or  purchase  price in respect of a Deleted  Mortgage  Loan or a Mortgage
Loan repurchased by the Responsible Party as of such Distribution  Date; reduced
by (y)  amounts  in  reimbursement  for  P&I  Advances  and  Servicing  Advances
previously made with respect to the Mortgage Loans and other amounts as to which
the Servicer is entitled to be reimbursed pursuant to the Agreement.

              BALLOON  LOAN:  Any  Mortgage  Loan that  provided  on the date of
origination for an amortization  schedule  extending  beyond its stated maturity
date.

              BASIC  PRINCIPAL   DISTRIBUTION   AMOUNT:   With  respect  to  any
Distribution  Date, the excess of (i) the Principal  Remittance  Amount for such
Distribution  Date over (ii) the Excess  Subordinated  Amount,  if any, for such
Distribution Date.

              BASIS  RISK  CARRYFORWARD  AMOUNT:  With  respect to each Class of
Regular  Certificates,  as of any  Distribution  Date, the sum of (A) if on such
Distribution Date the Pass-Through Rate for any Class of Regular Certificates is
based  upon a Loan  Group Cap or the WAC Cap,  the  excess of (i) the  amount of
interest such Class of  Certificates  would  otherwise be entitled to receive on
such Distribution Date had such rate been calculated as the sum of LIBOR and the
applicable   Pass-Through   Margin  on  such  Class  of  Certificates  for  such
Distribution Date, up to 16% (or, in the case of the Class A-3 Certificates, the
Loan Group II Cap or the WAC Cap minus the Class A-3  Insurance  Rate, up to 16%
minus the Class A-3 Insurance Rate) over (ii) the amount of interest  payable on
such Class of Certificates at, with respect to the Class A-1  Certificates,  the
lesser of (x) the Loan Group I Cap or (z) the WAC Cap, with respect to the Class
A-2  Certificates  and the Class A-3  Certificates,  the  lesser of (x) the Loan
Group II Cap or (z) the WAC Cap, and with respect to each other Class of Regular
Certificates, the WAC Cap, as

                                      -6-
<PAGE>

applicable,  for such  Distribution  Date and (B) the  Basis  Risk  CarryForward
Amount for such Class of Certificates  for all previous  Distribution  Dates not
previously  paid,  together with interest  thereon at a rate equal to the sum of
LIBOR and the applicable  Pass-Through Margin for such Class of Certificates for
such  Distribution  Date,  up  to  16%  (or,  in  the  case  of  the  Class  A-3
Certificates, 16 % minus the Class A-3 Insurance Rate).

              BASIS RISK PAYMENT:  For any Distribution Date, an amount equal to
any Basis Risk CarryForward Amount, PROVIDED,  HOWEVER, that with respect to any
Distribution  Date, the payment  cannot exceed the sum of the amounts  otherwise
distributable on the Class X Certificates.

              BEST'S: Best's Key Rating Guide, as the same shall be amended from
time to time.

              BOOK-ENTRY   CERTIFICATES:   As  specified   in  the   Preliminary
Statement.

              BUSINESS DAY: Any day other than (i) Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions,  in (a) the State of New
York, New Jersey,  Minnesota and Florida,  (b) the state in which the Servicer's
servicing  operations  are  located,  or (c) the  State in which  the  Trustee's
operations are located, are authorized or obligated by law or executive order to
be closed.

              CERTIFICATE:  Any one of the Certificates  executed by the Trustee
in substantially the forms attached hereto as exhibits.

              CERTIFICATE  BALANCE:  With respect to any Class of  Certificates,
other than the Class P or Class R Certificates,  at any date, the maximum dollar
amount of principal to which the Holder thereof is then entitled hereunder, such
amount  being  equal to the  Denomination  thereof  minus all  distributions  of
principal  previously  made  with  respect  thereto  and  in  the  case  of  any
Subordinated  Certificates,   reduced  by  any  Applied  Realized  Loss  Amounts
applicable  to such  Class of  Subordinated  Certificates.  Exclusively  for the
purpose of determining any subrogation  rights of FSA arising under Section 4.06
hereof,  the  "Certificate  Balance" of the Class A-3  Certificate  shall not be
reduced by the amount of any  payments  made by FSA in respect of  principal  on
such Certificates under the Certificate  Insurance Policy,  except to the extent
such payment  shall have been  reimbursed  to FSA pursuant to the  provisions of
this  Agreement.  The  Class P and  Class  R  Certificates  have no  Certificate
Balance.

              CERTIFICATE INSURANCE POLICY: The irrevocable Certificate Guaranty
Insurance Policy, No. 51197-N, including any endorsements thereto, issued by FSA
with  respect  to the Class A-3  Certificates,  in the form  attached  hereto as
Exhibit L.

              CERTIFICATE OWNER: With respect to a Book-Entry  Certificate,  the
Person who is the beneficial owner of such Book-Entry Certificate.

              CERTIFICATE REGISTER:  The register maintained pursuant to Section
5.02.

                                      -7-
<PAGE>

              CERTIFICATEHOLDER   OR   HOLDER:   The  person  in  whose  name  a
Certificate is registered in the Certificate Register,  and, with respect to the
Class  A-3  Certificates,  FSA to  the  extent  of any  amount  paid  under  the
Certificate  Insurance Policy, except that, solely for the purpose of giving any
consent  pursuant to this Agreement,  any Certificate  registered in the name of
the  Depositor  or any  affiliate  of the  Depositor  shall be deemed  not to be
Outstanding  and the Percentage  Interest  evidenced  thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect such consent has been obtained;  PROVIDED,  HOWEVER, that if
any such Person (including the Depositor) owns 100% of the Percentage  Interests
evidenced by a Class of Certificates,  such  Certificates  shall be deemed to be
Outstanding  for purposes of any  provision  hereof that requires the consent of
the Holders of Certificates  of a particular  Class as a condition to the taking
of any action  hereunder.  The  Trustee is entitled  to rely  conclusively  on a
certification  of the Depositor or any affiliate of the Depositor in determining
which Certificates are registered in the name of an affiliate of the Depositor.

              CLASS: All Certificates  bearing the same class designation as set
forth in the Preliminary Statement.

              CLASS A  CERTIFICATES:  The  Class  A-1,  Class  A-2 and Class A-3
Certificates.

              CLASS A PRINCIPAL ALLOCATION PERCENTAGE: For any Distribution Date
is the  percentage  equivalent of a fraction,  determined  as follows:  (A) with
respect to the Class A-1 Certificates, the numerator of which is (x) the portion
of  the  Principal   Remittance  Amount  for  that  Distribution  Date  that  is
attributable to the principal received or advanced on the Group I Mortgage Loans
and the  denominator  of which is (y) the Principal  Remittance  Amount for that
Distribution Date; (B) with respect to the Class A-2 Certificates, the numerator
of  which  is (x) the  portion  of the  Principal  Remittance  Amount  for  that
Distribution Date that is attributable to the principal  received or advanced on
the Group II Mortgage  Loans and the  denominator  of which is (y) the Principal
Remittance  Amount for that  Distribution  Date  multiplied  by a fraction,  the
numerator  of which is (x) the  Class  Certificate  Principal  of the  Class A-2
Certificate  and the  denominator  of which is the sum of the Class  Certificate
Balances of the Class A-2 Certificates and the Class A-3  Certificates;  and (C)
with respect to the Class A-3  Certificates,  the  numerator of which is (x) the
portion of the Principal  Remittance  Amount for that  Distribution Date that is
attributable  to the  principal  received  or  advanced on the Group II Mortgage
Loans and the  denominator of which is (y) the Principal  Remittance  Amount for
that Distribution  Date multiplied by a fraction,  the numerator of which is (x)
the  Class  Certificate   Principal  of  the  Class  A-3  Certificates  and  the
denominator  of which is (y) the sum of the Class  Certificate  Balances  of the
Class A-2 Certificates and the Class A-3 Certificates

              CLASS  A  PRINCIPAL  DISTRIBUTION  AMOUNT:  With  respect  to  any
Distribution Date, the excess of (i) the aggregate Class Certificate Balances of
the Class A Certificates  immediately  prior to such Distribution Date over (ii)
the  lesser of (A)  60.0%,  of the  aggregate  Stated  Principal  Balance of the
Mortgage  Loans as of the last day of the  related Due Period and (B) the Stated
Principal  Balances of the Mortgage  Loans as of the last day of the related Due
Period MINUS $3,359,647.

                                      -8-
<PAGE>

              CLASS  A-1  CERTIFICATES:   All  Certificates  bearing  the  class
designation of "Class A-1 Certificates".

              CLASS  A-2  CERTIFICATES:   All  Certificates  bearing  the  class
designation of "Class A-2 Certificates".

              CLASS  A-3  CERTIFICATES:   All  Certificates  bearing  the  class
designation of "Class A-3 Certificates".

              CLASS A-3 INSURANCE  ACCRUAL  PERIOD:  With respect to FSA and any
Distribution  Date, the period commencing on the 25th day of the month preceding
the month in which such  Distribution  Date occurs and ending on the 24th day of
the month in which such  Distribution  Date  occurs (or in the case of the first
Distribution  Date,  the  period  from and  including  the  Closing  Date to but
excluding  such first  Distribution  Date).  For purposes of computing  interest
accruals with respect to the Class A-3 Insurance Accrual Period,  each Class A-3
Insurance  Accrual  Period has the actual  number of days in such month and each
year is assumed to have 360 days.

              CLASS  A-3  INSURANCE   PAYMENT   AMOUNT:   With  respect  to  any
Distribution  Date for FSA,  the amount of Class A-3  Insurance  Payment  Amount
accrued during the Class A-3 Insurance  Accrual  Period at the applicable  Class
A-3  Insurance  Rate  on  the  Class  Certificate   Balance  of  the  Class  A-3
Certificates  immediately prior to such  Distribution  Date, as reduced by FSA's
share of Net Prepayment  Interest  Shortfalls and Relief Act Interest Shortfalls
for the related Due Period allocated to FSA pursuant to Section 4.02.

              CLASS A-3 INSURANCE RATE: 0.060% per annum.

              CLASS  B  CERTIFICATES:   All   Certificates   bearing  the  class
designation of "Class B Certificates".

              CLASS B-1  PRINCIPAL  DISTRIBUTION  AMOUNT:  With  respect  to any
Distribution  Date,  the  excess  of (i)  the  sum of (A)  the  aggregate  Class
Certificate  Balances of the Class A  Certificates  (after  taking into  account
distribution of the Class A Principal  Distribution  Amount on such Distribution
Date), (B) the Class  Certificate  Balance of the Class M-1 Certificates  (after
taking into account distribution of the Class M-1 Principal  Distribution Amount
on such Distribution  Date), (C) the Class Certificate  Balance of the Class M-2
Certificates (after taking into account  distribution of the Class M-2 Principal
Distribution  Amount for such Distribution  Date), and (D) the Class Certificate
Balance of the Class B-1  Certificates  immediately  prior to such  Distribution
Date over (ii) the lesser of (A) 96.0% of the aggregate Stated Principal Balance
of the  Mortgage  Loans as of the last day of the related Due Period and (B) the
Stated  Principal  Balances  of the  Mortgage  Loans  as of the  last day of the
related Due Period MINUS $3,359,647, PROVIDED, HOWEVER, that with respect to any
Distribution Date on which the Class Certificate  Balances of the Class A, Class
M-1 and  Class  M-2  Certificates  have  been  reduced  to zero,  the  Class B-1
Principal Distribution Amount is the lesser of (x) the Class Certificate Balance
of the Class B-1 Certificates and (y) the Principal Distribution Amount.

                                      -9-
<PAGE>

              CLASS CERTIFICATE BALANCE: With respect to any Class and as to any
date  of  determination,  the  aggregate  of  the  Certificate  Balances  of all
Certificates of such Class as of such date.

              CLASS  M-1  CERTIFICATES:   All  Certificates  bearing  the  class
designation of "Class M-1 Certificates".

              CLASS  M-2  CERTIFICATES:   All  Certificates  bearing  the  class
designation of "Class M-2 Certificates".

              CLASS M-1  PRINCIPAL  DISTRIBUTION  AMOUNT:  With  respect  to any
Distribution  Date,  the  excess  of (i)  the  sum of (A)  the  aggregate  Class
Certificate  Balances of the Class A  Certificates  (after  taking into  account
distribution of the Class A Principal  Distribution  Amount on such Distribution
Date),  and (B) the Class  Certificate  Balance  of the  Class M-1  Certificates
immediately prior to such Distribution Date over (ii) the lesser of (A) 73.5% of
the aggregate Stated Principal  Balance of the Mortgage Loans as of the last day
of the related Due Period and (B) the Stated Principal  Balances of the Mortgage
Loans as of the last day of the related Due Period MINUS $3,359,647.

              CLASS M-2  PRINCIPAL  DISTRIBUTION  AMOUNT:  With  respect  to any
Distribution  Date,  the  excess  of (i)  the  sum of (A)  the  aggregate  Class
Certificate  Balances of the Class A  Certificates  (after  taking into  account
distribution of the Class A Principal  Distribution  Amount on such Distribution
Date), (B) the Class  Certificate  Balance of the Class M-1 Certificates  (after
taking into account distribution of the Class M-1 Principal  Distribution Amount
on such Distribution  Date) and (C) the Class  Certificate  Balance of the Class
M-2  Certificates  immediately  prior to such  Distribution  Date  over (ii) the
lesser of (A) 85.5% of the aggregate  Stated  Principal  Balance of the Mortgage
Loans as of the last day of the related Due Period and (B) the Stated  Principal
Balances  of the  Mortgage  Loans as of the last day of the  related  Due Period
MINUS $3,359,647.

              CLASS X DISTRIBUTABLE AMOUNT: On any Distribution Date, the sum of
(i) the amount of interest that has accrued on the Class X Regular  Interest and
not applied as an Extra Principal Distribution Amount on such Distribution Date,
plus any such accrued interest  remaining  undistributed from prior Distribution
Dates,  and (ii) any  portion  of the  principal  balance of the Class X Regular
Interest which is distributable as a Subordination  Reduction  Amount,  less any
amounts paid as a Basis Risk Payment.

              CLOSING DATE: November 28, 2001.

              CODE: The Internal  Revenue Code of 1986,  including any successor
or amendatory provisions.

              COLLECTION ACCOUNT: As defined in Section 3.10(a).

              COMPENSATING  INTEREST:  For any Distribution  Date, the lesser of
(a) the Prepayment  Interest  Shortfall,  if any, for the Distribution Date, and
(b)  the  amount  of  the  Servicing  Fee  payable  to  the  Servicer  for  such
Distribution Date.

                                      -10-
<PAGE>

              CONDEMNATION  PROCEEDS:  All awards of settlements in respect of a
Mortgaged  Property,  whether  permanent  or  temporary,  partial or entire,  by
exercise of the power of eminent domain or condemnation.

              CORPORATE  TRUST OFFICE:  The designated  office of the Trustee in
the State of California  at which at any  particular  time its  corporate  trust
business  with respect to this  Agreement is  administered,  which office at the
date of the execution of this Agreement is located at 180 East Fifth Street, St.
Paul, Minnesota 55101, Attn:  Structured  Finance/MSDW  2001-NC3,  facsimile no.
(651)  244-1797 and which is the address to which notices to and  correspondence
with the Trustee should be directed.

              CORRESPONDING  CLASS:  The class of interests in any REMIC created
under this Agreement  that  correspond to the Class of interests in another such
REMIC or to a Class of Certificates in the manner set out below:

 LOWER TIER CLASS DESIGNATION   UPPER TIER INTEREST   CORRESPONDING CERTIFICATE
 ----------------------------   -------------------   -------------------------
         Class LT-A-1                Class A-1                Class A-1
         Class LT-A-2                Class A-2                Class A-2
         Class LT-A-3                Class A-3                Class A-3
         Class LT-M-1                Class M-1                Class M-1
         Class LT-M-2                Class M-2                Class M-2
         Class LT-M-3                Class B-1                Class B-1

              CUMULATIVE LOSS PERCENTAGE: With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Applied  Realized  Loss Amounts  incurred from the Cut-off Date to the
last day of the preceding  calendar  month and the  denominator  of which is the
Scheduled  Principal  Balance  of the  Mortgage  Loans as of the  Cut-off  Date.

              CUSTODIAL  FILE:  With  respect to each  Mortgage  Loan,  the file
retained  by the  Trustee  consisting  of items (a) - (h) as listed on Exhibit K
hereto.

              CUT-OFF DATE: November 1, 2001.

              CUT-OFF  DATE  POOL  PRINCIPAL   BALANCE:   The  aggregate  Stated
Principal Balances of all Mortgage Loans as of the Cut-off Date.

              CUT-OFF  DATE  PRINCIPAL  BALANCE:  As to any Mortgage  Loan,  the
Stated  Principal  Balance  thereof as of the close of  business  on the Cut-off
Date.

              DATA TAPE INFORMATION: The information provided by the Responsible
Party as of  November  1, 2001 to the  Depositor  setting  forth  the  following
information with respect to each Mortgage Loan: (1) the Mortgagor's name; (2) as
to each Mortgage Loan, the Scheduled  Principal  Balance as of the Cut-Off Date;
(3) the Mortgage  Rate Cap;  (4) the Index;  (5) a code  indicating  whether the
Mortgaged Property is owner-occupied;  (6) the type of Mortgaged  Property;  (7)
the first date on which the Monthly Payment was due on the Mortgage Loan and, if

                                      -11-
<PAGE>

such date is not  consistent  with the Due Date  currently  in effect,  such Due
Date;  (8) the "paid through  date" based on payments  received from the related
Mortgagor;  (9) the original  principal  amount of the Mortgage Loan;  (10) with
respect to Adjustable Rate Mortgage Loans,  the Maximum  Mortgage Rate; (11) the
type of Mortgage Loan (i.e.,  fixed or  adjustable);  (12) a code indicating the
purpose of the loan (i.e.,  purchase,  rate and term refinance,  equity take-out
refinance);  (13) a code indicating the documentation  style (i.e.,  full, asset
verification,  income  verification and no documentation);  (14) the credit risk
score (FICO score);  (15) the loan credit grade  classification (as described in
the Underwriting Guidelines); (16) with respect to each Adjustable Rate Mortgage
Loan, the Minimum  Mortgage Rate;  (17) the Mortgage Rate at  origination;  (18)
with respect to each  Adjustable  Rate Mortgage Loan, the first  Adjustment Date
immediately  following  the  Cut-off  Date;  (19)  the  Value  of the  Mortgaged
Property;  (20) a code indicating the type of Prepayment  Charges  applicable to
such  Mortgage  Loan,  if any;  and (21) with  respect to each  Adjustable  Rate
Mortgage  Loan,  the Periodic  Mortgage  Rate Cap.  With respect to the Mortgage
Loans in the aggregate,  the Data Tape Information shall set forth the following
information,  as of the Cut-off Date: (1) the number of Mortgage Loans;  (2) the
current aggregate  outstanding  principal balance of the Mortgage Loans; (3) the
weighted  average  Mortgage  Rate of the  Mortgage  Loans;  and (4) the weighted
average maturity of the Mortgage Loans.

              DEBT  SERVICE  REDUCTION:  With  respect to any  Mortgage  Loan, a
reduction  by a court  of  competent  jurisdiction  in a  proceeding  under  the
Bankruptcy  Code in the  Scheduled  Payment for such  Mortgage Loan which became
final and  non-appealable,  except such a reduction  resulting  from a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.

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

              DEFINITIVE  CERTIFICATES:  Any Certificate evidenced by a Physical
Certificate  and any  Certificate  issued  in lieu of a  Book-Entry  Certificate
pursuant to Section 5.02(e).

              DELAY CERTIFICATES: As specified in the Preliminary Statement.

              DELETED MORTGAGE LOAN: As defined in Section 2.03.

              DELINQUENT: A mortgage loan is "Delinquent" if any monthly payment
due on a due date is not made by the close of business on the next scheduled due
date for that  mortgage  loan. A mortgage  loan is "30 days  Delinquent"  if the
monthly  payment  has  not  been  received  by  the  close  of  business  on the
corresponding  day of the month  immediately  succeeding the month in which that
monthly payment was due or, if there was no corresponding  date (e.g., as when a
30-day month follows a 31-day month in which the payment was due on the 31st day
of that month),  then on the last day of that  immediately  preceding month; and
similarly for "60 days Delinquent" and "90 days Delinquent," etc.

                                      -12-
<PAGE>

              DENOMINATION:  With  respect to each  Certificate,  the amount set
forth  on  the  face  thereof  as  the  "Initial  Certificate  Balance  of  this
Certificate" or the Percentage Interest appearing on the face thereof.

              DEPOSITOR:  Morgan  Stanley Dean Witter  Capital I Inc. a Delaware
corporation, or its successor in interest.

              DEPOSITORY:  The initial  Depository shall be The Depository Trust
Company,  the  nominee of which is CEDE & Co., as the  registered  Holder of the
Book-Entry  Certificates.  The  Depository  shall at all  times  be a  "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code of
the State of New York.

              DEPOSITORY  INSTITUTION:   Any  depository  institution  or  trust
company,  including the Trustee,  that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination  by federal or state  banking  authorities  and (c) has  outstanding
unsecured  commercial paper or other short-term  unsecured debt obligations that
are rated P-1 by Moody's, F1+ by Fitch and A-1 by Standard & Poor's.

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

              DETERMINATION  DATE:  With respect to each  Remittance  Date,  the
Business Day immediately preceding such Remittance Date.

              DISTRIBUTION  ACCOUNT:  The separate  Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(d) in the name of the Trustee
for the benefit of the  Certificateholders  and designated  "U.S.  Bank National
Association  in trust for  registered  holders  of Morgan  Stanley  Dean  Witter
Capital I Inc. Mortgage Pass-Through  Certificates,  Series 2001-NC3".  Funds in
the Distribution Account shall be held in trust for the  Certificateholders  for
the uses and purposes set forth in this Agreement.

              DISTRIBUTION  ACCOUNT DEPOSIT DATE: As to any  Distribution  Date,
12:30  p.m.  Central  time  on  the  Business  Day  immediately  preceding  such
Distribution Date.

              DISTRIBUTION  DATE:  The 25th day of each calendar month after the
initial issuance of the Certificates,  or if such day is not a Business Day, the
next succeeding Business Day, commencing in December 2001.

              DOCUMENT  CERTIFICATION AND EXCEPTION REPORT:  The report attached
to Exhibit F hereto.

              DUE DATE:  The day of the month on which the Scheduled  Payment is
due on a Mortgage Loan, exclusive of any days of grace.

              DUE  PERIOD:  With  respect to each  Remittance  Date,  the period
commencing on the second day of the month  preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.

                                      -13-
<PAGE>

              ELIGIBLE ACCOUNT:  Either (i) an account maintained with a federal
or state  chartered  depository  institution  or trust  company  the  short-term
unsecured debt obligations of which (or, in the case of a depository institution
or trust  company  that is a subsidiary  of a holding  company,  the  short-term
unsecured debt  obligations of such holding company) are rated "A-1" by Standard
& Poor's and "P-1" by Moody's (or a comparable  rating if another  Rating Agency
is specified by the Depositor by written notice to the Servicer) at the time any
amounts are held on deposit therein, (ii) an account or accounts the deposits in
which  are  fully  insured  by the  FDIC,  (iii) a  trust  account  or  accounts
maintained  with a federal or state  chartered  depository  institution or trust
company acting in its fiduciary capacity or (iv) any other account acceptable to
each Rating Agency.  Eligible  Accounts may bear interest,  and may include,  if
otherwise qualified under this definition, accounts maintained with the Trustee.

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

              ERISA-QUALIFYING  UNDERWRITING:  A best efforts or firm commitment
underwriting  or private  placement  that meets the  requirements  of Prohibited
Transaction  Exemption  ("PTE") 97-34, 62 Fed. Reg. 39021 (1997),  as amended by
PTE 2000-58,  65 Fed.  Reg.  67,765 (2000) (or any  successor  thereto),  or any
substantially similar administrative exemption granted by the U.S. Department of
Labor.

              ERISA-RESTRICTED  CERTIFICATE:  As  specified  in the  Preliminary
Statement.

              ESCROW ACCOUNT:  The Eligible Account or Accounts  established and
maintained pursuant to Section 3.09(b).

              ESCROW PAYMENTS:  As defined in Section 3.09(b) of this Agreement.

              EVENT OF DEFAULT: As defined in Section 7.01.

              EXCESS RESERVE FUND ACCOUNT: The separate Eligible Account created
and  maintained by the Trustee  pursuant to Sections  3.07(b) and 3.07(c) in the
name of the  Trustee  for the  benefit  of the  Regular  Certificateholders  and
designated  "U.S. Bank National  Association in trust for registered  holders of
Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3,  Mortgage Pass-Through
Certificates,  Series 2001-NC3".  Funds in the Excess Reserve Fund Account shall
be held in trust for the Regular  Certificateholders  for the uses and  purposes
set forth in this Agreement.

              EXCESS SUBORDINATED AMOUNT: With respect to any Distribution Date,
the excess,  if any, of (a) the Subordinated  Amount on such  Distribution  Date
over (b) the Specified Subordinated Amount for such Distribution Date.

              EXPENSE FEES: As to each Mortgage  Loan,  the sum of the Servicing
Fee and Trustee Fee.

              EXPENSE  FEE  RATE:  As to  each  Mortgage  Loan,  the  sum of the
Servicing Fee Rate and Trustee Fee Rate.

                                      -14-
<PAGE>

              EXTRA PRINCIPAL  DISTRIBUTION AMOUNT: As of any Distribution Date,
the lesser of (x) the related Total Monthly Excess Spread for such  Distribution
Date and (y) the Subordination Deficiency for such Distribution Date.

              FANNIE MAE:  The Federal  National  Mortgage  Association,  or any
successor thereto.

              FANNIE MAE GUIDES:  The Fannie Mae  Sellers'  Guide and the Fannie
Mae Servicers' Guide and all amendments or additions thereto.

              FDIC: The Federal Deposit Insurance Corporation,  or any successor
thereto.

              FHLMC:  The Federal Home Loan  Mortgage  Corporation,  a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

              FINAL  RECOVERY  DETERMINATION:  With  respect  to  any  defaulted
Mortgage  Loan or any REO Property  (other than a Mortgage  Loan or REO Property
purchased  by the  Responsible  Party  as  contemplated  by this  Agreement),  a
determination  made by the Servicer  that all  Insurance  Proceeds,  Liquidation
Proceeds and other payments or recoveries which the Servicer,  in its reasonable
good faith judgment,  expects to be finally  recoverable in respect thereof have
been so recovered. The Servicer shall maintain records,  prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.

              FINAL   SCHEDULED   DISTRIBUTION   DATE:   The   Final   Scheduled
Distribution  Date for each Class of  Certificates is the  Distribution  Date in
each of the following months:

                                                                FINAL SCHEDULED
                                                               DISTRIBUTION DATE
                                                               -----------------
Class A-1 Certificates....................................      October 25, 2031
Class A-2 Certificates....................................      October 25, 2031
Class A-3 Certificates....................................      October 25, 2031
Class M-1 Certificates....................................      October 25, 2031
Class M-2 Certificates....................................      October 25, 2031
Class B-1 Certificates....................................      October 25, 2031
Class X Certificates......................................      October 25, 2031
Class P Certificates......................................      October 25, 2031
Class R Certificates......................................      October 25, 2031

              FISCAL AGENT: As defined in the Certificate Insurance Policy.

              FITCH:  Fitch,  Inc.,  or  any  successor  thereto.  If  Fitch  is
designated  as a Rating  Agency in the  Preliminary  Statement,  for purposes of
Section  10.05(b)  the address for  notices to Fitch shall be Fitch,  Inc.,  One
State Street  Plaza,  New York,  NY 10004,  Attention:  MBS  Monitoring - Morgan
Stanley Dean Witter Capital I Inc. 2001-NC3,  or such other address as Fitch may
hereafter furnish to the Depositor and the Servicer.

                                      -15-
<PAGE>

              FIXED RATE MORTGAGE  LOAN: A fixed rate  Mortgage  Loan  purchased
pursuant to the Purchase Agreement.

              FSA: Financial Security Assurance Inc., a New York stock insurance
company, or any successor thereto.

              FSA CONTACT PERSONS: Collectively, the officers designated by each
Servicer to provide information to FSA pursuant to Section 4.06(l).

              FSA DEFAULT: As defined in Section 4.06(o).

              GROSS MARGIN:  With respect to each Adjustable Rate Mortgage Loan,
the fixed  percentage  amount set forth in the related Mortgage Note to be added
to the applicable Index to determine the Mortgage Rate.

              GROUP I MORTGAGE  LOANS:  The  Mortgage  Loans  identified  on the
Mortgage Loan Schedule as Group I Mortgage Loans.

              GROUP II MORTGAGE  LOANS:  The Mortgage  Loans  identified  on the
Mortgage Loan Schedule as Group II Mortgage Loans.

              GUARANTEED DISTRIBUTIONS:  As defined in the Certificate Insurance
Policy.

              INDEX:  As to each  Adjustable  Rate Mortgage Loan, the index from
time to time in effect for the adjustment of the Mortgage Rate set forth as such
on the related Mortgage Note.

              INSURANCE  POLICY:  With respect to any Mortgage  Loan included in
the Trust Fund,  any insurance  policy,  including  all riders and  endorsements
thereto  in  effect,  including  any  replacement  policy  or  policies  for any
Insurance Policies.

              INSURANCE  PROCEEDS:  With respect to each Mortgage Loan, proceeds
of  insurance  policies  insuring  the  Mortgage  Loan or the related  Mortgaged
Property.

              INTEREST  ACCRUAL PERIOD:  With respect to each Class of Non-Delay
Certificates and the Corresponding Class of Lower Tier Regular Interests and any
Distribution  Date, the period commencing on the 25th day of the month preceding
the month in which such  Distribution  Date occurs and ending on the 24th day of
the month in which such  Distribution  Date  occurs (or in the case of the first
Distribution  Date,  the  period  from and  including  the  Closing  Date to but
excluding  such first  Distribution  Date).  For purposes of computing  interest
accruals on each Class of Non-Delay  Certificates,  each Interest Accrual Period
has the actual number of days in such month and each year is assumed to have 360
days.

              INTEREST RATE  ADJUSTMENT  DATE:  With respect to each  Adjustable
Rate Mortgage  Loan,  the date,  specified in the related  Mortgage Note and the
Mortgage Loan Schedule, on which the Mortgage Rate is adjusted.

              LATE  COLLECTIONS:  With respect to any Mortgage  Loan and any Due
Period,  all amounts received  subsequent to the Determination  Date immediately
following  such Due Period,

                                      -16-
<PAGE>

whether  as  late  payments  of  Monthly  Payments  or  as  Insurance  Proceeds,
Liquidation Proceeds or otherwise,  which represent late payments or collections
of principal and/or interest due (without regard to any acceleration of payments
under the related Mortgage and Mortgage Note) but delinquent for such Due Period
and not previously recovered.

              LIBOR:  With respect to any Interest  Accrual Period for the LIBOR
Certificates,   the  rate  determined  by  the  Trustee  on  the  related  LIBOR
Determination  Date on the basis of the offered rate for one-month  U.S.  dollar
deposits  as such rate  appears on Telerate  Page 3750 as of 11:00 a.m.  (London
time) on such date;  provided that if such rate does not appear on Telerate Page
3750,  the rate for such  date will be  determined  on the basis of the rates at
which  one-month  U.S.  dollar  deposits are offered by the  Reference  Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank  market.  In such event, the Trustee will request the principal London
office of each of the Reference  Banks to provide a quotation of its rate. If at
least  two such  quotations  are  provided,  the rate for that  date will be the
arithmetic mean of the quotations  (rounded  upwards if necessary to the nearest
whole  multiple  of  1/16%).  If  fewer  than two  quotations  are  provided  as
requested,  the rate for that  date  will be the  arithmetic  mean of the  rates
quoted  by  major  banks  in  New  York  City,  selected  by  the  Servicer,  at
approximately  11:00 a.m. (New York City time) on such date for  one-month  U.S.
dollar loan to leading European banks.

              LIBOR CERTIFICATES: As specified in the Preliminary Statement.

              LIBOR  DETERMINATION  DATE:  With respect to any Interest  Accrual
Period  (other  than  the  initial   Interest  Accrual  Period)  for  the  LIBOR
Certificates,  the second London Business Day preceding the commencement of such
Interest Accrual Period.

              LIQUIDATED MORTGAGE LOAN: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified (in accordance  with this Agreement) that it has received
all amounts it expects to receive in  connection  with the  liquidation  of such
Mortgage Loan including the final disposition of an REO Property.

              LIQUIDATION  EVENT:  With respect to any Mortgage Loan, any of the
following events:  (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination  is made as to such Mortgage  Loan; or (iii) such Mortgage Loan is
removed from  coverage  under this  Agreement by reason of its being  purchased,
sold or replaced pursuant to or as contemplated by this Agreement.  With respect
to any REO  Property,  either  of the  following  events:  (i) a Final  Recovery
Determination  is made as to such REO  Property;  or (ii) such REO  Property  is
removed from  coverage  under this  Agreement  by reason of its being  purchased
pursuant to this Agreement.

              LIQUIDATION  PROCEEDS:   Cash  received  in  connection  with  the
liquidation  of a defaulted  Mortgage  Loan,  whether  through  trustee's  sale,
foreclosure sale or otherwise.

              LOAN-TO-VALUE RATIO or LTV: With respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the original  outstanding  principal amount
of the Mortgage Loan as

                                      -17-
<PAGE>

of the  Cut-off  Date  (unless  otherwise  indicated),  to the lesser of (a) the
Appraised  Value  of the  Mortgaged  Property  at  origination,  and  (b) if the
Mortgage  Loan was made to finance  the  acquisition  of the  related  Mortgaged
Property, the purchase price of the Mortgaged Property.

              LONDON  BUSINESS  DAY:  Any day on which  dealings  in deposits of
United States dollars are transacted in the London interbank market.

              LOAN GROUP CAP:  The Loan Group I Cap or the Loan Group II Cap, as
applicable.

              LOAN GROUP I CAP: With respect to the Group I Mortgage Loans as of
any  Distribution  Date, the product of (i) the weighted average of the Adjusted
Net Mortgage  Rates then in effect on the beginning of the related Due Period on
the Group I Mortgage Loans and (ii) a fraction, the numerator of which is 30 and
the  denominator  of which is the actual number of days in the Interest  Accrual
Period related to such Distribution Date.

              LOAN GROUP II CAP: With respect to the Group II Mortgage  Loans as
of any  Distribution  Date,  the  product  of (i) the  weighted  average  of the
Adjusted Net Mortgage  Rates then in effect on the  beginning of the related Due
Period on the Group II Mortgage  Loans and (ii) a  fraction,  the  numerator  of
which is 30 and the  denominator  of which is the  actual  number of days in the
Interest Accrual Period related to such Distribution Date.

              LOWER  TIER  REGULAR  INTEREST:  Each of the Class  LT-A-1,  Class
LT-A-2,  Class  LT-A-3,  Class  LT-M-1,  Class  LT-M-2,  Class  LT-B-1 and Class
LT-Accrual Interests as described in the Preliminary Statement.

              LOWER  TIER  REMIC:  As  described  in the  Preliminary  Statement

              MAXIMUM  MORTGAGE  RATE:  With  respect  to each  Adjustable  Rate
Mortgage Loan, a rate that (i) is set forth on the Data Tape  Information and in
the related  Mortgage  Note and (ii) is the maximum  interest  rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be increased  during the
lifetime of such Mortgage Loan.

              MINIMUM  MORTGAGE  RATE:  With  respect  to each  Adjustable  Rate
Mortgage Loan, a rate that (i) is set forth on the Data Tape  Information and in
the related  Mortgage  Note and (ii) is the minimum  interest  rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be decreased  during the
lifetime of such Mortgage Loan.

              MONTHLY    STATEMENT:    The    statement    delivered    to   the
Certificateholders pursuant to Section 4.03.

              MOODY'S:  Moody's Investors Service, Inc. If Moody's is designated
as a Rating  Agency  in the  Preliminary  Statement,  for  purposes  of  Section
10.05(b) the address for notices to Moody's shall be Moody's Investors  Service,
Inc.,  99  Church  Street,  New York,  New York  10007,  Attention:  Residential
Mortgage  Pass-Through  Group,  or such other  address as Moody's may  hereafter
furnish to the Depositor and the Servicer.

              MORTGAGE:  The  mortgage,   deed  of  trust  or  other  instrument
identified on the Mortgage Loan Schedule as securing a Mortgage Note.

                                      -18-
<PAGE>

              MORTGAGE FILE: The items pertaining to a particular  Mortgage Loan
contained in either the Servicing File or Custodial File.

              MORTGAGE LOANS:  An individual  Mortgage Loan which is the subject
of this  Agreement,  each  Mortgage  Loan  originally  sold and  subject to this
Agreement  being  identified on the Mortgage Loan Schedule,  which Mortgage Loan
includes,  without  limitation,  the  Mortgage  File,  the  Scheduled  Payments,
Principal Prepayments,  Liquidation Proceeds,  Condemnation Proceeds,  Insurance
Proceeds, REO Disposition proceeds, and all other rights, benefits, proceeds and
obligations  arising from or in connection  with such Mortgage  Loan,  excluding
replaced or repurchased Mortgage Loans.

              MORTGAGE  LOAN  SCHEDULE:  A schedule  of Mortgage  Loans  annexed
hereto as Schedule I, such schedule setting forth the following information with
respect to each Mortgage  Loan: (1) the Seller's  Mortgage Loan number;  (2) the
city,  state  and zip  code of the  Mortgaged  Property;  (3) a code  indicating
whether  the  Mortgaged  Property  is  a  single  family  residence,  two-family
residence,  three-family residence,  four-family residence,  PUD or condominium;
(4) the current  Mortgage  Interest Rate; (5) the current net Mortgage  Interest
Rate; (6) the current Monthly  Payment;  (7) the Gross Margin;  (8) the original
term to maturity; (9) the scheduled maturity date; (10) the principal balance of
the  Mortgage  Loan as of the  Cut-off  Date  after  deduction  of  payments  of
principal due on or before the Cut-off Date whether or not  collected;  (11) the
Loan-to-Value  Ratio;  (12) the next Interest  Rate  Adjustment  Date;  (13) the
lifetime  Mortgage  Interest  Rate  Cap;  (14)  whether  the  Mortgage  Loan  is
convertible  or not;  (15) a code  indicating  the mortgage  guaranty  insurance
company;  (16) the  Servicing  Fee and (17) if such  Mortgage  Loan is a Group I
Mortgage Loan or a Group II Mortgage Loan.

              MORTGAGE NOTE: The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.

              MORTGAGE  RATE:  The annual rate of  interest  borne on a Mortgage
Note,  which shall be adjusted from time to time with respect to Adjustable Rate
Mortgage Loans.

              MORTGAGE RATE CAPS:  With respect to an  Adjustable  Rate Mortgage
Loan, the Periodic Mortgage Rate Cap, the Maximum Mortgage Rate, and the Minimum
Mortgage Rate for such Mortgage Loan.

              MORTGAGED  PROPERTY:  The real property (or leasehold  estate,  if
applicable)  identified on the Mortgage  Loan Schedule as securing  repayment of
the debt evidenced by a Mortgage Note.

              MORTGAGOR: The obligor(s) on a Mortgage Note.

              NET MONTHLY EXCESS CASH FLOW: For any Distribution Date the amount
remaining for  distribution  pursuant to  subsection  4.02(iii)  (before  giving
effect to distributions pursuant to such subsection).

              NCCC PURCHASE  AGREEMENTS:  The Mortgage Loan Purchase  Agreement,
dated as of  October 1,  2001,  by and  between  the  Responsible  Party and the
Purchaser and the Mortgage

                                      -19-
<PAGE>

Loan  Purchase  Agreement,  dated as of  October  1, 2001,  by and  between  the
Responsible Party and the Purchaser.

              NET PREPAYMENT INTEREST SHORTFALL:  For any Distribution Date, the
amount by which the sum of the Prepayment Interest Shortfalls exceeds the sum of
the Compensating Interest payments made on such Distribution Date.

              NIMS TRUST:  Morgan  Stanley Dean Witter  Capital I Inc. NIM Trust
2001-NC3N, a Delaware business trust.

              NON-DELAY CERTIFICATES: As specified in the Preliminary Statement.

              NONRECOVERABLE  ADVANCE: Any Servicing Advances previously made or
proposed to be made in respect of a Mortgage Loan or REO Property, which, in the
good faith  business  judgment  of the  Servicer,  will not or, in the case of a
proposed  Servicing Advance,  would not, be ultimately  recoverable from related
Insurance Proceeds,  Liquidation Proceeds or otherwise. The determination by the
Servicer  that  it has  made a  Nonrecoverable  Advance  or  that  any  proposed
Servicing Advances, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by an Officers' Certificate delivered to the Trustee.

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

              NOTICE OF FINAL  DISTRIBUTION:  The notice to be provided pursuant
to Section 9.02 to the effect that final distribution on any of the Certificates
shall be made only upon presentation and surrender thereof.

              OFFERED CERTIFICATES:  As specified in the Preliminary  Statement.

              OFFICER'S  CERTIFICATE:  A certificate signed by an officer of the
Servicer with  responsibility for the servicing of the Mortgage Loans and listed
on a list delivered to the Trustee pursuant to this Agreement.

              OPINION  OF  COUNSEL:  A written  opinion of  counsel,  who may be
in-house counsel for the Servicer or the Subservicer,  reasonably  acceptable to
the Trustee,  provided that any Opinion of Counsel relating to (a) qualification
of the Mortgage  Loans in a REMIC or (b) compliance  with the REMIC  Provisions,
must be  (unless  otherwise  stated in such  Opinion of  Counsel)  an opinion of
counsel who (i) is in fact  independent  of the Servicer of the Mortgage  Loans,
(ii) does not have any  material  direct or indirect  financial  interest in the
Servicer of the  Mortgage  Loans or in an  affiliate  of either and (iii) is not
connected  with the  Servicer of the  Mortgage  Loans as an  officer,  employee,
director or person performing similar functions.

              OPTIONAL  TERMINATION  DATE:  The  Distribution  Date on which the
assets  of the  Trust  Fund  decline  to 10% or less of the  Cut-off  Date  Pool
Principal Balance.

                                      -20-
<PAGE>

              OTS: Office of Thrift Supervision, and any successor thereto.

              OUTSTANDING:  With respect to the  Certificates  as of any date of
determination,  all Certificates  theretofore  executed and authenticated  under
this Agreement except:

            (i)   Certificates  theretofore canceled by the Trustee or delivered
                  to the Trustee for cancellation; and

            (ii)  Certificates  in exchange  for which or in lieu of which other
                  Certificates  have been  executed and delivered by the Trustee
                  pursuant to this Agreement.

              OUTSTANDING  MORTGAGE  LOAN:  As of any Due Date, a Mortgage  Loan
with a Stated Principal Balance greater than zero which was not the subject of a
Principal  Prepayment  in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.

              OWNERSHIP INTEREST: As to any Residual Certificate,  any ownership
interest in such  Certificate  including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial.

              P&I ADVANCE: As to any Mortgage Loan or REO Property,  any advance
made  by the  Servicer  in  respect  of any  Remittance  Date  representing  the
aggregate of all payments of principal and interest,  net of the Servicing  Fee,
that were due during the related Due Period on the Mortgage  Loans and that were
delinquent on the related  Determination Date, plus certain amounts representing
assumed  payments  not  covered  by any  current  net  income  on the  Mortgaged
Properties  acquired by foreclosure or deed in lieu of foreclosure as determined
pursuant to Section 4.01.

              PASS-THROUGH  MARGIN:  With  respect  to  each  Class  of  Regular
Certificates, the following percentages:  Class A-1 Certificates,  0.310%; Class
A-2   Certificates,   0.400%,   Class  A-3  Certificates,   0.330%,   Class  M-1
Certificates,   0.950%;   Class  M-2   Certificates,   1.500%;   and  Class  B-1
Certificates,  2.450%.  On  the  first  Distribution  Date  after  the  Optional
Termination  Date,  the  Pass-Through  Margins  shall  increase  to:  Class  A-1
Certificates,  0.620%,  Class A-2 Certificates,  0.800%, Class A-3 Certificates,
0.660%, Class M-1 Certificates, 1.425%, Class M-2 Certificates, 2.250% and Class
B-1 Certificates, 3.675%.

              PASS-THROUGH  RATE: For each Class of Certificates  and each Lower
Tier Regular Interest,  the per annum rate set forth or calculated in the manner
described in the Preliminary Statement.

              PERCENTAGE  INTEREST:  As  to  any  Certificate,   the  percentage
interest  evidenced thereby in distributions  required to be made on the related
Class, such percentage  interest being set forth on the face thereof or equal to
the percentage  obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.

                                      -21-
<PAGE>

              PERIODIC  MORTGAGE RATE CAP:  With respect to an  Adjustable  Rate
Mortgage Loan, the periodic limit on each Mortgage  Interest Rate  adjustment as
set forth in the related Mortgage Note.

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

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

            (ii)  demand and time  deposits in,  certificates  of deposit of, or
            bankers'  acceptances (which shall each have an original maturity of
            not more  than 90 days  and,  in the case of  bankers'  acceptances,
            shall in no event have an original maturity of more than 365 days or
            a  remaining  maturity of more than 30 days)  denominated  in United
            States dollars and issued by, any Depository  Institution  and rated
            F1+ by Fitch;

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

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

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

            (vi)  units of money  market  funds,  including  money  market funds
            advised by the  Depositor  or the Trustee or an  Affiliate  thereof,
            that have been rated  "Aaa" by  Moody's,  "AAA" by Standard & Poor's
            and, if rated by Fitch, at least "AA" by Fitch; and

            (vii) if previously  confirmed in writing to the Trustee,  any other
            demand,  money  market or time  deposit,  or any  other  obligation,
            security or investment,  as may be acceptable to the Rating Agencies
            as a  permitted  investment  of funds  backing  "Aaa" or "AAA" rated
            securities;

PROVIDED,  HOWEVER, that no instrument described hereunder shall evidence either
the  right  to  receive  (a)  only  interest  with  respect  to the  obligations
underlying such instrument or (b) both principal and interest  payments  derived
from obligations underlying such instrument and the

                                      -22-
<PAGE>

interest and principal  payments with respect to such instrument provide a yield
to  maturity  at par  greater  than 120% of the yield to  maturity at par of the
underlying obligations.

              PERMITTED TRANSFEREE: Any person other than (i) the United States,
any State or political  subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government,  International  Organization or
any agency or instrumentality of either of the foregoing,  (iii) an organization
(except  certain  farmers'  cooperatives  described  in section 521 of the Code)
which is exempt  from tax  imposed by Chapter 1 of the Code  (including  the tax
imposed by section 511 of the Code on unrelated  business taxable income) on any
excess inclusions (as defined in section 860E(c)(1) of the Code) with respect to
any  Residual  Certificate,  (iv)  rural  electric  and  telephone  cooperatives
described in section  1381(a)(2)(C) of the Code, (v) a Person that is not a U.S.
Person,  (vi) an "electing large partnership"  within the meaning of section 775
of the Code and (vii) any other Person so designated by the Depositor based upon
an Opinion of Counsel that the  Transfer of an Ownership  Interest in a Residual
Certificate to such Person may cause the REMIC hereunder to fail to qualify as a
REMIC at any time that the  Certificates  are  outstanding.  The  terms  "United
States," "State" and  "International  Organization"  shall have the meanings set
forth in section 7701 of the Code or successor  provisions.  A corporation  will
not be treated  as an  instrumentality  of the United  States or of any State or
political  subdivision  thereof for these  purposes if all of its activities are
subject  to tax and,  with the  exception  of the  Federal  Home  Loan  Mortgage
Corporation,  a  majority  of its board of  directors  is not  selected  by such
government unit.

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

              PHYSICAL CERTIFICATES:  As specified in the Preliminary Statement.

              POLICY   PAYMENTS   ACCOUNT:   As  defined  in  Section   4.06(f).

              POOL STATED PRINCIPAL  BALANCE:  As to any Distribution  Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans on the last day
of the related Due Period which were Outstanding Mortgage Loans on such day.

              PREPAYMENT  CHARGE:  Any  prepayment  premium,  penalty  or charge
collected  by the Servicer  with respect to a Mortgage  Loan from a Mortgagor in
connection with any voluntary Principal Prepayment in full pursuant to the terms
of the related Mortgage Note.

              PREPAYMENT  INTEREST  SHORTFALL:  With  respect to any  Remittance
Date, the sum of, for each Mortgage Loan that was during the related  Prepayment
Period the subject of a Principal Prepayment that was applied by the Servicer to
reduce  the  outstanding  principal  balance  of  such  Mortgage  Loan on a date
preceding the Due Date in the succeeding  Prepayment  Period, an amount equal to
the  product of (a) the  Mortgage  Rate net of the  Servicing  Fee Rate for such
Mortgage  Loan,  (b) the amount of the  Principal  Prepayment  for such Mortgage
Loan, (c) 1/360 and (d) the number of days  commencing on the date on which such
Principal  Prepayment  was  applied  and  ending on the last day of the  related
Prepayment Period.

                                      -23-
<PAGE>

              PREPAYMENT  PERIOD:  With  respect  to any  Remittance  Date,  the
calendar  month  preceding  the  calendar  month in which such  Remittance  Date
occurs.

              PRINCIPAL  DISTRIBUTION AMOUNT: For any Distribution Date, the sum
of (i) the Basic Principal  Distribution  Amount for such  Distribution Date and
(ii) the Extra Principal Distribution Amount for such Distribution Date.

              PRINCIPAL  PREPAYMENT:  Any  full  or  partial  payment  or  other
recovery of  principal  on a Mortgage  Loan  (including  upon  liquidation  of a
Mortgage Loan) which is received in advance of its scheduled Due Date, excluding
any  prepayment  penalty or premium  thereon and which is not  accompanied by an
amount of interest  representing  scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.

              PRINCIPAL  PREPAYMENT IN FULL: Any Principal  Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.

              PRINCIPAL  REMITTANCE  AMOUNT:  With  respect to any  Distribution
Date, the amount equal to the sum of the following amounts (without duplication)
with  respect to the  immediately  preceding  Due  Period:  (i) each  payment of
principal on a Mortgage  Loan  received or advanced by the Servicer  during such
Due Period (including the portion of Insurance Proceeds or Condemnation Proceeds
allocable to principal), including all Principal Prepayments received during the
related Prepayment Period,  (ii) the Liquidation  Proceeds on the Mortgage Loans
allocable to  principal  actually  collected by the Servicer  during the related
Prepayment Period,  (iii) the portion of the purchase price with respect to each
Deleted  Mortgage  Loan,  the  repurchase  obligation for which arose during the
related  Prepayment Period that was repurchased during the period from the prior
Distribution  Date through the  business  day prior to the current  Distribution
Date,  (iv) the  principal  portion of any  Substitution  Adjustment  Amounts in
connection with a substitution of a Mortgage Loan as of such Distribution  Date,
and (v) the  allocable  portion of the  proceeds  received  with  respect to the
termination of the Trust Fund (to the extent such proceeds relate to principal).

              PRIVATE CERTIFICATES: As specified in the Preliminary Statement.

              PROSPECTUS SUPPLEMENT:  The Prospectus Supplement,  dated November
21, 2001, relating to the Offered Certificates.

              PTCE 95-60: As defined in Section 5.02(b).

              PUD: Planned Unit Development.

              PURCHASER:  Morgan  Stanley Dean Witter  Mortgage  Capital Inc. as
purchaser of the Mortgage Loans under the NCCC Purchase Agreements.

              QUALIFIED  INSURER:  A mortgage  guaranty  insurance  company duly
qualified as such under the laws of the state of its principal place of business
and each state  having  jurisdiction  over such insurer in  connection  with the
insurance  policy issued by such insurer,  duly  authorized and licensed in such
states to transact a mortgage guaranty insurance business in

                                      -24-
<PAGE>

such states and to write the insurance  provided by the insurance  policy issued
by it, approved as a FNMA- or FHLMC-approved mortgage insurer or having a claims
paying  ability  rating of at least "AA" or  equivalent  rating by a  nationally
recognized statistical rating organization. Any replacement insurer with respect
to a Mortgage Loan must have at least as high a claims paying  ability rating as
the insurer it replaces had on the Closing Date.

              RATING  AGENCY:  Each  of the  Rating  Agencies  specified  in the
Preliminary  Statement.  If such  organization  or a  successor  is no longer in
existence,  "Rating  Agency"  shall be such  nationally  recognized  statistical
rating  organization,  or  other  comparable  Person,  as is  designated  by the
Depositor, notice of which designation shall be given to the Trustee. References
herein to a given rating or rating  category of a Rating  Agency shall mean such
rating category without giving effect to any modifiers.  For purposes of Section
10.05(b),  the  addresses for notices to each Rating Agency shall be the address
specified  therefor in the definition  corresponding  to the name of such Rating
Agency, or such other address as either such Rating Agency may hereafter furnish
to the Depositor and the Servicer.

              RECORD DATE: With respect to any  Distribution  Date, the close of
business on the Business  Day  immediately  preceding  such  Distribution  Date;
PROVIDED,  HOWEVER,  that for any  Certificate  issued in Definitive  Form,  the
Record Date shall be the close of business on the last Business Day of the month
preceding the month in which such applicable Distribution Date occurs.

              REFERENCE BANK: As defined in Section 4.04.

              REGULAR CERTIFICATES: As specified in the Preliminary Statement.

              RELIEF ACT INTEREST  SHORTFALL:  With respect to any  Distribution
Date and any Mortgage Loan, any reduction in the amount of interest  collectible
on such Mortgage Loan for the most recently  ended Due Period as a result of the
application of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended.

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

              REMIC  PROVISIONS:  Provisions  of  the  federal  income  tax  law
relating to real estate mortgage investment  conduits,  which appear at sections
860A  through  860G of  Subchapter  M of  Chapter  1 of the  Code,  and  related
provisions,  and regulations promulgated thereunder,  as the foregoing may be in
effect from time to time as well as provisions of applicable state laws.

              REMITTANCE  DATE:  The Business  Day  immediately  preceding  each
Distribution Date.

              REO  DISPOSITION:  The  final  sale  by the  Servicer  of any  REO
Property.

              REO IMPUTED INTEREST:  As to any REO Property,  for any period, an
amount  equivalent  to interest (at the Mortgage  Rate net of the  Servicing Fee
Rate that would have been

                                      -25-
<PAGE>

applicable to the related  Mortgage Loan had it been  outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof (as
such  balance is reduced  pursuant  to Section  3.17 by any income  from the REO
Property treated as a recovery of principal).

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

              REPURCHASE  PRICE:  With respect to any Mortgage  Loan,  an amount
equal to the sum of (i) the unpaid principal balance of such Mortgage Loan as of
the date of repurchase,  (ii) interest on such unpaid principal  balance of such
Mortgage Loan at the Mortgage Rate from the last date through which interest has
been paid and  distributed to the Trustee to the date of  repurchase,  (iii) all
unreimbursed Servicing Advances and (iv) all expenses reasonably incurred by the
Servicer or the  Trustee,  as the case may be, in respect of a breach or defect,
including,  without  limitation,  expenses  arising  out  of the  Servicer's  or
Trustee's, as the case may be, enforcement of the Responsible Party's repurchase
obligation, to the extent not included in (iii).

              REQUEST FOR  RELEASE:  The Request  for Release  submitted  by the
Servicer to the Trustee, substantially in the form of Exhibit J.

              RESIDUAL CERTIFICATES: As specified in the Preliminary Statement.

              RESPONSIBLE  OFFICER:  When used with respect to the Trustee,  any
Vice  President,  any Assistant Vice  President,  any Assistant  Secretary,  any
Assistant  Treasurer,  any Trust  Officer or any other  officer  of the  Trustee
customarily  performing functions similar to those performed by any of the above
designated  officers who at such time shall be officers to whom, with respect to
a particular matter, such matter is referred because of such officer's knowledge
of and  familiarity  with the  particular  subject  and who  shall  have  direct
responsibility for the administration of this Agreement.

              RESPONSIBLE   PARTY:   NC  Capital   Corporation,   a   California
corporation,  and its  successors  and assigns,  in its capacity as  responsible
party hereunder.

              RULE 144A LETTER: As defined in Section 5.01(b).

              SCHEDULED  PAYMENT:  The scheduled  monthly  payment on a Mortgage
Loan due on any Due Date allocable to principal and/or interest on such Mortgage
Loan which, unless otherwise specified herein,  shall give effect to any related
Debt Service  Reduction and any Deficient  Valuation  that affects the amount of
the monthly payment due on such Mortgage Loan.

              SCHEDULED  PRINCIPAL  BALANCE:  With respect to any Mortgage Loan:
(a) as of the Cut-off Date, the outstanding  principal  balance of such Mortgage
Loan as of  such  date,  net of the  principal  portion  of all  unpaid  Monthly
Payments,  if any, due on or before such date; (b) as of any Due Date subsequent
to the Cut-off Date up to and  including  the Due Date in the calendar  month in
which a  Liquidation  Event  occurs  with  respect to such  Mortgage  Loan,  the
Scheduled  Principal Balance of such Mortgage Loan as of the Cut-off Date, minus
the sum of (i) the  principal  portion of each Monthly  Payment due on or before
such Due Date but subsequent to the Cut-off Date, whether or not received,  (ii)
all Principal  Prepayments  received  before such Due

                                      -26-
<PAGE>

Date but after the Cut-off Date, (iii) the principal  portion of all Liquidation
Proceeds  and  Insurance  Proceeds  received  before such Due Date but after the
Cut-off Date, net of any portion thereof that represents  principal due (without
regard to any  acceleration of payments under the related  Mortgage and Mortgage
Note) on a Due Date  occurring on or before the date on which such proceeds were
received and (iv) any reduction in the  principal  balance of such Mortgage Loan
incurred  with respect  thereto as a result of a Deficient  Valuation  occurring
before such Due Date, but only to the extent such reduction in principal balance
represents a reduction in the portion of principal of such Mortgage Loan not yet
due (without regard to any  acceleration of payments under the related  Mortgage
and Mortgage Note) as of the date of such Deficient Valuation; and (c) as of any
Due Date  subsequent to the  occurrence  of a Liquidation  Event with respect to
such Mortgage Loan, zero.

              SECURITIES ACT: The Securities Act of 1933, as amended.

              SENIOR  ENHANCEMENT  PERCENTAGE:  With respect to any Distribution
Date, the percentage obtained by dividing (x) the sum of (i) the aggregate Class
Certificate  Balance of the Subordinated  Certificates and (ii) the Subordinated
Amount  (in each  case  after  taking  into  account  the  distributions  of the
Principal  Distribution  Amount for such Distribution Date) by (y) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period.

              SENIOR  SPECIFIED  ENHANCEMENT  PERCENTAGE:  As  of  any  date  of
determination, 40.0%.

              SERVICER:  Ocwen Federal Bank FSB, a  federally-chartered  savings
bank, and its successors and assigns, in its capacity as servicer hereunder.

              SERVICER INVESTMENT ACCOUNT: As defined in section 3.12(a).

              SERVICER  TERMINATION TEST: With respect to any Distribution Date,
the Servicer Termination Test will be failed with respect to the Servicer if the
Cumulative Loss Percentage exceeds 6.70%.

              SERVICING  ADVANCES:  The  reasonable  "out-of-pocket"  costs  and
expenses  (including  legal fees) incurred by the Servicer in the performance of
its servicing  obligations  in connection  with a default,  delinquency or other
unanticipated  event,  including,  but  not  limited  to,  the  cost  of (i) the
preservation,  restoration  and  protection  of a Mortgaged  Property,  (ii) any
enforcement or judicial proceedings,  including foreclosures and litigation,  in
respect  of  a  particular  Mortgage  Loan,  (iii)  the  management   (including
reasonable fees in connection therewith) and liquidation of any REO Property and
(iv) the  performance  of its  obligations  under  Section  3.01,  Section 3.09,
Section 3.13 and Section 3.15 hereof. The Servicer shall not be required to make
any Nonrecoverable Advances.

              SERVICING  FEE:  With  respect to each  Mortgage  Loan and for any
calendar month, an amount equal to one month's  interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on

                                      -27-
<PAGE>

the same  principal  amount on which  interest on such Mortgage Loan accrues for
such calendar month.  Such fee shall be payable monthly,  and shall be pro rated
for any portion of a month  during  which the  Mortgage  Loan is serviced by the
Servicer  under this  Agreement.  The Servicing Fee is payable  solely from, the
interest portion (including recoveries with respect to interest from Liquidation
Proceeds and proceeds  received  with respect to REO  Properties,  to the extent
permitted by Section 3.11) of such Monthly Payment collected by the Servicer, or
as otherwise provided under Section 3.11.

              SERVICING FEE RATE: With respect to each Mortgage Loan,  0.50% per
annum.

              SERVICING  FILE:  With  respect to each  Mortgage  Loan,  the file
retained by the Servicer  consisting  of originals or copies of all documents in
the Mortgage File which are not  delivered to the Trustee in the Custodial  File
and copies of the Mortgage Loan Documents set forth in Exhibit K hereto.

              SERVICING  OFFICER:  Any officer of the  Servicer  involved in, or
responsible  for, the  administration  and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this  Agreement,  as
such list may from time to time be amended.

              SIMILAR LAW: As defined in Section 5.02(b).

              SPECIFIED  SUBORDINATED  AMOUNT:  Prior to the Stepdown  Date,  an
amount equal to 2.00% of the Cut-off  Date Pool  Principal  Balance,  and on and
after the  Stepdown  Date,  an  amount  equal to 4.00% of the  aggregate  Stated
Principal  Balance of the  Mortgage  Loans as of the last day of the related Due
Period,  subject  to a minimum  amount  equal to 0.50% of the  aggregate  Stated
Principal  Balance  of the  Mortgage  Loans as of the  Cut-off  Date,  PROVIDED,
HOWEVER,  that if, on any Distribution  Date, a Trigger Event has occurred,  the
Specified  Subordinated Amount shall not be reduced to the applicable percentage
of the then current  aggregate  Stated  Principal  Balance of the Mortgage Loans
until the Distribution Date on which a Trigger Event is no longer occurring.

              STANDARD & POOR'S:  Standard & Poor's Ratings Services, a division
of the  McGraw-Hill  Companies,  Inc.  If Standard & Poor's is  designated  as a
Rating Agency in the Preliminary Statement, for purposes of Section 10.05(b) the
address for notices to Standard & Poor's  shall be Standard & Poor's,  55 Water,
New York, New York 10041,  Attention:  Residential Mortgage Surveillance Group -
Morgan  Stanley Dean Witter  Capital I Inc.  2001-NC3,  or such other address as
Standard & Poor's may hereafter furnish to the Depositor and the Servicer.

              STARTUP DAY: The Closing Date.

              STATED  PRINCIPAL  BALANCE:  As to  each  Mortgage  Loan,  (i) the
principal  balance of the Mortgage  Loan at the Cut-off Date after giving effect
to payments of  principal  due on or before  such date,  to the extent  actually
received,  minus (ii) all amounts  previously  distributed  to the Trustee  with
respect to the related  Mortgage  Loan  representing  payments or  recoveries of
principal.

                                      -28-
<PAGE>

              STEPDOWN  DATE:  The later to occur of (i) the earlier to occur of
(a) the  Distribution  Date in  December  2004  and (b) the  date on  which  the
aggregate  Class  Certificate  Balances  of the Class A  Certificates  have been
reduced  to zero and (ii)  the  first  Distribution  Date on  which  the  Senior
Enhancement  Percentage  (calculated  for this  purpose  only after  taking into
account  payments  of  principal  on the  Mortgage  Loans on the last day of the
related  Due  Period but prior to any  applications  of  Principal  Distribution
Amount to the  Certificates)  is greater  than or equal to the Senior  Specified
Enhancement Percentage.

              SUBORDINATED  AMOUNT: As of any Distribution  Date, the excess, if
any, of (a) the aggregate Stated  Principal  Balance of the Mortgage Loans as of
the  end of  the  related  Due  Period  over  (b)  the  aggregate  of the  Class
Certificate  Balances of the Class A and  Subordinated  Certificates  as of such
Distribution  Date  (after  giving  effect  to  the  payment  of  the  Principal
Remittance Amount on such Certificates on such Distribution Date).

              SUBORDINATED   CERTIFICATES:   As  specified  in  the  Preliminary
Statement.

              SUBORDINATION  DEFICIENCY:  With respect to any Distribution Date,
the excess, if any, of (a) the Specified  Subordinated Amount applicable to such
Distribution   Date  over  (b)  the  Subordinated   Amount  applicable  to  such
Distribution Date.

              SUBORDINATION  REDUCTION AMOUNT:  With respect to any Distribution
Date,  an amount equal to the lesser of (a) the Excess  Subordinated  Amount and
(b) the Total Monthly Excess Spread.

              SUBSERVICER: As defined in Section 3.02(a).

              SUBSERVICING ACCOUNT: As defined in Section 3.08.

              SUBSTITUTE  MORTGAGE  LOAN:  A Mortgage  Loan  substituted  by the
Responsible  Party for a Deleted  Mortgage  Loan which must, on the date of such
substitution,  as confirmed in a Request for Release,  substantially in the form
of  Exhibit  J, (i) have a Stated  Principal  Balance,  after  deduction  of the
principal portion of the Scheduled Payment due in the month of substitution, not
in excess of, and not more than 10% less than, the Stated  Principal  Balance of
the Deleted Mortgage Loan; (ii) be accruing interest at a rate no lower than and
not more than 1% per annum higher than, that of the Deleted Mortgage Loan; (iii)
have a  Loan-to-Value  Ratio no higher than that of the Deleted  Mortgage  Loan;
(iv) have a remaining  term to  maturity no greater  than (and not more than one
year less than that of) the  Deleted  Mortgage  Loan;  and (v) comply  with each
representation and warranty set forth in Section 2.03.

              SUBSTITUTION  ADJUSTMENT AMOUNT: The meaning ascribed to such term
pursuant to Section 2.03.

              TAX SERVICE CONTRACT: As defined in Section 3.09(a).

              TELERATE  PAGE 3750:  The display page  currently so designated on
the Bridge Telerate Service (or such other page as may replace that page on that
service for displaying comparable rates or prices).

                                      -29-
<PAGE>

              TOTAL  MONTHLY  EXCESS  SPREAD:  As to any  Distribution  Date, an
amount equal to the excess if any, of (i) the interest  collected or advanced on
the Mortgage  Loans for Due Dates during the related  Remittance  Period (net of
Expense  Fees)  over (ii) the sum of the  interest  payable  to the  Classes  of
Floating Rate Certificates on such Distribution Date.

              TRANSFER: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.

              TRANSFER AFFIDAVIT: As defined in section 5.02(b).

              TRANSFEROR CERTIFICATE: As defined in Section 5.02(b).

              TRIGGER  EVENT:  With  respect  to  the  Certificates  and as of a
Distribution  Date,  exists  if  (i)  after  the  Stepdown  Date,  the  quotient
(expressed  as a  percentage)  of (x) the Stated  Principal  Balance of Mortgage
Loans 60 days Delinquent or more, and (y) the aggregate Stated Principal Balance
of the  Mortgage  Loans  exceeds 40% of the prior  period's  Senior  Enhancement
Percentage or (ii) the aggregate  amount of Realized  Losses  incurred since the
Cut-off  Date  through  the last day of the  related  Due Period  divided by the
Cut-off Date Pool Principal Balance exceeds the applicable percentages described
below with respect to such Distribution Date:

<TABLE>
<CAPTION>
 ------------------------------------------------------------------------------------------------

 DISTRIBUTION DATE OCCURRING IN            LOSS PERCENTAGE
 ------------------------------------------------------------------------------------------------

<S>                                        <C>
 December 2004 through November 2005       4.00% for the first month,  plus an additional 1/12th
                                           of 2.00% for each  month  thereafter  (e.g.  5.00% in
                                           June 2005)
 ------------------------------------------------------------------------------------------------

 December 2005 through November 2006       6.00% for the first month,  plus an additional 1/12th
                                           of 1.00% for each  month  thereafter  (e.g.  6.50% in
                                           June 2006)
 ------------------------------------------------------------------------------------------------

 December 2006 through November 2007       7.00% for the first month,  plus an additional 1/12th
                                           of 0.50% for each  month  thereafter  (e.g.  7.25% in
                                           June 2006)
 ------------------------------------------------------------------------------------------------

 December 2007 and thereafter              7.50%
 ------------------------------------------------------------------------------------------------
</TABLE>

              TRUST FUND: The corpus of the trust created  hereunder  consisting
of (i) the Mortgage  Loans and all interest  and  principal  received on or with
respect  thereto after the related  Cut-off Date,  other than such amounts which
were due on the Mortgage Loans on or before the related  Cut-off Date;  (ii) the
Collection Account,  Excess Reserve Fund Account, the Distribution  Account, and
all amounts  deposited  therein  pursuant to the  applicable  provisions of this
Agreement;  (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure,  deed-in-lieu of foreclosure or otherwise; (iv) all proceeds of the
conversion,  voluntary  or  involuntary,  of any of the  foregoing  and (v) with
respect to the Class A-3 Certificates  only, the rights of the Trustee under the
Certificate Insurance Policy.

                                      -30-
<PAGE>

              TRUSTEE: U.S. Bank National Association and its successors and, if
a successor trustee is appointed hereunder, such successor.

              TRUSTEE FEE: As to each Mortgage Loan and any  Distribution  Date,
an amount equal to one month's  interest at the related  Trustee Fee Rate on the
Stated  Principal  Balance of such Mortgage Loan or, in the event of any payment
of  interest  which  accompanies  a  Principal  Prepayment  in Full  made by the
Mortgagor,  interest at the Trustee Fee Rate on the Stated Principal  Balance of
such Mortgage Loan for the period covered by such payment of interest.

              TRUSTEE FEE RATE: With respect to each Mortgage Loan, 0.00425% per
annum.

              TRUSTEE INVESTMENT ACCOUNT: As defined in section 3.07(e).

              UNPAID INTEREST AMOUNTS: As of any Distribution Date and any Class
of  Certificates,  the sum of (a)  the  excess  of (i)  the  sum of the  Accrued
Certificate  Interest  Distribution  Amount for such  Distribution  Date and any
portion of such  Accrued  Certificate  Interest  Distribution  Amount from prior
Distribution Dates remaining unpaid (from any source excluding,  with respect to
the Class A-3  Certificates,  the  Certificate  Insurance  Policy) over (ii) the
amount in respect of interest on such Class of Certificates actually distributed
on the preceding  Distribution  Date and (b) 30 days' interest on such excess at
the applicable Pass-Through Rate (to the extent permitted by applicable law).

              UNPAID CLASS A-3 INSURANCE PAYMENT AMOUNTS:  For FSA and as of any
Distribution  Date,  the sum of (a) the  excess  of (i) the sum of the Class A-3
Insurance  Payment  Amount for such  Distribution  Date and any  portion of such
Class A-3  Insurance  Payment  Amount from prior  Distribution  Dates  remaining
unpaid  (from any  source)  over (ii) the  amount  in  respect  of the Class A-3
Insurance  Payment  Amount  for  FSA  actually   distributed  on  the  preceding
Distribution  Date and (b) 30 days'  interest  on such  excess  at the Class A-3
Insurance Rate (to the extent permitted by applicable law).

              UNPAID  REALIZED  LOSS  AMOUNT:  With  respect  to  any  Class  of
Subordinated  Certificates and as to any Distribution Date, is the excess of (i)
Applied  Realized  Loss  Amounts with respect to such Class over (ii) the sum of
all  distributions  in reduction of such  Applied  Realized  Loss Amounts on all
previous  Distribution Dates. Any amounts distributed to a Class of Subordinated
Certificates  in respect of any Unpaid  Realized Loss Amount will not be applied
to reduce the Class Certificate Balance of such Class.

              U.S.  PERSON:  Shall mean (i) a citizen or  resident of the United
States; (ii) a corporation (or entity treated as a corporation for tax purposes)
created or organized in the United States or under the laws of the United States
or of any state thereof,  including, for this purpose, the District of Columbia;
(iii) a  partnership  (or entity  treated  as a  partnership  for tax  purposes)
organized in the United  States or under the laws of the United States or of any
state thereof,  including,  for this purpose,  the District of Columbia  (unless
provided otherwise by future Treasury regulations);  (iv) an estate whose income
is includible  in gross income for United States income tax purposes  regardless
of its source;  or (v) a trust,  if a court within the United  States is able to
exercise  primary  supervision over the  administration  of the trust and one or
more U.S.  Persons have  authority to control all  substantial  decisions of the
trust.

                                      -31-
<PAGE>

Notwithstanding  the  last  clause  of the  preceding  sentence,  to the  extent
provided in Treasury  regulations,  certain  trusts in  existence  on August 20,
1996,  and treated as U.S.  Persons prior to such date, may elect to continue to
be U.S. Persons.

              UPPER TIER  REGULAR  INTEREST:  As  described  in the  Preliminary
Statement.

              UPPER TIER REMIC: As described in the Preliminary Statement.

              VOTING  RIGHTS:  The  portion of the  voting  rights of all of the
Certificates  which  is  allocated  to  any  Certificate.  As  of  any  date  of
determination,  (a) 1% of all Voting  Rights  shall be  allocated to the Class X
Certificates,  if any (such Voting  Rights to be allocated  among the holders of
Certificates of each such Class in accordance with their  respective  Percentage
Interests),  (b) 1% of all  Voting  Rights  shall be  allocated  to the  Class P
Certificates,  if any, and (c) the  remaining  Voting  Rights shall be allocated
among  Holders of the  remaining  Classes of  Certificates  in proportion to the
Certificate Balances of their respective Certificates on such date.

              WAC CAP: With respect to the Mortgage Loans as of any Distribution
Date, the product of (i) the weighted average of the Adjusted Net Mortgage Rates
then in effect on the beginning of the related Due Period on the Mortgage  Loans
and (ii) a fraction,  the numerator of which is 30 and the  denominator of which
is the actual  number of days in the  Interest  Accrual  Period  related to such
Distribution Date.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

              Section 2.01      CONVEYANCE OF MORTGAGE LOANS.

              (a) The  Depositor,  concurrently  with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the benefit of the  Certificateholders,  without  recourse,  all the
right,  title  and  interest  of the  Depositor  in and to the  Trust  Fund.  In
addition,  on or prior to the Closing  Date,  the  Depositor  shall cause FSA to
deliver the Certificate Insurance Policy to the Trustee.

              (b) In  connection  with  the  transfer  and  assignment  of  each
Mortgage  Loan,  the  Depositor  has  delivered or caused to be delivered to the
Trustee for the benefit of the  Certificateholders  the  following  documents or
instruments with respect to each Mortgage Loan so assigned:

              (i)  the   original   Mortgage   Note   bearing  all   intervening
       endorsements  showing a complete chain of endorsement from the originator
       to the  last  endorsee,  endorsed  "Pay to the  order  of  _____________,
       without recourse" and signed (which may be by facsimile signature) in the
       name of the last  endorsee by an authorized  officer.  To the extent that
       there is no room on the face of the Mortgage Notes for endorsements,  the
       endorsement  may be contained  on an allonge,  if state law so allows and
       the  Trustee  is so advised  by the  Responsible  Party that state law so
       allows;

                                      -32-
<PAGE>

              (ii) the original of any guaranty  executed in connection with the
       Mortgage Note;

              (iii) the original  Mortgage with evidence of recording thereon or
       a certified  true copy of such Mortgage  submitted for  recording.  If in
       connection with any Mortgage Loan, the  Responsible  Party cannot deliver
       or cause to be delivered the original Mortgage with evidence of recording
       thereon on or prior to the Closing  Date because of a delay caused by the
       public  recording  office  where such  Mortgage  has been  delivered  for
       recordation or because such Mortgage has been lost or because such public
       recording office retains the original recorded Mortgage,  the Responsible
       Party shall deliver or cause to be delivered to the Trustee,  a photocopy
       of such Mortgage,  together with (i) in the case of a delay caused by the
       public  recording  office,  an Officer's  Certificate of the  Responsible
       Party or a certificate from an escrow company, a title company or closing
       attorney   stating  that  such  Mortgage  has  been   dispatched  to  the
       appropriate public recording office for recordation and that the original
       recorded  Mortgage or a copy of such  Mortgage  certified  by such public
       recording office to be a true and complete copy of the original  recorded
       Mortgage will be promptly  delivered to the Trustee upon receipt  thereof
       by the  Responsible  Party;  or (ii) in the  case of a  Mortgage  where a
       public recording office retains the original  recorded Mortgage or in the
       case where a Mortgage  is lost after  recordation  in a public  recording
       office, a copy of such Mortgage certified by such public recording office
       to be a true and complete copy of the original recorded Mortgage;

              (iv) the originals of all assumption, modification,  consolidation
       or extension agreements (if provided), with evidence of recording thereon
       or a certified true copy of such agreement submitted for recording;

              (v) the original  Assignment  of Mortgage for each  Mortgage  Loan
       endorsed in blank;

              (vi) the originals of all intervening  assignments of mortgage (if
       any)  evidencing  a  complete  chain of  assignment  from the  applicable
       originator to the last endorsee with evidence of recording thereon, or if
       any such intervening assignment has not been returned from the applicable
       recording  office or has been  lost or if such  public  recording  office
       retains the original  recorded  assignments of mortgage,  the Responsible
       Party shall deliver or cause to be delivered to the Trustee,  a photocopy
       of such intervening assignment,  together with (i) in the case of a delay
       caused by the public recording  office,  an Officer's  Certificate of the
       Responsible  Party  or a  certificate  from an  escrow  company,  a title
       company or a closing attorney stating that such intervening assignment of
       mortgage has been dispatched to the appropriate  public  recording office
       for recordation and that such original recorded intervening assignment of
       mortgage or a copy of such intervening  assignment of mortgage  certified
       by the appropriate public recording office to be a true and complete copy
       of the  original  recorded  intervening  assignment  of mortgage  will be
       promptly delivered to the Trustee upon receipt thereof by the Responsible
       Party;  or (ii) in the case of an intervening  assignment  where a public
       recording office retains the original recorded intervening  assignment or
       in the case where an intervening  assignment is lost after recordation in
       a  public  recording  office,  a  copy  of  such  intervening

                                      -33-
<PAGE>

       assignment certified by such public  recording office  to be  a true  and
       complete copy of the original recorded intervening assignment;

              (vii) the original  mortgagee title insurance policy or attorney's
       opinion of title and abstract of title; and

(viii)   the original of any security agreement, chattel mortgage or equivalent
         document executed in connection with the Mortgage (if provided).

              The Responsible  Party shall deliver to the Trustee the applicable
recorded document promptly upon receipt from the respective recording office but
in no event later than 120 days from the Closing Date.

              From time to time,  the  Responsible  Party  shall  forward to the
Trustee  additional  original  documents,  additional  documents  evidencing  an
assumption, modification, consolidation or extension of a Mortgage Loan approved
by the Responsible  Party,  in accordance with the terms of this Agreement.  All
such  mortgage  documents  held by the  Trustee as to each  Mortgage  Loan shall
constitute the "CUSTODIAL FILE".

              On or prior to the  Closing  Date,  the  Responsible  Party  shall
deliver to the Trustee  Assignments  of Mortgages,  in blank,  for each Mortgage
Loan. No later than thirty (30) Business Days following the later of the Closing
Date and the date of receipt by the Servicer of the recording  information for a
Mortgage,  the  Servicer  shall  promptly  submit or cause to be  submitted  for
recording, at no expense to the Trust Fund, the Trustee or the Depositor, in the
appropriate public office for real property records, each Assignment referred to
in   Section   2.01(b)(v).   Notwithstanding   the   foregoing,   however,   for
administrative  convenience and  facilitation of servicing and to reduce closing
costs,  the Assignments  shall not be required to be completed and submitted for
recording  with  respect to any  Mortgage  Loan if the  Trustee  and each Rating
Agency has received an opinion of counsel, satisfactory in form and substance to
the Trustee and each Rating Agency,  to the effect that the  recordation of such
Assignments  in any  specific  jurisdiction  is not  necessary  to  protect  the
Trustee's  interest in the related  Mortgage Note. If the Assignment of Mortgage
is to be recorded,  the Mortgage shall be assigned by the Responsible  Party, at
the expense of the Responsible  Party, to "U.S.  Bank National  Association,  as
trustee under the Pooling and Servicing  Agreement dated as of November 1, 2001,
Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3." In the event that any
such assignment is lost or returned unrecorded because of a defect therein,  the
Responsible  Party shall promptly  prepare a substitute  assignment to cure such
defect and thereafter cause each such assignment to be duly recorded.

              On or prior to the Closing Date,  the  Depositor  shall deliver to
the Trustee a copy of the Data Tape Information in electronic,  machine readable
medium in a form mutually acceptable to the Trustee.

              In the event that such original or copy of any document  submitted
for recordation to the appropriate  public  recording office is not so delivered
to the Trustee  within 90 days following the Closing Date, and in the event that
the Responsible  Party does not cure such failure within 30 days of discovery or
receipt of written notification of such failure from the Depositor,

                                      -34-
<PAGE>

the  related  Mortgage  Loan  shall,  upon  the  request  of the  Depositor,  be
repurchased by the Responsible Party at the price and in the manner specified in
Section 2.03. The foregoing  repurchase  obligation shall not apply in the event
that the Responsible  Party cannot deliver such original or copy of any document
submitted for recordation to the appropriate  public recording office within the
specified period due to a delay caused by the recording office in the applicable
jurisdiction;  PROVIDED  that the  Responsible  Party  shall  instead  deliver a
recording  receipt of such recording office or, if such recording receipt is not
available,  an officer's  certificate of a servicing  officer of the Responsible
Party, confirming that such document has been accepted for recording.

              Notwithstanding anything to the contrary contained in this Section
2.01, in those instances where the public  recording office retains or loses the
original  Mortgage or assignment after it has been recorded,  the obligations of
the  Responsible  Party shall be deemed to have been  satisfied upon delivery by
the Responsible Party to the Trustee prior to the Closing Date of a copy of such
Mortgage or assignment,  as the case may be, certified (such certification to be
an original  thereof) by the public  recording  office to be a true and complete
copy of the recorded original thereof.

              Section 2.02 ACCEPTANCE BY THE TRUSTEE OF THE MORTGAGE LOANS.

              The Trustee  acknowledges  receipt of the documents  identified in
the Initial  Certification in the form annexed hereto as Exhibit E, and declares
that it holds and will hold such documents and the other documents  delivered to
it pursuant to Section 2.01, and that it holds or will hold such other assets as
are included in the Trust Fund,  in trust for the  exclusive  use and benefit of
all present and future Certificateholders. The Trustee acknowledges that it will
maintain  possession of the related  Mortgage  Notes in the State of California,
unless otherwise permitted by the Rating Agencies.

              Prior to and as a condition  to the  Closing,  the  Trustee  shall
deliver via  facsimile  (with  original to follow the next  Business Day) to the
Depositor  an  Initial  Certification  prior  to  the  Closing  Date,  or as the
Depositor agrees to, on the Closing Date,  certifying receipt of a Mortgage Note
and  Assignment  of Mortgage for each  Mortgage  Loan.  The Trustee shall not be
responsible  to verify the validity,  sufficiency or genuineness of any document
in any Custodial File.

              Within 90 days after the Closing Date, the Trustee shall ascertain
that all  documents  required to be delivered to it are in its  possession,  and
shall deliver to the Depositor  and FSA a Document  Certification  and Exception
Report to the effect that,  as to each Mortgage Loan listed in the Mortgage Loan
Schedule  (other  than  any  Mortgage  Loan  paid in full or any  Mortgage  Loan
specifically identified in such certification as an exception and not covered by
such certification): (i) all documents required to be delivered to it are in its
possession;  (ii) such  documents have been reviewed by it and appear regular on
their face and relate to such Mortgage Loan;  (iii) based on its examination and
only as to the foregoing documents, the information set forth in items (1), (2),
(7),  and (9) of the Mortgage  Loan  Schedule and items (1), (9) and (17) of the
Data Tape  Information  respecting such Mortgage Loan is correct;  and (iv) each
Mortgage Note has been  endorsed as provided in Section 2.01 of this  Agreement.
The Trustee  shall not be

                                      -35-
<PAGE>

responsible  to verify the validity,  sufficiency or genuineness of any document
in any Custodial File.

              The Trustee shall retain  possession and custody of each Custodial
File in  accordance  with and  subject  to the  terms and  conditions  set forth
herein.  The Servicer shall promptly deliver to the Trustee,  upon the execution
or receipt  thereof,  the  originals  of such  other  documents  or  instruments
constituting the Custodial File as come into the possession of the Servicer from
time to time.

              Section  2.03  REPRESENTATIONS,  WARRANTIES  AND  COVENANTS OF THE
RESPONSIBLE PARTY AND THE SERVICER.

              (a) The Servicer hereby makes the  representations  and warranties
set forth in  Schedule II hereto to the  Depositor  and the  Trustee,  as of the
Closing Date.

              (b) NC Capital Corporation,  in its capacity as Responsible Party,
hereby makes the  representations  and  warranties set forth in Schedule III and
Schedule IV hereto, to the Depositor and the Trustee, as of the Closing Date.

              (c)  It  is  understood   and  agreed  by  the  Servicer  and  the
Responsible Party that the  representations  and warranties set forth in Section
2.03 shall  survive the transfer of the Mortgage  Loans by the  Depositor to the
Trustee,  and  shall  inure to the  benefit  of the  Depositor  and the  Trustee
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment  of Mortgage or the  examination  or failure to examine any  Mortgage
File. Upon discovery by any of the Responsible Party, the Depositor, the Trustee
or  the  Servicer  of a  breach  of any of  the  foregoing  representations  and
warranties,  the party  discovering such breach shall give prompt written notice
to the other.

              (d) Within 30 days of the earlier of either discovery by or notice
to the  Responsible  Party of that any  Mortgage  Loan does not  conform  to the
requirements as determined in the Trustee's review of the related Custodial File
or  within  90 days of the  earlier  of  either  discovery  by or  notice to the
Responsible  Party of any breach of a representation  or warranty,  set forth in
Section 2.03(b) that materially and adversely  affects the value of the Mortgage
Loans or the  interest of the  Trustee or the  Certificateholders  therein,  the
Responsible  Party shall use its best efforts to cause to be remedied a material
defect in a document  constituting  part of a Mortgage  File or promptly to cure
such breach in all  material  respects  and, if such defect or breach  cannot be
remedied,  the  Responsible  Party  shall,  (i) if such 30 or 90 day period,  as
applicable,  expires prior to the second anniversary of the Closing Date, remove
such  Mortgage  Loan (a  "DELETED  MORTGAGE  LOAN")  from  the  Trust  Fund  and
substitute in its place a Substitute Mortgage Loan, in the manner and subject to
the  conditions  set  forth in this  Section  2.03;  or (ii) at the  Depositor's
option,  repurchase  such  Mortgage  Loan  at the  Repurchase  Price;  PROVIDED,
HOWEVER,  that any such substitution pursuant to (i) above shall not be effected
prior to the  delivery  to the  Trustee of the  Opinion of Counsel  required  by
Section  2.05,  if any, and a Request for Release  substantially  in the form of
Exhibit K, and the Mortgage File for any such  Substitute  Mortgage Loan. In the
event that a breach shall  involve any  representation  or warranty set forth in
Section  2.03(b) and Schedule IV, and such breach cannot be cured within 60 days
of the earlier of either discovery by or notice to the Responsible Party of such
breach,  all

                                      -36-
<PAGE>

of the Mortgage Loans shall,  at the Depositor's  option,  be repurchased by the
Responsible Party at the Repurchase Price.

              With  respect  to any  Substitute  Mortgage  Loan  or  Loans,  the
Responsible  Party  shall  deliver  to  the  Trustee  for  the  benefit  of  the
Certificateholders  the Mortgage Note, the Mortgage,  the related  assignment of
the Mortgage, and such other documents and agreements as are required by Section
2.01,  with the Mortgage Note endorsed and the Mortgage  assigned as required by
Section  2.01.  No  substitution  is permitted to be made in any calendar  month
after the Determination Date for such month. Scheduled Payments due with respect
to Substitute Mortgage Loans in the Due Period of substitution shall not be part
of the Trust  Fund and will be  retained  by the  Seller on the next  succeeding
Distribution  Date.  For  the  Due  Period  of  substitution,  distributions  to
Certificateholders  will include the monthly payment due on any Deleted Mortgage
Loan for such Due Period and  thereafter  the Seller shall be entitled to retain
all amounts received in respect of such Deleted Mortgage Loan.

              The  Servicer  shall  amend the  Mortgage  Loan  Schedule  for the
benefit  of the  Certificateholders  to  reflect  the  removal  of such  Deleted
Mortgage Loan and the substitution of the Substitute  Mortgage Loan or Loans and
the Servicer  shall  deliver the amended  Mortgage Loan Schedule to the Trustee.
Upon such substitution,  the Substitute  Mortgage Loan or Loans shall be subject
to the terms of this Agreement in all respects,  and the Responsible Party shall
be deemed to have made with respect to such  Substitute  Mortgage Loan or Loans,
as of the date of substitution, the representations and warranties made pursuant
to  Section   2.03(b)  with  respect  to  such  Mortgage  Loan.  Upon  any  such
substitution and the deposit to the Collection Account of the amount required to
be deposited  therein in connection  with such  substitution as described in the
following  paragraph,  the Trustee  shall release the Mortgage File held for the
benefit of the Certificateholders  relating to such Deleted Mortgage Loan to the
Responsible  Party and shall  execute  and  deliver at the  Responsible  Party's
direction such instruments of transfer or assignment prepared by the Responsible
Party, in each case without recourse, as shall be necessary to vest title in the
Responsible  Party,  or its  designee,  the  Trustee's  interest  in any Deleted
Mortgage Loan substituted for pursuant to this Section 2.03.

              For any month in which the  Responsible  Party  substitutes one or
more  Substitute  Mortgage  Loans for one or more Deleted  Mortgage  Loans,  the
Servicer will  determine  the amount (if any) by which the  aggregate  principal
balance of all such Substitute  Mortgage Loans as of the date of substitution is
less than the aggregate  Stated  Principal  Balance of all such Deleted Mortgage
Loans  (after  application  of the  scheduled  principal  portion of the monthly
payments  due in the Due Period of  substitution).  The amount of such  shortage
(the "SUBSTITUTION ADJUSTMENT AMOUNT") plus, if the Responsible Party is not the
Servicer,  an amount  equal to the  aggregate of any  unreimbursed  Advances and
Servicing  Advances  with  respect  to such  Deleted  Mortgage  Loans  shall  be
deposited into the Collection  Account by the Responsible Party on or before the
Distribution  Account  Deposit  Date  for the  Distribution  Date  in the  month
succeeding  the calendar  month during  which the related  Mortgage  Loan became
required to be purchased or replaced hereunder.

              In addition to such repurchase  obligation,  the Responsible Party
shall indemnify the Depositor,  any of its Affiliates,  and the Trustee and hold
such  parties  harmless   against  any  losses,   damages,   penalties,   fines,
forfeitures,  reasonable and necessary legal fees and related

                                      -37-
<PAGE>

costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion  based on or grounded upon, or resulting  from, a breach by
the Responsible Party of any of its representations and warranties  contained in
the Purchase Agreement or this Agreement.

              The  Servicer  shall  amend the  Mortgage  Loan  Schedule  for the
benefit  of the  Certificateholders  to  reflect  the  removal  of such  Deleted
Mortgage Loan and the Servicer shall deliver the amended  Mortgage Loan Schedule
to the Trustee.

              In the event that the Responsible  Party shall have  repurchased a
Mortgage  Loan,  the  Repurchase  Price  therefor  shall  be  deposited  in  the
Collection  Account  pursuant  to  Section  3.10 on or before  the  Distribution
Account Deposit Date for the Distribution  Date in the month following the month
during which the Responsible  Party became obligated  hereunder to repurchase or
replace such Mortgage Loan and upon such deposit of the  Repurchase  Price,  the
delivery  of the Opinion of Counsel  required  by Section  2.05 and receipt of a
Request for Release in the form of Exhibit J hereto,  the Trustee  shall release
the related  Custodial  File held for the benefit of the  Certificateholders  to
such Person as  directed by the  Servicer,  and the  Trustee  shall  execute and
deliver at such Person's  direction  such  instruments of transfer or assignment
prepared by such Person, in each case without recourse, as shall be necessary to
transfer title from the Trustee. It is understood and agreed that the obligation
under this  Agreement of any Person to cure,  repurchase or replace any Mortgage
Loan as to which a breach has occurred and is continuing  shall  constitute  the
sole  remedy  against  such  Persons   respecting   such  breach   available  to
Certificateholders, the Depositor or the Trustee on their behalf.

              The  representations  and warranties made pursuant to this Section
2.03 shall survive delivery of the respective Custodial Files to the Trustee for
the  benefit  of the  Certificateholders.

              Section 2.04 THE DEPOSITOR AND THE MORTGAGE LOANS.

              The Depositor  hereby  represents and warrants to the Trustee with
respect to each Mortgage Loan as of the date hereof or such other date set forth
herein that as of the Closing  Date,  and following the transfer of the Mortgage
Loans to it by the Purchaser, the Depositor had good title to the Mortgage Loans
and the Mortgage Notes were subject to no offsets, defenses or counterclaims.

              The Depositor hereby assigns, transfers and conveys to the Trustee
all of its rights with respect to the Mortgage Loans.

              Section  2.05  DELIVERY OF OPINION OF COUNSEL IN  CONNECTION  WITH
SUBSTITUTION AND REPURCHASE, NON-QUALIFIED MORTGAGES.

              (a) Notwithstanding  any contrary provision of this Agreement,  no
substitution  pursuant to Section 2.03 shall be made more than 30 days after the
Closing Date unless the Responsible  Party delivers to the Trustee an Opinion of
Counsel,  which  Opinion  of Counsel  shall not be at the  expense of either the
Trustee or the Trust Fund,  addressed  to the  Trustee,  to the effect that such
substitution  will not (i) result in the  imposition  of the tax on  "prohibited
transactions"  on the Trust Fund or  contributions  after the Startup  Date,  as
defined in

                                      -38-
<PAGE>

Sections  860F(a)(2)  and  860G(d) of the Code,  respectively  or (ii) cause the
Trust Fund to fail to qualify as a REMIC at any time that any  Certificates  are
outstanding.

              (b) Upon discovery by the Depositor,  the Responsible  Party,  the
Servicer or the Trustee that any Mortgage Loan does not  constitute a "qualified
mortgage"  within  the  meaning  of Section  860G(a)(3)  of the Code,  the party
discovering  such fact shall promptly (and in any event within five (5) Business
Days of  discovery)  give  written  notice  thereof  to the  other  parties.  In
connection  therewith,  the  Trustee  shall  require  the  Responsible  Party to
repurchase  the affected  Mortgage Loan within 90 days of such  discovery in the
same  manner  as it would a  Mortgage  Loan for a breach  of  representation  or
warranty  made  pursuant  to Section  2.03.  The Trustee  shall  reconvey to the
Responsible  Party the Mortgage Loan to be released  pursuant hereto in the same
manner,  and on the same  terms  and  conditions,  as it would a  Mortgage  Loan
repurchased  for breach of a  representation  or warranty  contained  in Section
2.03.

              Section 2.06 EXECUTION AND DELIVERY OF CERTIFICATES.

              The Trustee  acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed and
delivered to or upon the order of the Depositor,  the Certificates in authorized
denominations  evidencing  directly or  indirectly  the entire  ownership of the
Trust Fund.  The Trustee  agrees to hold the Trust Fund and  exercise the rights
referred  to above for the  benefit of all  present  and  future  Holders of the
Certificates.

              Section 2.07 REMIC MATTERS.

              The Preliminary  Statement sets forth the designations for federal
income tax purposes of all  interests  created  hereby.  The  "STARTUP  DAY" for
purposes of the REMIC Provisions shall be the Closing Date. The "latest possible
maturity date" is April 25, 2031, which is the  Distribution  Date following the
latest Mortgage Loan maturity date

              Section 2.08 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.

                  The Depositor hereby represents, warrants and covenants to the
Trustee and the 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 the 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
Servicer and the Trustee,  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

                                      -39-
<PAGE>

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 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;

              (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; and

              (h)  Immediately  prior  to the  transfer  and  assignment  by the
Depositor  to the  Trustee,  the  Depositor  had good title to, and was the sole
owner of each Mortgage Loan,  free of any interest of any other Person,  and the
Depositor has transferred all right, title and interest in each Mortgage Loan to
the Trustee.  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 Trustee, for the benefit of the Certificateholders, all right, title, and
interest of the Depositor  thereto as note holder and mortgagee or (ii) to grant
to the Trustee, for the benefit of the Certificateholders, the security interest
referred to in Section 10.04 hereof.

              It is understood and agreed that the  representations,  warranties
and  covenants  set forth in this  Section  2.08 shall  survive  delivery of the
respective Custodial Files to the Trustee or to a custodian, as the case may be,
and shall inure to the benefit of the Trustee.

                                      -40-
<PAGE>

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

              Section 3.01 SERVICER TO SERVICE MORTGAGE LOANS.

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

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

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

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

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

              To the extent  consistent  with the foregoing,  the Servicer shall
seek to maximize the timely and complete  recovery of principal  and interest on
the Mortgage Notes. Subject only to the above-described  servicing standards and
the terms of this Agreement and of the respective  Mortgage Loans,  the Servicer
shall have full power and  authority,  acting alone or through  Subservicers  as
provided  in  Section  3.02,  to do or cause to be done  any and all  things  in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer in its
own name or in the name of a Subservicer  is hereby  authorized and empowered by
the Trustee when the Servicer  believes it  appropriate  in its best judgment in
accordance with the servicing  standards set forth above, to execute and deliver
any and all instruments of satisfaction or  cancellation,  or of partial or full
release or discharge, and all other comparable instruments,  with respect to the
Mortgage  Loans  and  the  Mortgaged  Properties  and to  institute  foreclosure
proceedings  or  obtain a  deed-in-lieu  of  foreclosure  so as to  convert  the
ownership  of such  properties,  and to hold or cause  to be held  title to such
properties,  on behalf of the Trustee. The Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors  any reports  required to be provided to them thereby.
The Servicer  shall also comply in the  performance  of this  Agreement with all
reasonable  rules and  requirements  of each insurer  under any standard  hazard
insurance  policy.  Subject to Section 3.15, the Trustee shall  execute,  at the
written request of the Servicer, and furnish to the Servicer and any Subservicer
such  documents as are  necessary or  appropriate  to enable the Servicer or any
Subservicer to carry out their servicing and  administrative  duties  hereunder,
and the  Trustee  hereby  grants  to the  Servicer,  and  this  Agreement  shall
constitute,  a power of attorney  to carry out such duties  including a

                                      -41-
<PAGE>

power of attorney to take title to Mortgaged  Properties  after  foreclosure  on
behalf of the Trustee. The Trustee shall execute a separate power of attorney in
favor of the Servicer for the purposes  described herein to the extent necessary
or desirable to enable the Servicer to perform its duties hereunder. The Trustee
shall not be liable for the actions of the  Servicer or any  Subservicers  under
such powers of attorney.

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

              (c)  Notwithstanding  anything in this  Agreement to the contrary,
the Servicer may not make any future  advances  with respect to a Mortgage  Loan
(except as provided in Section  4.01) and the Servicer  shall not (i) permit any
modification  with respect to any  Mortgage  Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions  resulting
from actual  payments of  principal)  or change the final  maturity date on such
Mortgage Loan or (ii) permit any  modification,  waiver or amendment of any term
of any  Mortgage  Loan that would both (A) effect an exchange or  reissuance  of
such  Mortgage  Loan  under  Section  1001 of the Code (or final,  temporary  or
proposed Treasury regulations promulgated thereunder) and (B) cause any REMIC to
fail to  qualify  as a REMIC  under  the  Code or the  imposition  of any tax on
"prohibited  transactions" or  "contributions  after the startup date" under the
REMIC  Provisions,  or (iii)  except as provided in Section  3.07(a),  waive any
Prepayment  Charges.

              (d) The  Servicer may  delegate  its  responsibilities  under this
Agreement; PROVIDED, HOWEVER, that no such delegation shall release the Servicer
from the  responsibilities or liabilities arising under this Agreement.

              Section  3.02  SUBSERVICING  AGREEMENTS  BETWEEN THE  SERVICER AND
SUBSERVICERS.

              (a) The  Servicer  may enter  into  Subservicing  Agreements  with
Subservicers, for the servicing and administration of the Mortgage Loans.

              Each Subservicer  shall be (i) authorized to transact  business in
the state or states in which the related  Mortgaged  Properties it is to service
are  situated,  if and to the extent  required by  applicable  law to enable the
Subservicer  to perform its  obligations  hereunder  and under the  Subservicing
Agreement,  (ii) an  institution  approved as a mortgage loan  originator by the
Federal  Housing  Administration  or an  institution  that has deposit  accounts
insured  by the FDIC and (iii) a Freddie  Mac or Fannie  Mae  approved  mortgage
servicer.   Each   Subservicing   Agreement  must  impose  on  the   Subservicer
requirements  conforming to the provisions set forth in Section 3.08 and provide
for servicing of the Mortgage Loans consistent with the terms of this Agreement.
The Servicer will examine each Subservicing  Agreement and will be familiar with

                                      -42-
<PAGE>

the  terms  thereof.  The  terms  of  any  Subservicing  Agreement  will  not be
inconsistent with any of the provisions of this Agreement.  The Servicer and the
Subservicers may enter into and make amendments to the  Subservicing  Agreements
or enter into different forms of  Subservicing  Agreements,  PROVIDED,  HOWEVER,
that any such  amendments or different  forms shall be  consistent  with and not
violate  the  provisions  of this  Agreement,  and  that no  such  amendment  or
different form shall be made or entered into which could be reasonably  expected
to be materially adverse to the interests of the Trustee, without the consent of
the  Trustee.  Any  variation  without  the  consent  of the  Trustee  from  the
provisions  set  forth  in  Section  3.08  relating  to  insurance  or  priority
requirements   of  Subservicing   Accounts,   or  credits  and  charges  to  the
Subservicing   Accounts  or  the  timing  and  amount  of   remittances  by  the
Subservicers to the Servicer,  are conclusively  deemed to be inconsistent  with
this  Agreement  and  therefore  prohibited.  The Servicer  shall deliver to the
Trustee  and  the  Depositor  copies  of all  Subservicing  Agreements,  and any
amendments or modifications thereof,  promptly upon the Servicer's execution and
delivery of such instruments.

              (b) As part of its servicing  activities  hereunder,  the Servicer
(except as otherwise  provided in the last sentence of this paragraph),  for the
benefit of the Trustee,  shall enforce the obligations of each Subservicer under
the  related  Subservicing  Agreement,   including,   without  limitation,   any
obligation to make  advances in respect of delinquent  payments as required by a
Subservicing Agreement.  Such enforcement,  including,  without limitation,  the
legal  prosecution of claims,  termination of Subservicing  Agreements,  and the
pursuit of other appropriate remedies,  shall be in such form and carried out to
such an extent  and at such time as the  Servicer,  in its good  faith  business
judgment,  would require were it the owner of the related  Mortgage  Loans.  The
Servicer shall pay the costs of such  enforcement at its own expense,  and shall
be reimbursed  therefor  only (i) from a general  recovery  resulting  from such
enforcement,  to the extent,  if any, that such recovery exceeds all amounts due
in respect of the  related  Mortgage  Loans or (ii) from a specific  recovery of
costs,  expenses  or  attorneys'  fees  against  the  party  against  whom  such
enforcement is directed.

              Section 3.03 SUCCESSOR SUBSERVICERS.

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

              Any  Subservicing  Agreement shall include the provision that such
agreement may be immediately  terminated by the Depositor or the Trustee without
fee,  in  accordance  with the terms of this  Agreement,  in the event  that the
Servicer shall, for any reason, no longer be the Servicer (including termination
due to an Event of Default).

                                      -43-
<PAGE>

              Section 3.04 LIABILITY OF THE SERVICER.

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

              Section 3.05 NO CONTRACTUAL  RELATIONSHIP BETWEEN SUBSERVICERS AND
THE TRUSTEE.

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

              Section 3.06 ASSUMPTION OR TERMINATION OF SUBSERVICING  AGREEMENTS
BY TRUSTEE.

              In the  event the  Servicer  at any time  shall for any  reason no
longer be the  Servicer  (including  by reason of the  occurrence  of a Event of
Default),  the Trustee or its designee shall thereupon  assume all of the rights
and  obligations  of the Servicer  under each  Subservicing  Agreement  that the
Servicer  may have entered  into,  with copies  thereof  provided to the Trustee
prior to the Trustee  assuming such rights and  obligations,  unless the Trustee
elects to terminate any  Subservicing  Agreement in accordance with its terms as
provided in Section 3.03.

              Upon such assumption,  the Trustee,  its designee or the successor
servicer  shall be deemed,  subject to Section  3.03, to have assumed all of the
Servicer's interest therein and to have replaced the Servicer as a party to each
Subservicing  Agreement to the same extent as if each Subservicing Agreement had
been  assigned to the assuming  party,  except that (i) the  Servicer  shall not
thereby be relieved  of any  liability  or  obligations  under any  Subservicing
Agreement  that arose  before it ceased to be the  Servicer and (ii) none of the
Depositor,  the Trustee,  their  designees or any  successor  Servicer  shall be
deemed to have assumed any  liability or  obligation  of the Servicer that arose
before it ceased to be the Servicer.

              The  Servicer at its expense  shall,  upon request of the Trustee,
deliver  to the  assuming  party all  documents  and  records  relating  to each
Subservicing  Agreement  and the  Mortgage  Loans  then  being  serviced  and an
accounting of amounts collected and held by or on

                                      -44-
<PAGE>

behalf of it, and  otherwise  use its best  efforts to effect  the  orderly  and
efficient transfer of the Subservicing Agreements to the assuming party.

              Section 3.07 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.

              (a) The  Servicer  shall make  reasonable  efforts to collect  all
payments  called for under the terms and provisions of the Mortgage  Loans,  and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and  provisions  of any  applicable  insurance  policies,  follow such
collection  procedures  as it  would  follow  with  respect  to  mortgage  loans
comparable to the Mortgage Loans and held for its own account.  Consistent  with
the  foregoing,  the  Servicer  may (i) waive  any late  payment  charge  or, if
applicable, any penalty interest, or (ii) extend the due dates for the Scheduled
Payments  due on a  Mortgage  Note for a period  of not  greater  than 180 days;
provided that any  extension  pursuant to clause (ii) above shall not affect the
amortization  schedule of any  Mortgage  Loan for  purposes  of any  computation
hereunder,  except  as  provided  below.  In the  event of any such  arrangement
pursuant to clause (ii) above,  the Servicer shall make timely  advances on such
Mortgage Loan during such  extension  pursuant to Section 4.01 and in accordance
with the  amortization  schedule  of such  Mortgage  Loan  without  modification
thereof by reason of such  arrangements,  subject to Section 4.01(d) pursuant to
which the  Servicer  shall not be  required to make any such  advances  that are
Nonrecoverable  P&I Advances.  Notwithstanding  the foregoing,  the Servicer may
waive,  in whole or in part,  a  Prepayment  Charge  only  under  the  following
circumstances:  (i) such waiver relates to a default or a reasonably foreseeable
default and would, in the reasonable judgment of the Servicer, maximize recovery
of total proceeds  taking into account the value of such  Prepayment  Charge and
the related Mortgage Loan or (ii) such Prepayment  Charge is not permitted to be
collected  by  applicable  law. If a  Prepayment  Charge is waived other than as
permitted by the prior sentence, then the Servicer is required to pay the amount
of such waived Prepayment  Charge, for the benefit of the Holders of the Class P
Certificates,  by depositing  such amount into the Collection  Account  together
with and at the time that the amount  prepaid on the  related  Mortgage  Loan is
required to be deposited into the Collection Account.

              (b) (i) The  Trustee  shall  establish  and  maintain  the  Excess
Reserve Fund  Account,  on behalf of the Class X  Certificateholders,  to secure
their limited recourse obligation to pay to the Floating Rate Certificateholders
Basis Risk CarryForward Amounts.

              (ii) On each  Distribution  Date,  the Trustee  shall  deposit the
       amount of any Basis Risk  Payment  for such date into the Excess  Reserve
       Fund Account.

              (c) (i) On each  Distribution  Date on which there  exists a Basis
Risk  CarryForward  Amount on any Class of  Certificates,  the Trustee shall (1)
withdraw from the  Distribution  Account and deposit in the Excess  Reserve Fund
Account,  as set forth in  Section  4.02(a)(iii)(g),  the  lesser of the Class X
Distributable  Amount (without regard to the reduction in the definition thereof
with  respect to the Basis Risk  CarryForward  Amount) (to the extent  remaining
after the distributions specified in Sections 4.02(a)(iii)(a)-(f)) and the Basis
Risk  CarryForward  Amount and (2) withdraw from the Excess Reserve Fund Account
amounts necessary to pay to such Class or Classes of Certificates the Basis Risk
CarryForward  Amount. Such payments shall be allocated to those Classes on a pro
rata basis based upon the amount of

                                      -45-
<PAGE>

Basis Risk CarryForward  Amount owed to each such Class and shall be paid in the
priority set forth in Section 4.02(a)(iii)(h) hereof.

              (ii) The Trustee shall account for the Excess Reserve Fund Account
       as an outside  reserve  fund within the  meaning of  Treasury  regulation
       1.860G-2(h)  and not an  asset  of any  REMIC  created  pursuant  to this
       Agreement. The beneficial owner of the Excess Reserve Fund Account is the
       Class  X  Certificateholder.   For  all  federal  tax  purposes,  amounts
       transferred  by the Upper Tier REMIC to the Excess  Reserve  Fund Account
       shall  be  treated  as  distributions  by  the  Trustee  to the  Class  X
       Certificateholder.

              (iii) Any Basis Risk  CarryForward  Amounts paid by the Trustee to
       the  Floating  Rate  Certificateholders  shall  be  accounted  for by the
       Trustee as amounts  paid first to the Holders of the Class X  Certificate
       and  then  to  the   respective   Class  or  Classes  of  Floating   Rate
       Certificates.  In addition,  the Trustee  shall  account for the Floating
       Rate  Certificateholders'  rights  to  receive  payments  of  Basis  Risk
       CarryForward  Amounts as rights in a limited  recourse  interest rate cap
       contract  written  by the  Class X  Certificateholders  in  favor  of the
       Floating Rate Certificateholders.

              (iv)  Notwithstanding  any provision  contained in this Agreement,
       the Trustee  shall not be required to make any  payments  from the Excess
       Reserve  Fund  Account  except as  expressly  set  forth in this  Section
       3.07(c).

              (d) The Trustee  shall  establish  and maintain  the  Distribution
Account on behalf of the  Certificateholders.  The Trustee shall,  promptly upon
receipt, deposit in the Distribution Account and retain therein the following:

              (i) the aggregate  amount  remitted by the Servicer to the Trustee
       pursuant to Section 3.11;

              (ii) any amount deposited by the Servicer pursuant to Section 3.10
       in connection with any losses on Permitted Investments; and

              (iii) any other amounts deposited  hereunder which are required to
       be deposited in the Distribution Account.

              In the event that the Servicer shall remit any amount not required
to be  remitted,  it may at any time  direct the  Trustee in writing to withdraw
such amount from the Distribution  Account, any provision herein to the contrary
notwithstanding.  Such direction may be accomplished by delivering notice to the
Trustee  which  describes  the amounts  deposited  in error in the  Distribution
Account.  All funds deposited in the  Distribution  Account shall be held by the
Trustee in trust for the  Certificateholders  until disbursed in accordance with
this  Agreement or withdrawn in accordance  with Section 4.02. In no event shall
the Trustee incur liability for withdrawals from the Distribution Account at the
direction of the Servicer.

              (e) The Trustee may invest the funds in the  Distribution  Account
(for purposes of this Section 3.07 a "TRUSTEE  INVESTMENT  Account"),  in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand no later than the

                                      -46-
<PAGE>

date on which such funds are required to be withdrawn from such account pursuant
to this  Agreement.  All such Permitted  Investments  shall be held to maturity,
unless  payable  on  demand.  Any  investment  of funds in a Trustee  Investment
Account shall be made in the name of the Trustee.  The Trustee shall be entitled
to sole  possession  over each such  investment,  and any  certificate  or other
instrument  evidencing any such  investment  shall be delivered  directly to the
Trustee or its agent,  together  with any  document  of  transfer  necessary  to
transfer  title to such  investment  to the  Trustee.  In the event  amounts  on
deposit in a Trustee  Investment Account are at any time invested in a Permitted
Investment payable on demand, the Trustee may:

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

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

              (i) All  income and gain  realized  from the  investment  of funds
       deposited  in  the  Distribution  Account  held  by or on  behalf  of the
       Trustee,  shall be for the benefit of the Trustee and shall be subject to
       its withdrawal.  In regard to the Distribution Account, the Trustee shall
       deposit in the  Distribution  Account the amount of any loss of principal
       incurred in respect of any such Permitted  Investment  made with funds in
       such account  immediately  upon  realization of such loss.

              (ii) Except as otherwise expressly provided in this Agreement,  if
       any  default  occurs in the making of a payment  due under any  Permitted
       Investment,  or if a default  occurs in any  other  performance  required
       under any Permitted Investment, the Trustee shall take such action as may
       be  appropriate  to enforce such payment or  performance,  including  the
       institution and prosecution of appropriate proceedings. The Trustee shall
       not be liable  for the  amount of any loss  incurred  in  respect  of any
       investment  or lack  of  investment  of  funds  held in the  Distribution
       Account if made in accordance  with this Section  3.07.

              (f) The  Servicer  shall give notice to the  Trustee,  each Rating
Agency  and  the  Depositor  of  any  proposed  change  of the  location  of the
Collection Account not later than 30 days and not more than 45 days prior to any
change thereof.

              Section 3.08 SUBSERVICING ACCOUNTS.

              In those cases where a  Subservicer  is servicing a Mortgage  Loan
pursuant  to a  Subservicing  Agreement,  the  Subservicer  will be  required to
establish and maintain one or more  accounts  (collectively,  the  "SUBSERVICING
ACCOUNT").  The  Subservicing  Account  shall be an  Eligible  Account and shall
otherwise be acceptable to the Servicer.  The  Subservicer  shall deposit in the
clearing  account  (which  account  must be an  Eligible  Account)  in  which it

                                      -47-
<PAGE>

customarily  deposits  payments and  collections on mortgage loans in connection
with its mortgage loan  servicing  activities on a daily basis,  and in no event
more than one Business Day after the Subservicer's receipt thereof, all proceeds
of Mortgage Loans received by the Subservicer less its servicing compensation to
the extent permitted by the Subservicing Agreement, and shall thereafter deposit
such  amounts in the  Subservicing  Account,  in no event more than two Business
Days after the deposit of such funds into the clearing account.  The Subservicer
shall thereafter  deposit such proceeds in the Collection  Account or remit such
proceeds to the  Servicer for deposit in the  Collection  Account not later than
two Business Days after the deposit of such amounts in the Subservicing Account.
For purposes of this  Agreement,  the Servicer  shall be deemed to have received
payments on the Mortgage  Loans when the  Subservicer  receives  such  payments.

              Section 3.09  COLLECTION OF TAXES,  ASSESSMENTS AND SIMILAR ITEMS;
ESCROW ACCOUNTS.

              (a) The  Servicer  shall  ensure that each of the  Mortgage  Loans
shall be covered by a paid-in-full, life-of-the-loan tax service contract with a
provider mutually acceptable to the Depositor and Servicer (each, a "TAX SERVICE
CONTRACT").  Each Tax Service Contract shall be assigned to the Trustee,  or its
designee, at the Servicer's expense in the event that the Servicer is terminated
as Servicer of the related  Mortgage  Loan.

              (b) To the extent that the services  described  in this  paragraph
(b) are not otherwise  provided pursuant to the Tax Service Contracts  described
in paragraph (a) hereof, the Servicer undertakes to perform such functions.  The
Servicer  shall  establish  and  maintain,   or  cause  to  be  established  and
maintained,  one or more  accounts  (the  "ESCROW  ACCOUNTS"),  which  shall  be
Eligible  Accounts.  The Servicer  shall deposit in the clearing  account (which
account must be an Eligible  Account) in which it customarily  deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities  on a daily  basis,  and in no event more than one Business Day after
the Servicer's receipt thereof,  all collections from the Mortgagors (or related
advances  from  Subservicers)  for the  payment  of taxes,  assessments,  hazard
insurance  premiums  and  comparable  items for the  account  of the  Mortgagors
("ESCROW  PAYMENTS")  collected  on  account  of the  Mortgage  Loans  and shall
thereafter deposit such Escrow Payments in the Escrow Accounts, in no event more
than two Business Days after the deposit of such funds in the clearing  account,
for the purpose of effecting the payment of any such items as required under the
terms of this  Agreement.  Withdrawals  of amounts from an Escrow Account may be
made  only  to (i)  effect  payment  of  taxes,  assessments,  hazard  insurance
premiums, and comparable items; (ii) reimburse the Servicer (or a Subservicer to
the  extent  provided  in the  related  Subservicing  Agreement)  out of related
collections  for any advances  made  pursuant to Section  3.01 (with  respect to
taxes and  assessments)  and Section  3.13 (with  respect to hazard  insurance);
(iii) refund to Mortgagors  any sums as may be  determined to be overages;  (iv)
pay interest,  if required and as described  below, to Mortgagors on balances in
the  Escrow  Account;  (v)  clear  and  terminate  the  Escrow  Account  at  the
termination of the Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement or (vi) recover amounts  deposited in error.
As part of its servicing duties,  the Servicer or Subservicers  shall pay to the
Mortgagors  interest on funds in Escrow Accounts,  to the extent required by law
and,  to the extent  that  interest  earned on funds in the Escrow  Accounts  is
insufficient, to pay such interest from its

                                      -48-
<PAGE>

or their own funds,  without any  reimbursement  therefor.  To the extent that a
Mortgage  does not provide for Escrow  Payments,  the Servicer  shall  determine
whether any such  payments  are made by the  Mortgagor in a manner and at a time
that  avoids  the  loss  of the  Mortgaged  Property  due to a tax  sale  or the
foreclosure  of a tax lien.  The Servicer  assumes full  responsibility  for the
payment of all such bills within such time and shall effect payments of all such
bills  irrespective  of the Mortgagor's  faithful  performance in the payment of
same or the making of the Escrow  Payments and shall make  advances from its own
funds to effect such payments;  PROVIDED, HOWEVER, that such advances are deemed
to be Servicing Advances.

              Section 3.10 COLLECTION ACCOUNT.

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

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

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

              (iii) all Insurance Proceeds to the extent such Insurance Proceeds
       are  not to be  applied  to the  restoration  of  the  related  Mortgaged
       Property  or released to the related  Mortgagor  in  accordance  with the
       express  requirements  of law or in accordance with prudent and customary
       servicing practices and Liquidation Proceeds;

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

              (v) any amounts required to be deposited by the Servicer  pursuant
       to the  second  paragraph  of Section  3.13(a) in respect of any  blanket
       policy deductibles;

              (vi) all proceeds of any Mortgage Loan repurchased or purchased in
       accordance with this Agreement; and

              (vii) all Prepayment Charges collected by the Servicer.

                                      -49-
<PAGE>

              The foregoing  requirements for deposit in the Collection Accounts
shall be exclusive,  it being  understood and agreed that,  without limiting the
generality of the foregoing, payments in the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees and other similar fees and charges need
not be  deposited  by the  Servicer in the  Collection  Account and shall,  upon
collection,  belong to the Servicer as additional compensation for its servicing
activities.  In the event the Servicer shall deposit in the  Collection  Account
any amount not required to be  deposited  therein,  it may at any time  withdraw
such amount from the Collection  Account,  any provision  herein to the contrary
notwithstanding.

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

              Section 3.11 WITHDRAWALS FROM THE COLLECTION ACCOUNT.

              (a) The Servicer shall,  from time to time, make  withdrawals from
the  Collection  Account for any of the  following  purposes or as  described in
Section 4.01:

              (i) On or prior to the  Remittance  Date,  to remit to the Trustee
       (i) the Trustee Fee with respect to such  Distribution  Date and (ii) all
       Available Funds in respect of the related Distribution Date together with
       all amounts  representing  Prepayment  Charges  from the  Mortgage  Loans
       received during the related Prepayment Period;

              (ii) to reimburse the Servicer for P&I  Advances,  but only to the
       extent of amounts  received which represent Late  Collections (net of the
       related  Servicing  Fees) of  Monthly  Payments  on  Mortgage  Loans with
       respect  to which  such P&I  Advances  were made in  accordance  with the
       provisions of Section 4.01;

              (iii)  to pay the  Servicer  or any  Subservicer  (a)  any  unpaid
       Servicing Fees or (b) any unreimbursed Servicing Advances with respect to
       each  Mortgage  Loan,  but only to the  extent  of any Late  Collections,
       Liquidation  Proceeds,  Insurance  Proceeds  or other  amounts  as may be
       collected by the Servicer  from a Mortgagor,  or otherwise  received with
       respect to such Mortgage Loan (or the related REO Property);

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

              (v) to pay to the Responsible Party, with respect to each Mortgage
       Loan that has  previously  been  purchased  or replaced  pursuant to this
       Agreement all amounts received thereon subsequent to the date of purchase
       or substitution, as the case may be;

              (vi) to  reimburse  the  Servicer for any P&I Advance or Servicing
       Advance  previously  made  which  the  Servicer  has  determined  to be a
       Nonrecoverable  P&I  Advance  or  Nonrecoverable   Servicing  Advance  in
       accordance with the provisions of Section 4.01;

                                      -50-
<PAGE>

              (vii) to pay, or to reimburse the Servicer for advances in respect
       of,  expenses  incurred in connection  with any Mortgage Loan pursuant to
       Section 3.15;

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

              (ix) to reimburse the Servicer or the Trustee, as the case may be,
       for  expenses  reasonably  incurred  in  respect  of the breach or defect
       giving  rise  to the  purchase  obligation  under  Section  2.03  of this
       Agreement  that were  included in the  Repurchase  Price of the  Mortgage
       Loan,  including  any  expenses  arising  out of the  enforcement  of the
       purchase obligation;

              (x) to withdraw any amounts deposited in the Collection Account in
       error; and

              (xi)  to  clear  and   terminate  the   Collection   Account  upon
       termination of this Agreement.

              (b) The Servicer shall keep and maintain separate accounting, on a
Mortgage  Loan by  Mortgage  Loan  basis,  for the  purpose  of  justifying  any
withdrawal  from the Collection  Account,  to the extent held by or on behalf of
it, pursuant to subclauses  (a)(ii),  (iii), (v), (vi),  (vii),  (viii) and (ix)
above. The Servicer shall provide written  notification to the Depositor,  on or
prior to the next succeeding  Remittance  Date, upon making any withdrawals from
the Collection Account pursuant to subclause (a)(vii) above.

              Section 3.12 INVESTMENT OF FUNDS IN THE COLLECTION ACCOUNT.

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

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

                                      -51-
<PAGE>

                     (y)    demand  payment of all amounts due  thereunder  that
                            such  Permitted  Investment  would not  constitute a
                            Permitted  Investment in respect of funds thereafter
                            on deposit in the Servicer Investment Account.

              (b) All  income and gain  realized  from the  investment  of funds
deposited in the Collection Account held by or on behalf of the Servicer,  shall
be for the benefit of the Servicer and shall be subject to its withdrawal in the
manner set forth in  Section  3.11.  In regard to the  Collection  Account,  the
Servicer  shall  deposit  in the  Collection  Account  the amount of any loss of
principal  incurred in respect of any such Permitted  Investment made with funds
in such accounts immediately upon realization of such loss.

              (c) Except as otherwise  expressly provided in this Agreement,  if
any  default  occurs  in  the  making  of a  payment  due  under  any  Permitted
Investment,  or if a default occurs in any other performance  required under any
Permitted Investment,  the Servicer shall take such action as may be appropriate
to  enforce  such  payment  or   performance,   including  the  institution  and
prosecution of appropriate proceedings. The Servicer shall not be liable for the
amount of any loss  incurred in respect of any  investment or lack of investment
of funds held in the Collection  Account if made in accordance with this Section
3.12.

              Section  3.13  MAINTENANCE  OF HAZARD  INSURANCE  AND  ERRORS  AND
OMISSIONS AND FIDELITY COVERAGE.

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

                                      -52-
<PAGE>

is at any time in an area  identified  in the  Federal  Register  by the Federal
Emergency  Management Agency as having special flood hazards and flood insurance
has been made  available,  the  Servicer  will  cause to be  maintained  a flood
insurance policy in respect thereof.  Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal  balance of the related Mortgage
Loan and (ii) the maximum  amount of such  insurance  available  for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which  such  Mortgaged  Property  is located  is  participating  in such
program).

              In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of A:X or better in Best's
(or such other rating that is comparable to such rating) insuring against hazard
losses on all of the Mortgage  Loans,  it shall  conclusively  be deemed to have
satisfied  its  obligations  as set  forth in the first  two  sentences  of this
Section  3.13,  it being  understood  and agreed  that such policy may contain a
deductible  clause,  in which case the Servicer  shall,  in the event that there
shall not have been maintained on the related Mortgaged Property or REO Property
a policy  complying with the first two sentences of this Section 3.13, and there
shall have been one or more losses which would have been covered by such policy,
deposit to the  Collection  Account from its own funds the amount not  otherwise
payable  under  the  blanket  policy  because  of  such  deductible  clause.  In
connection  with its  activities as  administrator  and servicer of the Mortgage
Loans,  the  Servicer  agrees to prepare and present,  on behalf of itself,  the
Trustee  claims under any such blanket  policy in a timely fashion in accordance
with the terms of such policy.

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

              Section  3.14  ENFORCEMENT  OF  DUE-ON-SALE  CLAUSES;   ASSUMPTION
AGREEMENTS.

              The  Servicer  will,  to  the  extent  it  has  knowledge  of  any
conveyance or prospective  conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute  conveyance or by contract of sale,  and whether or not the
Mortgagor  remains or is to remain  liable  under the  Mortgage  Note and/or the
Mortgage),  exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto;  PROVIDED,  HOWEVER,
that the  Servicer  shall not be  required  to take such  action if, in its sole

                                      -53-
<PAGE>

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

              Notwithstanding  the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or any
other  violation of its  obligations  hereunder by reason of any assumption of a
Mortgage  Loan by operation  of law or by the terms of the Mortgage  Note or any
assumption which the Servicer may be restricted by law from preventing,  for any
reason  whatever.  For purposes of this Section 3.14, the term  "assumption"  is
deemed  to also  include  a sale  (of the  Mortgaged  Property)  subject  to the
Mortgage that is not  accompanied by an assumption or  substitution of liability
agreement.

              Section 3.15 REALIZATION UPON DEFAULTED MORTGAGE LOANS.

              The Servicer shall use its best efforts, consistent with customary
servicing practices as described in Section 3.01, to foreclose upon or otherwise
comparably  convert  (which may  include an  acquisition  of REO  Property)  the
ownership of  properties  securing  such of the Mortgage  Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent  payments  pursuant to Section 3.07,  and which are not
released  from this  Agreement  pursuant  to any  other  provision  hereof.  The
Servicer

                                      -54-
<PAGE>

shall use reasonable  efforts to realize upon such  defaulted  Mortgage Loans in
such  manner as will  maximize  the  receipt of  principal  and  interest by the
Trustee,  taking into  account,  among other things,  the timing of  foreclosure
proceedings.  The  foregoing is subject to the  provisions  that, in any case in
which Mortgaged Property shall have suffered damage from an uninsured cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such property  unless it shall  determine in its sole  discretion  (i) that such
restoration  will  increase  the net  proceeds  of  liquidation  of the  related
Mortgage Loan to the Trustee,  after  reimbursement to itself for such expenses,
and  (ii)  that  such  expenses  will be  recoverable  by the  Servicer  through
Insurance Proceeds or Liquidation  Proceeds from the related Mortgaged Property,
as contemplated in Section 3.11. The Servicer shall be responsible for all other
costs and expenses  incurred by it in any such proceedings;  PROVIDED,  HOWEVER,
that it shall be entitled to reimbursement thereof from the related property, as
contemplated in Section 3.11.

              The proceeds of any liquidation or REO Disposition, as well as any
recovery   resulting  from  a  partial   collection  of  Insurance  Proceeds  or
Liquidation Proceeds or any income from an REO Property,  will be applied in the
following order of priority: first, to reimburse the Servicer or any Subservicer
for any related  unreimbursed  Servicing  Advances,  pursuant to Section 3.11 or
3.17; second, to accrued and unpaid interest on the Mortgage Loan or REO Imputed
Interest,  at  the  Mortgage  Rate,  to  the  date  of  the  liquidation  or REO
Disposition,  or to the Due Date  prior  to the  Remittance  Date on which  such
amounts are to be  distributed  if not in connection  with a liquidation  or REO
Disposition;  third, to reimburse the Servicer for any related  unreimbursed P&I
Advances,  pursuant to Section 3.11;  and fourth,  as a recovery of principal of
the  Mortgage  Loan.  If the amount of the  recovery so allocated to interest is
less than a full  recovery  thereof,  that amount will be  allocated as follows:
first, to unpaid  Servicing  Fees; and second,  as interest at the Mortgage Rate
(net of the  Servicing  Fee Rate).  The portion of the  recovery so allocated to
unpaid  Servicing  Fees shall be reimbursed  to the Servicer or any  Subservicer
pursuant to Section  3.11 or 3.17.  The portions of the recovery so allocated to
interest at the Mortgage  Rate (net of the  Servicing Fee Rate) and to principal
of the  Mortgage  Loan shall be applied as  follows:  first,  to  reimburse  the
Servicer or any Subservicer for any related  unreimbursed  Servicing Advances in
accordance  with Section 3.11 or 3.17, and second,  to the Trustee in accordance
with the  provisions of Section 4.02,  subject to the last  paragraph of Section
3.17 with respect to certain excess recoveries from an REO Disposition.

              Notwithstanding  anything to the  contrary  contained  herein,  in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Servicer has received actual notice of, or has actual knowledge of
the  presence  of,  hazardous  or toxic  substances  or  wastes  on the  related
Mortgaged  Property,  or if the Trustee otherwise  requests,  the Servicer shall
cause an  environmental  inspection or review of such  Mortgaged  Property to be
conducted by a qualified  inspector.  Upon  completion  of the  inspection,  the
Servicer  shall  promptly  provide  the  Trustee  with a  written  report of the
environmental inspection.

              After reviewing the environmental inspection report, the Depositor
shall  determine  how the Servicer  shall  proceed with respect to the Mortgaged
Property.  In the event (a) the  environmental  inspection report indicates that
the  Mortgaged  Property is  contaminated  by hazardous or toxic  substances  or
wastes and (b) the Depositor directs the Servicer to proceed with foreclosure or
acceptance of a deed in lieu of  foreclosure,  the Servicer  shall be reimbursed

                                      -55-
<PAGE>

for all reasonable  costs  associated  with such  foreclosure or acceptance of a
deed in lieu of foreclosure  and any related  environmental  clean-up  costs, as
applicable,  from  the  related  Liquidation  Proceeds,  or if  the  Liquidation
Proceeds are insufficient to fully reimburse the Servicer, the Servicer shall be
entitled to be reimbursed  from amounts in the  Collection  Account  pursuant to
Section  3.11  hereof.  In the event the  Depositor  directs the Servicer not to
proceed with  foreclosure  or acceptance of a deed in lieu of  foreclosure,  the
Servicer shall be reimbursed from general collections for all Servicing Advances
made with respect to the related Mortgaged  Property from the Collection Account
pursuant to Section 3.11 hereof.

              Section 3.16 RELEASE OF MORTGAGE FILES.

              (a) Upon the payment in full of any Mortgage  Loan, or the receipt
by the  Servicer of a  notification  that payment in full shall be escrowed in a
manner customary for such purposes,  the Servicer will, within five (5) Business
Days of the  payment in full,  notify  the  Trustee  by a  certification  (which
certification  shall include a statement to the effect that all amounts received
or to be received  in  connection  with such  payment  which are  required to be
deposited in the Collection  Account  pursuant to Section 3.10 have been or will
be so deposited) of a Servicing  Officer and shall request delivery to it of the
Custodial  File.  Upon receipt of such  certification  and request,  the Trustee
shall promptly release the related Custodial File to the Servicer within two (2)
Business  Days.  No  expenses  incurred in  connection  with any  instrument  of
satisfaction  or deed of  reconveyance  shall be  chargeable  to the  Collection
Account.

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

              Upon written  certification  of a Servicing  Officer,  the Trustee
shall  execute and deliver to the  Servicer  any court  pleadings,  requests for
trustee's sale or other  documents  reasonably  necessary to the  foreclosure or
trustee's sale in respect of a Mortgaged Property or to

                                      -56-
<PAGE>

any legal  action  brought  to obtain  judgment  against  any  Mortgagor  on the
Mortgage Note or Mortgage or to obtain a deficiency judgment,  or to enforce any
other remedies or rights  provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity,  or shall  exercise and deliver to the Servicer a
power of attorney sufficient to authorize the Servicer to execute such documents
on its  behalf.  Each such  certification  shall  include  a  request  that such
pleadings  or  documents  be executed  by the Trustee and a statement  as to the
reason such  documents or pleadings  are  required  and that the  execution  and
delivery thereof by the Trustee will not invalidate or otherwise affect the lien
of the Mortgage,  except for the  termination of such a lien upon  completion of
the foreclosure or trustee's sale.

              Section 3.17 TITLE, CONSERVATION AND DISPOSITION OF REO PROPERTY.

              (a) This Section shall apply only to REO  Properties  acquired for
the account of the Trustee and shall not apply to any REO Property relating to a
Mortgage Loan which was purchased or  repurchased  from the Trustee  pursuant to
any  provision  hereof.  In the event  that  title to any such REO  Property  is
acquired, the deed or certificate of sale shall be issued to the Servicer, or to
its nominee, on behalf of the Trustee.

              (b) The Servicer shall manage, conserve,  protect and operate each
REO  Property for the Trustee  solely for the purpose of its prompt  disposition
and sale.  The  Servicer,  either  itself or  through an agent  selected  by the
Servicer,  shall manage,  conserve,  protect and operate the REO Property in the
same manner that it manages,  conserves,  protects and operates other foreclosed
property  for its own account,  and in the same manner that similar  property in
the same locality as the REO Property is managed.  The Servicer shall attempt to
sell the same (and may  temporarily  rent the same for a period not greater than
one year,  except as otherwise  provided  below) on such terms and conditions as
the Servicer deems to be in the best interest of the Trustee. The Servicer shall
notify the Trustee from time to time as to the status of each REO Property.

              (c) The Servicer  shall use its best efforts to dispose of the REO
Property  as soon as  possible  (subject  to the  Trustee's  right  to veto  any
proposed  sale of REO  Property)  and shall sell such REO  Property in any event
within one year  after  title has been  taken to such REO  Property,  unless the
Servicer  determines,  and gives an  appropriate  notice to the  Trustee to such
effect,  that a longer period is necessary for the orderly  liquidation  of such
REO Property.  If a period longer than one year is permitted under the foregoing
sentence and is necessary to sell any REO  Property,  the Servicer  shall report
monthly  to the  Trustee  as to the  progress  being  made in  selling  such REO
Property.  Notwithstanding  its veto rights,  the Trustee has no obligation with
respect to REO dispositions.

              (d) [Reserved].

              (e) The Servicer shall  segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds  and  general  assets  and shall  deposit  such  funds in the
Collection Account.

              (f)  The  Servicer  shall  deposit  net  of  reimbursement  to the
Servicer for any related  outstanding  Servicing  Advances and unpaid  Servicing
Fees provided in Section 3.11 hereof, or

                                      -57-
<PAGE>

cause to be deposited,  on a daily basis in the Collection  Account all revenues
received with respect to the related REO Property and shall  withdraw  therefrom
funds necessary for the proper operation,  management and maintenance of the REO
Property.

              (g) The Servicer,  upon an REO  Disposition,  shall be entitled to
reimbursement  for any related  unreimbursed  Servicing  Advances as well as any
unpaid  Servicing  Fees  from  proceeds  received  in  connection  with  the REO
Disposition, as further provided in Section 3.11.

              (h) Any net proceeds which are in excess of the applicable  Stated
Principal  Balance plus all unpaid REO Imputed Interest thereon through the date
of the REO Disposition shall be retained by the Servicer as additional servicing
compensation.

              (i) The Servicer shall use its reasonable best efforts to sell, or
cause the  Subservicer to sell, any REO Property as soon as possible,  but in no
event later than the conclusion of the third  calendar year beginning  after the
year of its  acquisition  by the REMIC  unless (i) the  Servicer  applies for an
extension of such period from the Internal Revenue Service pursuant to the REMIC
Provisions and Code Section 856(e)(3), in which event such REO Property shall be
sold within the applicable  extension  period,  or (ii) the Servicer obtains for
the Trustee an Opinion of Counsel,  addressed to the Depositor,  the Trustee and
the  Servicer,  to the effect that the holding by the REMIC of such REO Property
subsequent  to such  period  will  not  result  in the  imposition  of  taxes on
"prohibited  transactions"  as defined in Section  860F of the Code or cause the
REMIC to fail to qualify as a REMIC  under the REMIC  Provisions  or  comparable
provisions  of  relevant  state laws at any time.  The  Servicer  shall  manage,
conserve,  protect and operate each REO Property for the Trustee  solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO Property to fail to qualify as "foreclosure  property" within the meaning of
Section  860G(a)(8)  or result in the receipt by the REMIC of any  "income  from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or
any "net income from  foreclosure  property"  which is subject to taxation under
Section  860G(a)(1)  of the  Code.  Pursuant  to its  efforts  to sell  such REO
Property,  the Servicer  shall either itself or through an agent selected by the
Servicer  protect and conserve  such REO Property in the same manner and to such
extent as is customary  in the  locality  where such REO Property is located and
may, incident to its conservation and protection of the interests of the Trustee
on behalf of the Certificateholders,  rent the same, or any part thereof, as the
Servicer  deems to be in the best  interest  of the  Trustee  on  behalf  of the
Certificateholders  for the  period  prior  to the  sale of such  REO  Property;
PROVIDED,  HOWEVER,  that any rent  received or accrued with respect to such REO
Property qualifies as "rents from real property" as defined in Section 856(d) of
the Code.

              Section 3.18 NOTIFICATION OF ADJUSTMENTS.

              With respect to each  Adjustable  Rate Mortgage Loan, the Servicer
shall adjust the Mortgage Rate on the related  interest rate adjustment date and
shall adjust the Scheduled  Payment on the related mortgage  payment  adjustment
date, if applicable,  in compliance with the  requirements of applicable law and
the related  Mortgage and Mortgage  Note. The Servicer shall execute and deliver
any and all necessary notices required under applicable law and the terms of the
related  Mortgage  Note and Mortgage  regarding  the Mortgage Rate and Scheduled
Payment adjustments. The Servicer shall promptly, upon written request therefor,
deliver to the Trustee

                                      -58-
<PAGE>

such notifications and any additional applicable data regarding such adjustments
and the methods used to  calculate  and  implement  such  adjustments.  Upon the
discovery by the Servicer that the Servicer has failed to adjust a Mortgage Rate
or Scheduled  Payment in accordance with the terms of the related Mortgage Note,
the  Servicer  shall  deposit in the  Collection  Account from its own funds the
amount of any interest loss caused as such interest loss occurs.

              Section  3.19  ACCESS TO  CERTAIN  DOCUMENTATION  AND  INFORMATION
REGARDING THE MORTGAGE LOANS.

              In the event the Servicer reasonably believes that compliance with
this  Section  will make the Mortgage  Loans legal for  investment  by federally
insured savings and loan associations,  the Servicer shall provide, or cause the
Subservicer to provide, to the Depositor,  the Trustee,  the OTS or the FDIC and
the  examiners  and  supervisory  agents  thereof  access  to the  documentation
regarding  the  Mortgage  Loans  in  its   possession   required  by  applicable
regulations of the OTS. Such access shall be afforded  without charge,  but only
upon  reasonable and prior written  request and during normal  business hours at
the offices of the  Servicer,  the  Depositor,  the Trustee or any  Subservicer.
Nothing in this Section shall derogate from the obligation of the Servicer,  the
Depositor,  the  Trustee  or any  Subservicer  to  observe  any  applicable  law
prohibiting  disclosure of information  regarding the Mortgagors and the failure
of the Servicer, the Depositor, the Trustee or any Subservicer to provide access
as provided in this Section as a result of such obligation  shall not constitute
a breach of this Section.

              Section 3.20  DOCUMENTS,  RECORDS AND FUNDS IN  POSSESSION  OF THE
SERVICER TO BE HELD FOR THE TRUSTEE.

              Not later than  fifteen  days after each  Distribution  Date,  the
Servicer  shall  forward to the  Trustee a statement  prepared  by the  Servicer
setting forth the status of the  Collection  Account as of the close of business
on the last day of the calendar  month  relating to such  Distribution  Date and
showing,  for the period  covered by such  statement,  the  aggregate  amount of
deposits into and  withdrawals  from the Collection  Account of each category of
deposit  specified in Section 3.10(a) and each category of withdrawal  specified
in Section 3.11.  Such  statement may be in the form of the then current  Fannie
Mae Monthly Accounting Report for its Guaranteed Mortgage  Pass-Through  Program
with appropriate additions and changes, and shall also include information as to
the aggregate of the outstanding principal balances of all of the Mortgage Loans
as of the last day of the calendar month immediately preceding such Distribution
Date.  Copies  of  such  statement  shall  be  provided  by the  Trustee  to any
Certificateholder  and to any Person  identified to the Trustee as a prospective
transferee  of a  Certificate,  upon  the  request  and  at the  expense  of the
requesting  party,  provided such  statement is delivered by the Servicer to the
Trustee.

              Section 3.21 SERVICING COMPENSATION.

              (a) As  compensation  for its activities  hereunder,  the Servicer
shall,  with respect to each Mortgage  Loan, be entitled to retain from deposits
to the Collection Account and from Liquidation Proceeds,  Insurance Proceeds and
REO Proceeds  related to such Mortgage  Loan,  the Servicing Fee with respect to
each  Mortgage  Loan  (less  any  portion  of  such  amounts   retained  by  any
Subservicer).  In  addition,  the Servicer  shall be entitled to recover  unpaid
Servicing  Fees out

                                      -59-
<PAGE>

of related late  collections to the extent  permitted in Section 3.11. The right
to receive the Servicing Fee may not be  transferred  in whole or in part except
in connection  with the transfer of all of the Servicer's  responsibilities  and
obligations under this Agreement;  PROVIDED,  HOWEVER, that the Servicer may pay
from  the  Servicing  Fee  any  amounts  due  to  a  Subservicer  pursuant  to a
Subservicing Agreement entered into under Section 3.02.

              (b) Additional servicing compensation in the form of assumption or
modification fees, late payment charges,  NSF fees,  reconveyance fees and other
similar fees and charges  (other than  Prepayment  Charges) shall be retained by
the  Servicer  only to the  extent  such fees or  charges  are  received  by the
Servicer. The Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to
withdraw from the  Collection  Account,  as additional  servicing  compensation,
interest or other income earned on deposits therein.

              (c) The Servicer shall be required to pay all expenses incurred by
it in connection with its servicing  activities  hereunder (including payment of
premiums for any blanket  policy  insuring  against  hazard  losses  pursuant to
Section  3.13,  servicing  compensation  of the  Subservicer  to the  extent not
retained by it and the fees and  expenses  of  independent  accountants  and any
agents  appointed by the Servicer),  and shall not be entitled to  reimbursement
therefor except as specifically provided in Section 3.11.

              Section 3.22 ANNUAL STATEMENT AS TO COMPLIANCE.

              The  Servicer  will  deliver  or  cause  to be  delivered  to  the
Depositor,  the Rating Agencies and the Trustee on or before August 15th of each
calendar year,  commencing in 2002, an Officers' Certificate stating, as to each
signatory  thereof,  that (i) a review of the activities of the Servicer  during
the preceding calendar year and of performance under this Agreement or a similar
agreement has been made under such officers'  supervision,  and (ii) to the best
of such officers'  knowledge,  based on such review,  the Servicer has fulfilled
all of its obligations  under this Agreement  throughout such year, or, if there
has been a default in the  fulfillment of any such  obligation,  specifying each
such default known to such officers and the nature and status thereof.

              Section  3.23 ANNUAL  INDEPENDENT  PUBLIC  ACCOUNTANTS'  SERVICING
STATEMENT; FINANCIAL STATEMENTS.

              Not later than August 15th of each  calendar  year  commencing  in
2002, the Servicer, at its expense,  shall cause a nationally recognized firm of
independent  certified  public  accountants  to  furnish to the  Depositor,  the
Servicer,  the Rating  Agencies and the Trustee a report stating that (i) it has
obtained  a  letter  of  representation   regarding  certain  matters  from  the
management  of the Servicer  which  includes an assertion  that the Servicer has
complied with certain  minimum  residential  mortgage loan servicing  standards,
identified  in the  Uniform  Single  Attestation  Program for  Mortgage  Bankers
established by the Mortgage Bankers Association of America,  with respect to the
servicing  of  residential  mortgage  loans during the most  recently  completed
fiscal year and (ii) on the basis of an  examination  conducted  by such firm in
accordance  with standards  established  by the American  Institute of Certified
Public  Accountants,  such  representation  is  fairly  stated  in all  material
respects,  subject  to such  exceptions  and  other  qualifications  that may be
appropriate.  In rendering its report such firm may rely, as to matters relating
to the direct  servicing of  residential  mortgage loans by  Subservicers,  upon
comparable

                                      -60-
<PAGE>

reports of firms of independent certified public accountants rendered
on the basis of  examinations  conducted in accordance  with the same  standards
(rendered within one year of such report) with respect to those Subservicers.

              Section 3.24 TRUSTEE TO ACT AS SERVICER.

              In the event that the  Servicer  shall for any reason no longer be
the Servicer hereunder (including by reason of an Event of Default), the Trustee
or its successor shall thereupon assume all of the rights and obligations of the
Servicer  hereunder arising thereafter (except that the Trustee shall not be (i)
liable  for  losses of the  Servicer  pursuant  to  Section  3.10 or any acts or
omissions  of the  predecessor  Servicer  hereunder),  (ii)  obligated  to  make
Advances if it is prohibited from doing so by applicable law, (iii) obligated to
effectuate  repurchases or substitutions of Mortgage Loans hereunder,  including
but not limited to repurchases or  substitutions  pursuant to Section 2.03, (iv)
responsible for expenses of the Servicer  pursuant to Section 2.03 or (v) deemed
to have made any representations  and warranties of the Servicer hereunder.  Any
such assumption shall be subject to Section 7.02.

              Every  subservicing  agreement  entered into by the Servicer shall
contain a provision  giving the successor  Servicer the option to terminate such
agreement in the event a successor Servicer is appointed.

              If the  Servicer  shall for any  reason no longer be the  Servicer
(including  by  reason  of any  Event of  Default),  the  Trustee  (or any other
successor Servicer) may, at its option, succeed to any rights and obligations of
the  Servicer  under any  subservicing  agreement in  accordance  with the terms
thereof;  provided that the Trustee (or any other successor  Servicer) shall not
incur  any  liability  or have any  obligations  in its  capacity  as  successor
Servicer  under a  subservicing  agreement  arising  prior  to the  date of such
succession  unless it expressly  elects to succeed to the rights and obligations
of the Servicer  thereunder;  and the Servicer  shall not thereby be relieved of
any liability or obligations  under the subservicing  agreement arising prior to
the date of such succession.

              The  Servicer  shall,  upon  request  of the  Trustee,  but at the
expense of the Servicer, deliver to the assuming party all documents and records
relating to each  subservicing  agreement  (if any) and the Mortgage  Loans then
being serviced  thereunder and an accounting of amounts collected held by it and
otherwise use its best efforts to effect the orderly and  efficient  transfer of
the  subservicing  agreement to the assuming  party.

              Section 3.25 COMPENSATING INTEREST.

              The Servicer shall remit to the Trustee on each Remittance Date an
amount  from its own funds  equal to the lesser of (a) the  Prepayment  Interest
Shortfall, if any, for such Remittance Date, and (b) the amount of the Servicing
Fee payable to the Servicer for such Remittance Date.

                                      -61-
<PAGE>

              Section 3.26 CREDIT REPORTING; GRAMM-LEACH-BLILEY ACT.

              (a) With  respect  to each  Group I Mortgage  Loan,  the  Servicer
agrees to  accurately  and fully report its  borrower  credit files to all three
credit repositories in a timely manner.

              (b)   The   Servicer   shall   comply   with   Title   V  of   the
Gramm-Leach-Bliley  Act of  1999  and  all  applicable  regulations  promulgated
thereunder,  relating to the Mortgage Loans and the related  borrowers and shall
provide all required notices thereunder prior to the July 1, 2001 effective date
and annually thereafter.

                                   ARTICLE IV

                                DISTRIBUTIONS AND
                            ADVANCES BY THE SERVICER

              Section 4.01 ADVANCES.

              (a) The amount of P&I  Advances to be made by the Servicer for any
Remittance  Date shall  equal,  subject to Section  4.01(c),  the sum of (i) the
aggregate  amount of Scheduled  Payments (with each interest portion thereof net
of the related  Servicing Fee), due on the Due Date  immediately  preceding such
Remittance Date in respect of the Mortgage Loans,  which Scheduled Payments were
not  received  as of the  close  of  business  on the last  Business  Day of the
immediately  preceding  calendar  month,  plus  (ii)  with  respect  to each REO
Property,  which  REO  Property  was  acquired  during  or prior to the  related
Prepayment  Period and as to which such REO Property an REO  Disposition did not
occur during the related  Prepayment  Period,  an amount equal to the excess, if
any, of the Scheduled  Payments (with each interest  portion  thereof net of the
related  Servicing  Fee) that  would  have been due on the  related  Due Date in
respect  of the  related  Mortgage  Loans,  over the net  income  from  such REO
Property  transferred  to  the  Collection  Account  for  distribution  on  such
Remittance Date.

              (b)  On  the   Remittance   Date,  the  Servicer  shall  remit  in
immediately  available  funds to the  Trustee an amount  equal to the  aggregate
amount of P&I Advances,  if any, to be made in respect of the Mortgage Loans and
REO Properties for the related  Remittance Date either (i) from its own funds or
(ii) from the Collection Account, to the extent of funds held therein for future
distribution  (in which case, it will cause to be made an  appropriate  entry in
the records of Collection Account that Amounts Held For Future Distribution have
been,  as permitted by this Section  4.01,  used by the Servicer in discharge of
any such P&I  Advance) or (iii) in the form of any  combination  of (i) and (ii)
aggregating  the total amount of P&I  Advances to be made by the  Servicer  with
respect to the Mortgage  Loans and REO  Properties.  Any Amounts Held For Future
Distribution  and so used shall be  appropriately  reflected  in the  Servicer's
records and replaced by the Servicer by deposit in the Collection  Account on or
before any future Remittance Date to the extent required.

              (c) The  obligation  of the  Servicer to make such P&I Advances is
mandatory,  notwithstanding any other provision of this Agreement but subject to
(d)  below,  and,  with  respect to any  Mortgage  Loan or REO  Property,  shall
continue until a Final Recovery Determination in

                                      -62-
<PAGE>

connection  therewith or the removal thereof from coverage under this Agreement,
except as otherwise provided in this Section.

              (d)  Notwithstanding  anything  herein  to  the  contrary,  no P&I
Advance or  Servicing  Advance  shall be  required to be made  hereunder  by the
Servicer if such P&I Advance or Servicing  Advance would, if made,  constitute a
Nonrecoverable P&I Advance or Nonrecoverable  Advance.  The determination by the
Servicer  that it has made a  Nonrecoverable  P&I  Advance  or a  Nonrecoverable
Advance or that any proposed P&I Advance or Servicing  Advance,  if made,  would
constitute  a   Nonrecoverable   P&I  Advance  or  a   Nonrecoverable   Advance,
respectively,  shall be evidenced by an  Officers'  Certificate  of the Servicer
delivered to the Trustee.

              (e) Except as otherwise  provided  herein,  the Servicer  shall be
entitled to reimbursement pursuant to Section 3.11 hereof for Servicing Advances
from recoveries from the related Mortgagor or from all Liquidation  Proceeds and
other  payments or recoveries  (including  Insurance  Proceeds and  Condemnation
Proceeds) with respect to the related Mortgage Loan.

              Section 4.02 PRIORITIES OF DISTRIBUTION.

          (a) On each Distribution Date, the Trustee will make the disbursements
and transfers  from amounts then on deposit in the  Distribution  Account in the
following order of priority and to the extent of the Available Funds remaining:

              (i) to the  holders of each Class of  Certificates  and FSA in the
following order of priority:

              (a) to the Class A Certificates,  the related Accrued  Certificate
       Interest  Distribution  Amount and any Unpaid  Interest  Amounts for such
       Distribution  Date and to FSA the Class A-3 Insurance  Payment Amount and
       any Unpaid  Class A-3  Insurance  Payment  Amounts for such  Distribution
       Date, as described in Section 4.02(a), pro rata (based on the accrued and
       unpaid  interest or Class A-3  Insurance  Payment  Amounts  distributable
       under this clause 4.02(a)(i)(a) to such Classes of Certificates or FSA);

              (b)  to  the  Class  M-1  Certificates,  the  Accrued  Certificate
       Interest Distribution Amount for such Class on such Distribution Date;

              (c)  to  the  Class  M-2  Certificates,  the  Accrued  Certificate
       Interest Distribution Amount for such Class on such Distribution Date;

              (d)  to  the  Class  B-1  Certificates,  the  Accrued  Certificate
       Interest Distribution Amount for such Class on such Distribution Date;

              (ii) (A) on each Distribution Date (a) before the related Stepdown
Date or (b) with respect to which a Trigger  Event is in effect,  to the holders
of the  related  Class  or  Classes  of  LIBOR  Certificates  then  entitled  to
distributions  of principal as set forth below, an amount equal to the Principal
Distribution Amount in the following order of priority:

                                      -63-
<PAGE>

       (a) to the Class A-1, Class A-2 and Class A-3 Certificates,  allocated as
       described in Section  4.02(c),  until the  respective  Class  Certificate
       Balances thereof are reduced to zero;

       (b) sequentially to the Class M-1, Class M-2 and Class B-1  Certificates,
       in that  order,  until the  respective  Class  Certificate  Balances  are
       reduced to zero;

                 (B) on each  Distribution  Date (a) on and  after  the  related
Stepdown  Date  and (b) as long as a  Trigger  Event  is not in  effect,  to the
holders of the related Class or Classes of LIBOR  Certificates  then entitled to
distribution  of principal an amount equal to, in the  aggregate,  the Principal
Distribution Amount in the following amounts and order of priority:

              (a) the lesser of (x) the  Principal  Distribution  Amount and (y)
       the Class A Principal  Distribution  Amount to the Class A  Certificates,
       allocated as described in Section  4.02(c),  until the  respective  Class
       Certificate Balances thereof are reduced to zero;

              (b) the lesser of (x) the excess of (i) the Principal Distribution
       Amount over (ii) the amount distributed to the Class A Certificateholders
       in clause  (ii)(B)(a) above and (y) the Class M-1 Principal  Distribution
       Amount to the Class M-1  Certificateholders,  until the Class Certificate
       Balance thereof has been reduced to zero;

              (c) the lesser of (x) the excess of (i) the Principal Distribution
       Amount over (ii) the amount distributed to the Class A Certificateholders
       in clause  (ii)(B)(a)  above and to the Class M-1  Certificates in clause
       (ii)(B). (b) above and (y) the Class M-2 Principal Distribution Amount to
       the Class M-2  Certificateholders,  until the Class  Certificate  Balance
       thereof has been reduced to zero;

              (d) the lesser of (x) the excess of (i) the Principal Distribution
       Amount over (ii) the amount distributed to the Class A Certificateholders
       in clause  (ii)(B)(a)  above,  to the Class  M-1  Certificates  in clause
       (ii)(B)(b) above and to the Class M-2  Certificates in clause  (ii)(B)(c)
       above and (y) the Class B-1  Principal  Distribution  Amount to the Class
       B-1  Certificateholders,  until the Class Certificate Balance thereof has
       been reduced to zero;

              (iii) any amount remaining after the  distributions in clauses (i)
and (ii) above shall be distributed in the following order of priority:

              (a) to the  holders  of the Class  M-1  Certificates,  any  Unpaid
       Interest Amounts for such Class;

              (b) to the  holders  of the Class  M-1  Certificates,  any  Unpaid
       Realized Loss Amount for such Class;

              (c) to the  holders  of the Class  M-2  Certificates,  any  Unpaid
       Interest Amounts for such Class;

                                      -64-
<PAGE>

              (d) to the  holders  of the Class  M-2  Certificates,  any  Unpaid
       Realized Loss Amount for such Class;

              (e) to the  holders  of the Class  B-1  Certificates,  any  Unpaid
       Interest Amounts for such Class;

              (f) to the  holders  of the Class  B-1  Certificates,  any  Unpaid
       Realized Loss Amount for such Class;

              (g) to the Excess  Reserve Fund  Account,  the amount of any Basis
       Risk Payment for such Distribution Date;

              (h) from funds on deposit in the Excess  Reserve Fund Account,  an
       amount  equal to any Basis Risk  CarryForward  Amount with respect to any
       Floating Rate Certificate for such Distribution Date to the Floating Rate
       Certificates in the same order and priority in which Accrued  Certificate
       Interest is allocated among those Classes of Certificates;

              (i) to the holders of the Class X  Certificates,  the remainder of
       the Class X  Distributable  Amount not  distributed  pursuant to Sections
       4.02(a)(iii)(a)-(h); and

              (iv) to the  holders of the Class R  Certificates,  any  remaining
amount.

          (b) On each  Distribution  Date, all amounts  representing  Prepayment
Charges from the Mortgage Loans received  during the related  Prepayment  Period
will be distributed to the holders of the Class P Certificates.

              Solely for purposes of this interest allocation  calculation,  the
portion of the interest  component of Available  Funds  attributable  to Group I
Mortgage Loans will be allocated:

              1. first, to the Class A-1 Certificates,  the Accrued  Certificate
Interest  Distribution  Amount and any Unpaid Interest Amounts for the Class A-1
Certificates;

              2. second,  (a) to the Class A-2 and Class A-3  Certificates,  the
Accrued Certificate Interest Distribution Amount and any Unpaid Interest Amounts
for the  Class  A-2 and Class  A-3  Certificates  and (b) to FSA,  the Class A-3
Certificate  Insurance Payment Amount and any Unpaid Class A-3 Insurance Payment
Amounts,  pro rata according to the Accrued  Certificate  Interest  Distribution
Amount and any Unpaid Interest  Amounts or the Class A-3  Certificate  Insurance
Payment  Amount  and  any  Unpaid  Class  A-3  Insurance  Payment  Amounts,   as
applicable,  to the  extent  not  otherwise  previously  paid from the  interest
component of Available Funds attributable to Group II Mortgage Loans.

              Solely for purposes of this interest allocation  calculation,  the
portion of the interest  component of Available  Funds  attributable to Group II
Mortgage Loans will be allocated:

              1.  first,  (a) to the Class A-2 and Class A-3  Certificates,  the
Accrued Certificate Interest Distribution Amount and any Unpaid Interest Amounts
for the Class A-2 and

                                      -65-
<PAGE>

Class A-3  Certificates  and (b) to FSA,  the Class  A-3  Certificate  Insurance
Payment  Amount and any Unpaid Class A-3  Insurance  Payment  Amounts,  pro rata
according to the Accrued Certificate Interest Distribution Amount and any Unpaid
Interest Amounts or the Class A-3 Certificate  Insurance  Payment Amount and any
Unpaid Class A-3 Insurance Payment Amounts, as applicable;

              2. second, to the Class A-1 Certificates,  the Accrued Certificate
Interest  Distribution  Amount and any Unpaid Interest Amounts for the Class A-1
Certificates  to the  extent not  otherwise  previously  paid from the  interest
component of Available Funds attributable to Group I Mortgage Loans.

              If  on  any  Distribution  Date,  as a  result  of  the  foregoing
allocation  rules,  either  class of Class A  Certificates  does not receive the
related Accrued Certificate  Interest  Distribution Amount or the related Unpaid
Interest  Amounts,  if any, then that unpaid amount will be  recoverable  by the
holders of that class, with interest thereon,  on future  distribution dates, as
Unpaid Interest Amounts, subject to the priorities described above.

          (c) All  principal  distributions  to  the  holders  of  the  Class  A
Certificates on any  distribution  date will be allocated  between the Class A-1
Certificates, the Class A-2 Certificates and the Class A-3 Certificates on a pro
rata basis  based on the Class A  Principal  Allocation  Percentage  for each of
those Classes for that Distribution  Date;  provided,  however,  that (i) if the
Class Certificate Balance of the Class A-1 Certificates is reduced to zero, then
the remaining  amount of principal  distributions  distributable  to the Class A
Certificates   on  that   Distribution   Date,   and  the  amount  of  principal
distributions  distributable  on  all  subsequent  Distribution  Dates  will  be
distributed  to the  holders of the  Classes of Class A  Certificates  remaining
outstanding  on a pro rata basis on the Class  Certificate  Balance  for each of
those Classes for that Distribution Date until their Class Certificate  Balances
have been reduced to zero and (ii) if the Class Certificate Balance of the Class
A-2 and Class A-3 Certificates are reduced to zero, then the remaining amount of
principal  distributions  distributable  to the  Class  A  Certificates  on that
Distribution  Date, and the amount of principal  distributions  distributable on
all  subsequent  Distribution  Dates will be  distributed  to the holders of the
Classes  of  Class  A  Certificates   remaining   outstanding  until  its  Class
Certificate  Balance has been reduced to zero.  Any payments of principal to the
Class A-1 Certificates  shall be made first from Available Funds relating to the
Group I Mortgage Loans.  Any payments of principal to the Class A-2 Certificates
and the Class A-3 Certificates shall be made first from Available Funds relating
to the Group II Mortgage Loans.

          (d) On any  Distribution  Date,  any  Relief  Act  Shortfalls  and Net
Prepayment Interest Shortfalls for such Distribution Date will be allocated as a
reduction in the following order:

              (1)    First,  to the  amount of  interest  payable to the Class X
                     Certificates; and

              (2)    Second, pro rata, as a reduction of the Accrued Certificate
                     Interest   for  the   Class  A,   Class  M  and  Class  B-1
                     Certificates, based on the amount of interest to which such
                     classes would otherwise be entitled.

                                      -66-
<PAGE>

              Section 4.03 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.

              (a) Not later than each Distribution  Date, the Trustee shall make
available to each  Certificateholder,  the Servicer, the Depositor,  each Rating
Agency  and  FSA  a  statement   setting  forth  with  respect  to  the  related
distribution:

              (i)  the  amount  thereof   allocable  to  principal,   separately
       identifying  the  aggregate  amount  of  any  Principal  Prepayments  and
       Liquidation Proceeds included therein;

              (ii) the amount thereof allocable to interest, any Unpaid Interest
       Amounts  included in such  distribution and any remaining Unpaid Interest
       Amounts  after  giving  effect  to  such  distribution,  any  Basis  Risk
       CarryForward  Amount  for such  Distribution  Date and the  amount of all
       Basis Risk  CarryForward  Amount covered by  withdrawals  from the Excess
       Reserve Fund Account on such Distribution Date;

              (iii)  if the  distribution  to  the  Holders  of  such  Class  of
       Certificates is less than the full amount that would be  distributable to
       such  Holders if there were  sufficient  funds  available  therefor,  the
       amount of the shortfall and the allocation  thereof as between  principal
       and interest, including any Basis Risk CarryForward Amount not covered by
       amounts in the Excess Reserve Fund Account;

              (iv) the Class  Certificate  Balance of each Class of Certificates
       after giving effect to the distribution of principal on such Distribution
       Date;

              (v)  the  Pool  Stated   Principal   Balance  for  the   following
       Distribution Date;

              (vi) the amount of the  Servicing  Fees paid to or retained by the
       Servicer  or  Subservicer  (with  respect  to  the  Subservicers,  in the
       aggregate) with respect to such Distribution Date;

              (vii) the  Pass-Through  Rate for each such Class of  Certificates
       with  respect to such  Distribution  Date;

              (viii) the amount of Advances included in the distribution on such
       Distribution  Date and the aggregate  amount of Advances  reported by the
       servicer as outstanding as of the close of business on such  Distribution
       Date;

              (ix) the number and  aggregate  Scheduled  Principal  Balances  of
       Mortgage  Loans (1) as to which the Scheduled  Payment is delinquent 1 to
       30 days,  31 to 59 days,  60 to 89 days  and 90 or more  days,  (2) as to
       which the  Scheduled  Payment is  delinquent 31 to 60 days, 61 to 90 days
       and 91 or more days,  (3) that have become REO Property,  (4) that are in
       foreclosure and (5) that are in bankruptcy,  in each case as of the close
       of business on the last Business Day of the immediately preceding month;

              (x) For each of the preceding 12 calendar months,  or all calendar
       months since the related  Cut-off Date,  whichever is less, the aggregate
       dollar  amount  of the  Scheduled  Payments  (A)  due on all  Outstanding
       Mortgage Loans on each of the Due Dates in each

                                      -67-
<PAGE>

       such  month  and (B) delinquent 60 days or more on each of the Due  Dates
       in each such month;

              (xi) with respect to any Mortgage Loan that became an REO Property
       during the preceding calendar month, the loan number and Stated Principal
       Balance  of  such  Mortgage  Loan  as of the  close  of  business  on the
       Determination  Date  preceding  such  Distribution  Date  and the date of
       acquisition thereof;

              (xii) the total number and principal balance of any REO Properties
       (and  market  value,  if  available)  as of the close of  business on the
       Determination Date preceding such Distribution Date;

              (xiii)  whether a Trigger  Event has  occurred  and is  continuing
       (including  the  calculation  of thereof  and the  aggregate  outstanding
       balance of all 60+ Delinquent Loans)

              (xiv) the amount on deposit in the  Excess  Reserve  Fund  Account
       (after giving effect to distributions on such Distribution Date);

              (xv)  the  aggregate  amount  of  Applied  Realized  Loss  Amounts
       incurred  during  the  preceding  calendar  month and  aggregate  Applied
       Realized Loss Amounts through such Distribution Date;

              (xvi)  the  amount  of any Net  Monthly  Excess  Cash Flow on such
       Distribution  Date and the allocation  thereof to the  Certificateholders
       with respect to Applied Realized Losses and Unpaid Interest Amounts; and

              (xvii) the Subordinated Amount and Required Subordinated Amount.

              (xviii) Prepayment Charges collected and paid by Servicer.

              (b) The Trustee's responsibility for providing the above statement
to the  Certificateholders,  each Rating Agency, the Servicer, the Depositor and
FSA is limited to the  availability,  timeliness and accuracy of the information
derived from the Servicer.  The Trustee will provide the above statement via the
Trustee's  internet  website and,  with respect to FSA, via mail.  The Trustee's
website will initially be located at http:\\www.usbank.com/abs and assistance in
using  the  website  can  be  obtained  by  calling  the  Trustee's   Bondholder
Communications  desk at 1-800-934-6802.  A paper copy of the statement will also
be made available upon request.

              (c)  Within a  reasonable  period  of time  after  the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at any
time during the calendar year was a  Certificateholder,  a statement  containing
the  information  set forth in clauses  (a)(i),  (a)(ii)  and  (a)(vii)  of this
Section 4.03  aggregated  for such calendar year or applicable  portion  thereof
during which such Person was a Certificateholder. Such obligation of the Trustee
shall  be  deemed  to have  been  satisfied  to the  extent  that  substantially
comparable  information  shall  be  provided  by  the  Trustee  pursuant  to any
requirements of the Code as from time to time in effect.

                                      -68-
<PAGE>

              (d) Not later than the fifth  Business  Day  following  the end of
each month,  the  Servicer  shall  furnish to the  Trustee a monthly  remittance
advice statement containing such information as shall be reasonably requested by
the  Trustee to  provide  the  reports  required  by  Section  4.03(a) as to the
accompanying  remittance  and the period  ending on the close of business on the
last Business Day of the immediately preceding month.

              The  Servicer  shall  furnish to the  Trustee an  individual  loan
accounting  report,  as of the last  Business  Day of each  month,  to  document
Mortgage  Loan  payment  activity on an  individual  Mortgage  Loan basis.  With
respect to each month, the  corresponding  individual loan accounting report (in
electronic  format)  shall be  received by the Trustee no later than the related
Determination Date, which report shall contain the following:

              (i) with  respect to each  Scheduled  Payment,  the amount of such
       remittance  allocable to principal (including a separate breakdown of any
       Principal  Prepayment,  including  the date of such  prepayment,  and any
       prepayment  penalties  or  premiums,  along  with a  detailed  report  of
       interest on principal  prepayment  amounts  remitted in  accordance  with
       Section 3.25);

              (ii) with respect to each  Scheduled  Payment,  the amount of such
       remittance allocable to interest and assumption fees;

              (iii)  the  amount  of  servicing  compensation  received  by  the
       Servicer during the prior  distribution  period;

              (iv) the individual and aggregate Stated Principal  Balance of the
       Mortgage Loans;

              (v) the individual and aggregate  Scheduled  Principal Balances of
       the Mortgage Loans;

              (vi) the  aggregate  of any  expenses  reimbursed  to the Servicer
       during the prior distribution period pursuant to Section 3.05; and

              (vii) the number and aggregate  outstanding  principal balances of
       Mortgage  Loans (a)  delinquent (1) 30 to 59 days, (2) 60 to 89 days, (3)
       90 days or more; (b) as to which foreclosure has commenced; and (c) as to
       which REO Property has been acquired.

              Section  4.04 CERTAIN  MATTERS  RELATING TO THE  DETERMINATION  OF
LIBOR.

              Until all of the LIBOR  Certificates are paid in full, the Trustee
will at all times  retain at least  four  Reference  Banks  for the  purpose  of
determining LIBOR with respect to each Interest Determination Date. The Servicer
initially shall designate the Reference Banks.  Each "REFERENCE BANK" shall be a
leading bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency  market,  shall not control,  be controlled  by, or be under common
control  with,  the Trustee and shall have an  established  place of business in
London.  If any such Reference Bank should be unwilling or unable to act as such
or if the Servicer  should  terminate its  appointment  as Reference  Bank,  the
Servicer shall promptly appoint or cause to be appointed

                                      -69-
<PAGE>

another Reference Bank. The Trustee shall have no liability or responsibility to
any  Person  for (i)  the  selection  of any  Reference  Bank  for  purposes  of
determining  LIBOR or (ii) any inability to retain at least four Reference Banks
which is caused by circumstances beyond its reasonable control.

              (i) The Pass-Through Rate for each Class of LIBOR Certificates for
       each Interest  Accrual  Period shall be determined by the Trustee on each
       LIBOR   Determination   Date  so  long  as  the  LIBOR  Certificates  are
       outstanding on the basis of LIBOR and the respective  formulae  appearing
       in  footnotes  corresponding  to the  LIBOR  Certificates  in  the  table
       relating to the  Certificates in the Preliminary  Statement.  The Trustee
       shall not have any  liability  or  responsibility  to any  Person for its
       inability, following a good-faith reasonable effort, to obtain quotations
       from the Reference  Banks or to determine the arithmetic mean referred to
       in the definition of LIBOR,  all as provided for in this Section 4.04 and
       the definition of LIBOR. The establishment of LIBOR and each Pass-Through
       Rate for the LIBOR  Certificates  by the Trustee shall (in the absence of
       manifest  error) be final,  conclusive  and binding upon each Holder of a
       Certificate and the Trustee.

              Section 4.05  ALLOCATION OF APPLIED  REALIZED  LOSS  AMOUNTS.  Any
Applied  Realized  Loss  Amounts  will be  allocated to the most junior Class of
Subordinate  Certificates then outstanding in reduction of the Class Certificate
Balance thereof.

              Section 4.06 POLICY MATTERS.

              (a) As soon as  possible,  and in no event  later than 11:00 a.m.,
New  York  time,  on  the  second  Business  Day   immediately   preceding  each
Distribution Date, the Trustee shall determine the amount of funds available for
such Distribution Date.

              (b) If for any Distribution  Date, the Trustee determines that the
funds that will be available for such  Distribution  Date  distributable  to the
Holders  of the  Class  A-3  Certificates  pursuant  to  Section  4.02  will  be
insufficient to pay the related  Guaranteed  Distributions on such  Distribution
Date,  the Trustee shall  determine the amount of any such  deficiency and shall
give notice to FSA and the Fiscal Agent (as defined in the Certificate Insurance
Policy),  if any, by  telephone  or  telecopy of the amount of such  deficiency,
confirmed  in  writing by notice  substantially  in the form of Exhibit A to the
Certificate  Insurance  Policy by 12:00 noon, New York City time, on such second
Business Day. The Trustee's  responsibility for delivering the notice to FSA, as
provided in the preceding  sentence is limited to the  availability,  timeliness
and  accuracy of the  information  provided by the  Servicer.  The notice  shall
constitute a claim for payment  pursuant to the  Certificate  Insurance  Policy.
Upon  receipt of the  Guaranteed  Distribution,  at or prior to the latest  time
payments of the Guaranteed  Distributions  are to be made by FSA pursuant to the
Certificate  Insurance  Policy,  on  behalf  of the  Holders  of the  Class  A-3
Certificates,  the Trustee shall deposit such  Guaranteed  Distributions  in the
Distribution Account and shall distribute such Guaranteed  Distributions only in
accordance with Section 4.02, if applicable.

              (c) The Trustee shall receive as  attorney-in-fact  of each Holder
of a Class A-3 Certificate,  any Guaranteed  Distributions from FSA and disburse
the same to each  Holder  of a Class  A-3  Certificate  in  accordance  with the
provisions of Article IV. Guaranteed Distributions

                                      -70-
<PAGE>

disbursed by the Trustee from proceeds of the Certificate Insurance Policy shall
not be  considered  payment by the Trust nor shall such  payments  discharge the
obligation  of the Trust with  respect to such  Class A-3  Certificate,  and FSA
shall  become the owner of such unpaid  amounts due from the Trust in respect of
such Guaranteed Distributions as the deemed assignee of such Holder and shall be
entitled to receive the FSA  Reimbursement  Amount pursuant to Section 4.02. The
Trustee  hereby agrees on behalf of each Holder of a Class A-3  Certificate  for
the benefit of FSA that it and they  recognize that to the extent that FSA makes
Guaranteed  Distributions,  either  directly or indirectly (as by paying through
the  Trustee),  to the Class A-3  Certificateholders,  FSA will be  entitled  to
receive the Reimbursement Amount pursuant to Section 4.02.

              (d) It is understood  and agreed that the intention of the parties
is that FSA shall not be entitled to reimbursement on any Distribution  Date for
amounts  previously paid by it unless on such  Distribution  Date the Holders of
the Class A-3  Certificates  shall  also have  received  the full  amount of the
Guaranteed Distributions for such Distribution Date.

              (e) In the event the Trustee receives a certified copy of an order
of the  appropriate  court that any payment of  principal or interest on a Class
A-3  Certificate  has been  voided in whole or in part as a  preference  payment
under  applicable  bankruptcy law, the Trustee shall (i) promptly notify FSA and
the Fiscal Agent, if any, and (ii) comply with the provisions of the Certificate
Insurance  Policy to obtain payment by FSA of such voided payment.  In addition,
the Trustee  shall mail notice to all Holders of the Class A-3  Certificates  so
affected  that,  in the event  that any such  Holder's  scheduled  payment is so
recovered,  such Holder will be entitled to payment pursuant to the terms of the
Certificate  Insurance  Policy a copy of which shall be made  available  to such
Holders by the Trustee.  The Trustee  shall furnish to FSA and the Fiscal Agent,
if any, its records listing the payments on the affected Class A-3 Certificates,
if any, that have been made by the Trustee and  subsequently  recovered from the
affected Holders, and the dates on which such payments were made by the Trustee.

              (f) At the  time of the  execution  hereof,  and for the  purposes
hereof,  the Trustee shall establish a separate special purpose trust account in
the name of the Trustee for the benefit of Holders of the Class A-3 Certificates
(the "Policy  Payments  Account")  over which the Trustee  shall have  exclusive
control and sole right of withdrawal.  The Policy  Payments  Account shall be an
Eligible  Account.   The  Trustee  shall  deposit  any  amount  paid  under  the
Certificate  Insurance  Policy into the Policy  Payments  Account and distribute
such amount only for the purposes of making the payments to Holders of the Class
A-3  Certificates in respect of such amount for which the related claim was made
under the Certificate  Insurance Policy.  Such amounts shall be allocated by the
Trustee to Holders of Class A-3 Certificates  affected by such shortfalls in the
same manner as principal and interest  payments are to be allocated with respect
to such  Certificates  pursuant to Section  4.02.  It shall not be necessary for
such payments to be made by checks or wire  transfers  separated from the checks
or wire transfers used to make regular  payments  hereunder with funds withdrawn
from the  Distribution  Account.  However,  any  payments  made on the Class A-3
Certificates  from  funds  in the  Policy  Payments  Account  shall  be noted as
provided in  subsection  (h) below.  Funds held in the Policy  Payments  Account
shall not be invested by the Trustee or the .

                                      -71-
<PAGE>

              (g) Any  funds  received  from FSA for  deposit  into  the  Policy
Payments  Account  pursuant to the Certificate  Insurance Policy in respect of a
Distribution  Date or otherwise  as a result of any claim under the  Certificate
Insurance Policy shall be applied by the Trustee directly to the payment in full
(i) of the Guaranteed  Distributions  due on such Distribution Date on the Class
A-3  Certificates,  or (ii) of  other  amounts  payable  under  the  Certificate
Insurance  Policy.  Funds received by the Trustee as a result of any claim under
the Certificate Insurance Policy shall be used solely for payment to the Holders
of the Class A-3  Certificates  and may not be  applied  for any other  purpose,
including,   without  limitation,   satisfaction  of  any  costs,   expenses  or
liabilities of the Depositor,  the Trustee,  the Servicer or the Trust Fund. Any
funds  (other  than  funds  deposited  therein  in  respect of the amount of any
distribution of principal or interest to any Class A-3  Certificateholder  which
distribution  subsequently is avoided in whole or in part as a preference amount
under applicable law payable under the Certificate  Insurance  Policy) remaining
in the Policy Payments Account on the first Business Day after each Distribution
Date shall be remitted  promptly to FSA pursuant to the written  instruction  of
FSA.

              (h) The  Trustee  shall  keep  complete  and  accurate  records in
respect of (i) all funds  remitted  to it by FSA and  deposited  into the Policy
Payments  Account and (ii) the  allocation of such funds to payments of interest
on and  principal in respect of any Class A-3  Certificates.  FSA shall have the
right to inspect such records at reasonable  times during normal  business hours
upon three Business Days' prior notice to the Trustee.

              (i) The  Trustee  acknowledges,  and each  Holder  of a Class  A-3
Certificate by its acceptance of the Class A-3 Certificate agrees, that, without
the need for any further action on the part of FSA or the Trustee, to the extent
FSA makes  payments,  directly  or  indirectly,  on account of  principal  of or
interest  on any Class A-3  Certificates,  FSA will be fully  subrogated  to the
rights of the Holders of such Class A-3  Certificates  to receive such principal
and interest from the Trust Fund. The Holders of the Class A-3 Certificates,  by
acceptance of the Class A-3 Certificates,  assign their rights as Holders of the
Class A-3  Certificates  to the extent of FSA's interest with respect to amounts
paid under the  Certificate  Insurance  Policy.  Anything herein to the contrary
notwithstanding, solely for purposes of determining FSA's rights, as applicable,
as subrogee for payments  distributable  pursuant to Section  4.02,  any payment
with respect to distributions  to the Class A-3 Certificates  which is made with
funds received pursuant to the terms of the Certificate  Insurance Policy, shall
not be considered  payment of the Class A-3 Certificates from the Trust Fund and
shall not result in the  distribution  or the provision for the  distribution in
reduction of the Class Certificate  Balance of the Class A-3 Certificates except
to the extent such  payment  has been  reimbursed  to FSA  pursuant to the terms
hereof.

              (j) Upon a Responsible  Officer of the Trustee  becoming  aware of
the occurrence of an Event of Default,  the Trustee shall promptly notify FSA of
such Event of Default.

              (k)  The  Trustee  shall  promptly  notify  FSA of  either  of the
following as to which a Responsible Officer of the Trustee has actual knowledge:
(A) the  commencement  of any  proceeding by or against the Depositor  commenced
under the United  States  bankruptcy  code or any other  applicable  bankruptcy,
insolvency,   receivership,   rehabilitation  or  similar  law  (an  "Insolvency
Proceeding")  and (B) the making of any claim in connection  with any Insolvency
Proceeding  seeking the  avoidance  as a  preferential  transfer (a  "Preference
Claim") of any  distribution  made with respect to the Class A-3 Certificates as
to which it has actual knowledge.

                                      -72-
<PAGE>

Each  Holder  of  a  Class  A-3  Certificate,  by  its  purchase  of  Class  A-3
Certificates,  and the Trustee hereby agrees that FSA (so long as no FSA Default
exists) may at any time during the continuation of any proceeding  relating to a
Preference  Claim  direct  all  matters  relating  to  such  Preference   Claim,
including,  without  limitation,  (i) the  direction  of any appeal of any order
relating to any Preference Claim and (ii) the posting of any surety, supersedeas
or performance bond pending any such appeal. In addition and without  limitation
of the foregoing,  FSA shall be subrogated to the rights of the Trustee and each
Holder  of a Class A-3  Certificate  in the  conduct  of any  Preference  Claim,
including,  without  limitation,  all  rights  of  any  party  to  an  adversary
proceeding  action with respect to any court order issued in connection with any
such Preference Claim.

              (l) The Servicer  shall  designate at least one FSA Contact Person
who shall be  available  to FSA to  provide  reasonable  access  to  information
regarding the Mortgage Loans.  The initial FSA Contact Persons are the Servicing
Officers.

              (m) The Trustee shall surrender the Certificate  Insurance  Policy
to FSA for cancellation upon the reduction of the Class  Certificate  Balance of
the Class A-3 Certificates to zero.

              (n) The Trustee shall send to FSA the reports prepared pursuant to
Sections 3.22 and 3.23 and the statements  prepared pursuant to Section 4.03, as
well as any other  statements or  communications  sent to Holders of the Class A
Certificates,  in each  case at the  same  time  such  reports,  statements  and
communications are otherwise sent.

              (o) For so long as there is no continuing default by FSA under its
obligations  under the Certificate  Insurance  Policy (an "FSA  Default"),  each
Holder of a Class  A-3  Certificate  agrees  that FSA  shall be  treated  by the
Depositor,  the Servicer and the Trustee as if FSA were the Holder of all of the
Class A-3  Certificates  for the  purpose  (and  solely for the  purpose) of the
giving of any consent, the making of any direction or the exercise of any voting
or  other  control  rights  otherwise  given to the  Holders  of the  Class  A-3
Certificates  hereunder and the Holders of the Class A-3 Certificates shall only
exercise such rights with the prior written consent of FSA.

              (p) With respect to this Section 4.06, (i) the terms "Receipt" and
"Received" shall mean actual delivery to FSA and its Fiscal Agent, if any, prior
to 12:00 noon, New York City time, on a Business Day;  delivery  either on a day
that is not a Business  Day or after  12:00 noon,  New York City time,  shall be
deemed to be Receipt on the next succeeding Business Day and (ii) "Business Day"
means any day other than (A) a Saturday, Sunday or legal holiday or (B) a day on
which banking  institutions in New York City, Florida,  New Jersey or Minnesota,
are  authorized  or  obligated by law or  executive  order to be closed.  If any
notice or  certificate  given  under  the  Certificate  Insurance  Policy by the
Trustee  is  not in  proper  form  or is not  properly  completed,  executed  or
delivered,  it shall be deemed  not to have  been  Received.  FSA or its  Fiscal
Agent,  if any,  shall promptly so advise the Trustee and the Trustee may submit
an amended notice.

              (q) All notices,  statements,  reports,  certificates  or opinions
required by this  Agreement  to be sent to the Rating  Agencies or the Class A-3
Certificateholders shall also be

                                      -73-
<PAGE>

sent at such time to FSA at FSA Security  Assurance  Inc., 350 Park Avenue,  New
York, New York 10022.

              (r) FSA  shall  be an  express  third  party  beneficiary  of this
Agreement  for the purpose of enforcing the  provisions  hereof to the extent of
FSA's rights explicitly specified herein as if a party hereto.

              (s)  All  references   herein  to  the  ratings  assigned  to  the
Certificates  and to the  interests of any  Certificateholders  shall be without
regard to the Certificate Insurance Policy.

              (t) The Depositor,  Trustee and the Servicer shall  cooperate with
any  reasonable  request by FSA to preserve or enforce the rights granted to FSA
hereunder.

              (u) Any  amendment  to this  Agreement  shall  require  the  prior
written  consent of FSA if such amendment  adversely  affects in any respect the
rights  or  interests  of FSA or of the Class  A-3  Certificateholders  (without
regard to the FSA Policy).

                                   ARTICLE V

                                THE CERTIFICATES

              Section 5.01 THE CERTIFICATES.

              The  Certificates  shall be  substantially  in the forms  attached
hereto as exhibits.  The  Certificates  shall be issuable in registered form, in
the minimum denominations, integral multiples in excess thereof (except that one
Certificate  in each Class may be issued in a different  amount which must be in
excess of the applicable minimum  denomination) and aggregate  denominations per
Class set forth in the Preliminary Statement.

              Subject to Section 9.02  respecting the final  distribution on the
Certificates,  on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (x) by wire
transfer in immediately  available funds to the account of such holder at a bank
or other entity having appropriate  facilities therefor,  if (i) such Holder has
so notified the Trustee at least five Business Days prior to the related  Record
Date and (ii) such Holder shall hold (A) 100% of the Class  Certificate  Balance
of any Class of  Certificates  or (B)  Certificates  of any Class with aggregate
principal  Denominations  of not less than  $1,000,000 or (y) by check mailed by
first  class  mail to  such  Certificateholder  at the  address  of such  holder
appearing in the Certificate Register.

              The  Certificates   shall  be  executed  by  manual  or  facsimile
signature  on behalf  of the  Trustee  by an  authorized  officer.  Certificates
bearing the manual or facsimile  signatures of individuals who were, at the time
such signatures were affixed,  authorized to sign on behalf of the Trustee shall
bind the  Trustee,  notwithstanding  that such  individuals  or any of them have
ceased to be so  authorized  prior to the  countersignature  and delivery of any
such  Certificates or did not hold such offices at the date of such Certificate.
No  Certificate  shall be entitled to any benefit  under this  Agreement,  or be
valid for any purpose,  unless countersigned by the Trustee by manual signature,
and such countersignature upon any Certificate shall be conclusive

                                      -74-
<PAGE>

evidence,  and the only evidence,  that such  Certificate has been duly executed
and  delivered  hereunder.  All  Certificates  shall be dated  the date of their
countersignature.  On the  Closing  Date,  the  Trustee  shall  countersign  the
Certificates  to be issued at the direction of the  Depositor,  or any affiliate
thereof.

              The  Depositor  shall  provide,  or cause to be  provided,  to the
Trustee  on a  continuous  basis,  an  adequate  inventory  of  Certificates  to
facilitate  transfers.

              Section 5.02  CERTIFICATE  REGISTER;  REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES.

              (a) The  Trustee  shall  maintain,  or cause to be  maintained  in
accordance  with the provisions of Section 5.06, a Certificate  Register for the
Trust Fund in which,  subject to the provisions of subsections (b) and (c) below
and to such  reasonable  regulations  as it may  prescribe,  the  Trustee  shall
provide for the  registration of Certificates  and of transfers and exchanges of
Certificates as herein provided.  Upon surrender for registration of transfer of
any  Certificate,  the Trustee  shall  execute and  deliver,  in the name of the
designated  transferee or transferees,  one or more new Certificates of the same
Class and aggregate Percentage Interest.

              At  the  option  of  a  Certificateholder,   Certificates  may  be
exchanged for other  Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest upon surrender of the
Certificates  to be exchanged  at the office or agency of the Trustee.  Whenever
any  Certificates  are so surrendered  for exchange,  the Trustee shall execute,
authenticate,  and deliver the Certificates which the  Certificateholder  making
the exchange is entitled to receive.  Every Certificate presented or surrendered
for  registration  of  transfer or exchange  shall be  accompanied  by a written
instrument of transfer in form  satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.

              No service charge to the Certificateholders  shall be made for any
registration  of  transfer or  exchange  of  Certificates,  but payment of a sum
sufficient  to cover  any tax or  governmental  charge  that may be  imposed  in
connection with any transfer or exchange of Certificates may be required.

              All  Certificates  surrendered  for  registration  of  transfer or
exchange  shall be  cancelled  and  subsequently  destroyed  by the  Trustee  in
accordance with the Trustee's customary procedures.

              (b) No transfer of a Private Certificate shall be made unless such
transfer  is made  pursuant to an  effective  registration  statement  under the
Securities Act and any applicable  state  securities  laws or is exempt from the
registration  requirements under said Act and such state securities laws. Except
with respect to the transfer of the Class X and Class P Certificates to the NIMs
Trust on the Closing Date, in the event that a transfer of a Private Certificate
which is a Physical Certificate is to be made in reliance upon an exemption from
the  Securities  Act and  such  laws,  in order to  assure  compliance  with the
Securities  Act and such laws,  the  Certificateholder  desiring  to effect such
transfer  shall  certify to the  Trustee in writing  the facts  surrounding  the
transfer  in  substantially  the form set forth in  Exhibit  H (the  "TRANSFEROR

                                      -75-
<PAGE>

CERTIFICATE") and either (i) there shall be delivered to the Trustee a letter in
substantially the form of Exhibit I (the "RULE 144A LETTER") or (ii) there shall
be  delivered  to the  Trustee at the  expense of the  transferor  an Opinion of
Counsel that such transfer may be made without registration under the Securities
Act. In the event that a transfer of a Private Certificate which is a Book-Entry
Certificate  is to be made in reliance upon an exemption from the Securities Act
and such laws, in order to assure  compliance  with the  Securities Act and such
laws, the  Certificateholder  desiring to effect such transfer will be deemed to
have made as of the transfer  date each of the  certifications  set forth in the
Transferor Certificate in respect of such Certificate and the transferee will be
deemed to have made as of the transfer date each of the certifications set forth
in the Rule 144A Letter in respect of such Certificate,  in each case as if such
Certificate  were  evidenced  by a Physical  Certificate.  The  Depositor  shall
provide to any Holder of a Private  Certificate and any  prospective  transferee
designated by any such Holder,  information  regarding the related  Certificates
and the  Mortgage  Loans and such other  information  as shall be  necessary  to
satisfy the condition to eligibility  set forth in Rule  144A(d)(4) for transfer
of any such Certificate  without  registration  thereof under the Securities Act
pursuant to the  registration  exemption  provided by Rule 144A. The Trustee and
the Servicer  shall  cooperate  with the  Depositor  in providing  the Rule 144A
information  referenced in the preceding  sentence,  including  providing to the
Depositor such information  regarding the  Certificates,  the Mortgage Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably request
to meet its obligation  under the preceding  sentence.  Each Holder of a Private
Certificate  desiring to effect such transfer  shall,  and does hereby agree to,
indemnify the Trustee and the  Depositor and the Servicer  against any liability
that may result if the  transfer  is not so exempt or is not made in  accordance
with such federal and state laws.

              Except  with  respect to the  transfer  of the Class X and Class P
Certificates  to  the  NIMs  Trust  on  the  Closing  Date,  no  transfer  of an
ERISA-Restricted  Certificate  shall  be made  unless  the  Trustee  shall  have
received  either (i) a  representation  from the transferee of such  Certificate
acceptable  to and in form and  substance  satisfactory  to the  Trustee (in the
event such Certificate is a Private  Certificate,  such requirement is satisfied
only by the Trustee's  receipt of a  representation  letter from the  transferee
substantially  in the form of Exhibit I), to the effect that such  transferee is
not an employee  benefit plan or arrangement  subject to Section 406 of ERISA, a
plan subject to Section 4975 of the Code or a plan subject to any Federal, state
or local law materially similar to the foregoing provisions of ERISA or the Code
("SIMILAR  LAW"),  nor a person acting on behalf of any such plan or arrangement
nor using the assets of any such plan or arrangement to effect such transfer, or
(ii) if the  ERISA-Restricted  Certificate is a Private Certificate or a Class P
Certificate  that has been the subject of an  ERISA-Qualifying  Underwriting,  a
representation  that the  purchaser is an insurance  company that is  purchasing
such Certificates with funds contained in an "insurance company general account"
(as such  term is  defined  in  Section  V(e) of  Prohibited  Transaction  Class
Exemption  95-60  ("PTCE  95-60")  and that the  purchase  and  holding  of such
Certificates  are covered under Sections I and III of PTCE 95-60 or (iii) in the
case of any such  ERISA-Restricted  Certificate or Class P Certificate presented
for  registration in the name of an employee  benefit plan subject to Title I of
ERISA, a plan or arrangement  subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a plan subject to Similar Law, or a
trustee of any such plan or any other  person  acting on behalf of any such plan
or  arrangement  or using such  plan's or  arrangement's  assets,  an Opinion of
Counsel satisfactory to the Trustee and the Servicer, which

                                      -76-
<PAGE>

Opinion of Counsel  shall not be an expense of the Trustee,  the Servicer or the
Trust Fund, addressed to the Trustee, to the effect that the purchase or holding
of such ERISA-Restricted  Certificate will not result in the assets of the Trust
Fund being deemed to be "plan assets" and subject to the prohibited  transaction
provisions  of ERISA and the Code or similar  violation  of Similar Law and will
not subject the Trustee or the Servicer to any  obligation  in addition to those
expressly undertaken in this Agreement or to any liability.  For purposes of the
preceding sentence, with respect to an ERISA-Restricted  Certificate that is not
a Private Certificate, in the event the representation letter referred to in the
preceding sentence is not furnished, such representation shall be deemed to have
been made to the Trustee by the transferee's  (including an initial  acquiror's)
acceptance  of  the  ERISA-Restricted  Certificates.  In  the  event  that  such
representation is violated,  or any attempt to transfer to a plan or arrangement
subject to Section 406 of ERISA, a plan subject to Section 4975 of the Code or a
plan  subject to Similar  Law, or a person  acting on behalf of any such plan or
arrangement  or using the assets of any such plan or  arrangement,  without such
Opinion of Counsel,  such attempted transfer or acquisition shall be void and of
no effect.

              The Class R  Certificate  may not be sold to any employee  benefit
plan subject to Title I of ERISA,  any plan subject to Section 4975 of the Code,
or any plan  subject to any Similar Law or any person  investing on behalf of or
with plan assets of such plan.

              To the extent permitted under  applicable law (including,  but not
limited to,  ERISA),  the Trustee  shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not  permitted  by this  Section  5.02(b) or for making any payments due on such
Certificate  to the Holder  thereof or taking any other  action with  respect to
such Holder under the  provisions of this  Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.

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

              (i) Each Person  holding or acquiring any Ownership  Interest in a
       Residual  Certificate shall be a Permitted  Transferee and shall promptly
       notify the Trustee of any change or  impending  change in its status as a
       Permitted Transferee.

              (ii)  No  Ownership  Interest  in a  Residual  Certificate  may be
       registered on the Closing Date or thereafter transferred, and the Trustee
       shall not register the Transfer of any Residual  Certificate  unless,  in
       addition  to the  certificates  required to be  delivered  to the Trustee
       under  subparagraph (b) above, the Trustee shall have been furnished with
       an  affidavit  (a  "TRANSFER  AFFIDAVIT")  of the  initial  owner  or the
       proposed transferee in the form attached hereto as Exhibit G.

              (iii) Each Person holding or acquiring any Ownership Interest in a
       Residual  Certificate shall agree (A) to obtain a Transfer Affidavit from
       any other Person to whom such Person  attempts to Transfer its  Ownership
       Interest in a Residual  Certificate,  (B) to obtain a Transfer  Affidavit
       from any Person for whom such Person is acting as nominee,

                                      -77-
<PAGE>

       trustee  or  agent  in  connection   with  any  Transfer  of  a  Residual
       Certificate and (C) not to Transfer its Ownership  Interest in a Residual
       Certificate  or to cause  the  Transfer  of an  Ownership  Interest  in a
       Residual  Certificate to any other Person if it has actual knowledge that
       such Person is not a Permitted Transferee.

              (iv) Any attempted or purported Transfer of any Ownership Interest
       in a Residual  Certificate in violation of the provisions of this Section
       5.02(c) shall be absolutely null and void and shall vest no rights in the
       purported  Transferee.  If any purported transferee shall become a Holder
       of a Residual  Certificate in violation of the provisions of this Section
       5.02(c),  then the last preceding Permitted  Transferee shall be restored
       to all rights as Holder thereof  retroactive to the date of  registration
       of Transfer of such Residual  Certificate.  The Trustee shall be under no
       liability  to any Person for any  registration  of Transfer of a Residual
       Certificate  that is in fact not  permitted  by Section  5.02(b) and this
       Section 5.02(c) or for making any payments due on such Certificate to the
       Holder  thereof or taking any other  action  with  respect to such Holder
       under  the  provisions  of this  Agreement  so long as the  Transfer  was
       registered  after receipt of the related Transfer  Affidavit,  Transferor
       Certificate  and the Rule 144A Letter.  The Trustee shall be entitled but
       not obligated to recover from any Holder of a Residual  Certificate  that
       was in fact not a Permitted Transferee at the time it became a Holder or,
       at such subsequent  time as it became other than a Permitted  Transferee,
       all payments made on such Residual  Certificate  at and after either such
       time.  Any such  payments so recovered  by the Trustee  shall be paid and
       delivered by the Trustee to the last  preceding  Permitted  Transferee of
       such Certificate.

              (v) The  Depositor  shall use its best efforts to make  available,
       upon  receipt  of  written  request  from the  Trustee,  all  information
       necessary to compute any tax imposed under Section 860E(e) of the Code as
       a result of a Transfer of an Ownership Interest in a Residual Certificate
       to any Holder who is not a Permitted Transferee.

              The restrictions on Transfers of a Residual  Certificate set forth
in this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual  Certificate  may be  deleted)  with  respect to  Transfers
occurring after delivery to the Trustee of an Opinion of Counsel,  which Opinion
of  Counsel  shall  not be an  expense  of the  Trust  Fund,  the  Trustee,  the
Responsible  Party or the Servicer,  to the effect that the  elimination of such
restrictions  will not cause the Trust  Fund  hereunder  to fail to qualify as a
REMIC at any  time  that the  Certificates  are  outstanding  or  result  in the
imposition of any tax on the Trust Fund, a Certificateholder  or another Person.
Each  Person  holding  or  acquiring  any  Ownership   Interest  in  a  Residual
Certificate  hereby consents to any amendment of this Agreement which,  based on
an Opinion of Counsel furnished to the Trustee,  is reasonably  necessary (a) to
ensure that the record  ownership of, or any beneficial  interest in, a Residual
Certificate is not transferred,  directly or indirectly, to a Person that is not
a Permitted  Transferee and (b) to provide for a means to compel the Transfer of
a  Residual  Certificate  which  is held  by a  Person  that is not a  Permitted
Transferee to a Holder that is a Permitted Transferee.

              (d) The preparation and delivery of all  certificates and opinions
referred to above in this Section 5.02 in connection  with transfer  shall be at
the expense of the parties to such transfers.

                                      -78-
<PAGE>

              (e) Except as provided below, the Book-Entry Certificates shall at
all times remain  registered in the name of the Depository or its nominee and at
all times:  (i)  registration of the  Certificates may not be transferred by the
Trustee  except  to  another  Depository;  (ii) the  Depository  shall  maintain
book-entry  records with respect to the  Certificate  Owners and with respect to
ownership and transfers of such  Book-Entry  Certificates;  (iii)  ownership and
transfers of  registration  of the Book-Entry  Certificates  on the books of the
Depository shall be governed by applicable rules  established by the Depository;
(iv) the  Depository  may  collect  its usual and  customary  fees,  charges and
expenses from its Depository  Participants;  (v) the Trustee shall deal with the
Depository,   Depository   Participants  and  indirect  participating  firms  as
representatives  of the Certificate  Owners of the Book-Entry  Certificates  for
purposes of exercising the rights of holders under this Agreement,  and requests
and directions for and votes of such  representatives  shall not be deemed to be
inconsistent if they are made with respect to different  Certificate Owners; and
(vi) the  Trustee  may  rely  and  shall be  fully  protected  in  relying  upon
information   furnished  by  the  Depository  with  respect  to  its  Depository
Participants  and  furnished  by the  Depository  Participants  with  respect to
indirect  participating  firms and persons  shown on the books of such  indirect
participating firms as direct or indirect Certificate Owners.

              All transfers by  Certificate  Owners of  Book-Entry  Certificates
shall be made in accordance  with the  procedures  established by the Depository
Participant  or  brokerage  firm  representing  such  Certificate   Owner.  Each
Depository   Participant   shall  only  transfer   Book-Entry   Certificates  of
Certificate  Owners it  represents  or of  brokerage  firms for which it acts as
agent in accordance with the Depository's normal procedures.

              If (x) (i) the Depository or the Depositor  advises the Trustee in
writing that the Depository is no longer  willing or able to properly  discharge
its  responsibilities  as  Depository,  and (ii) the Trustee or the Depositor is
unable to locate a qualified successor,  (y) the Depositor at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository or (z) after the  occurrence of an Event of Default,  Certificate
Owners  representing at least 51% of the  Certificate  Balance of the Book-Entry
Certificates  together  advise  the  Trustee  and  the  Depository  through  the
Depository  Participants in writing that the continuation of a book-entry system
through the  Depository  is no longer in the best  interests of the  Certificate
Owners, the Trustee shall notify all Certificate Owners, through the Depository,
of the  occurrence  of any such  event and of the  availability  of  definitive,
fully-registered  Certificates  (the "DEFINITIVE  Certificates")  to Certificate
Owners  requesting the same.  Upon surrender to the Trustee of the related Class
of  Certificates  by the Depository,  accompanied by the  instructions  from the
Depository   for   registration,   the  Trustee   shall  issue  the   Definitive
Certificates.  Neither the  Servicer,  the  Depositor  nor the Trustee  shall be
liable for any delay in delivery of such  instruction and each may  conclusively
rely on, and shall be protected in relying on, such instructions.  The Depositor
shall  provide  the  Trustee  with an  adequate  inventory  of  certificates  to
facilitate  the  issuance  and  transfer of  Definitive  Certificates.  Upon the
issuance of Definitive Certificates all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon and
performed  by the  Trustee,  to the  extent  applicable  with  respect  to  such
Definitive  Certificates  and the  Trustee  shall  recognize  the Holders of the
Definitive  Certificates as  Certificateholders  hereunder;  PROVIDED,  that the
Trustee shall not by virtue of its assumption of such obligations  become liable
to any party for any act or failure to act of the Depository.

                                      -79-
<PAGE>

              Section 5.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

              If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives  evidence to its  satisfaction of the destruction,  loss or
theft of any  Certificate  and (b)  there is  delivered  to the  Depositor,  the
Servicer and the Trustee  such  security or indemnity as may be required by them
to hold each of them  harmless,  then,  in the  absence of notice to the Trustee
that such  Certificate has been acquired by a bona fide  purchaser,  the Trustee
shall execute,  countersign and deliver,  in exchange for or in lieu of any such
mutilated,  destroyed,  lost or stolen  Certificate,  a new  Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate  under this Section  5.03,  the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation  thereto and any other expenses  (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this  Section  5.03 shall  constitute  complete  and  indefeasible  evidence  of
ownership, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.

              Section 5.04 PERSONS DEEMED OWNERS.

              The  Servicer,  the Trustee,  the  Depositor  and any agent of the
Servicer,  the  Depositor  or the Trustee may treat the Person in whose name any
Certificate  is registered as the owner of such  Certificate  for the purpose of
receiving distributions as provided in this Agreement and for all other purposes
whatsoever,  and neither the Servicer,  the Trustee, the Depositor nor any agent
of the Servicer, the Depositor or the Trustee shall be affected by any notice to
the contrary.

              Section  5.05  ACCESS  TO LIST OF  CERTIFICATEHOLDERS'  NAMES  AND
ADDRESSES.

              If three or more  Certificateholders  (a) request such information
in writing from the Trustee,  (b) state that such  Certificateholders  desire to
communicate  with other  Certificateholders  with  respect to their rights under
this  Agreement  or  under  the  Certificates,  and  (c)  provide  a copy of the
communication  which  such  Certificateholders  propose to  transmit,  or if the
Depositor  or  Servicer  shall  request  such  information  in writing  from the
Trustee,  then the Trustee shall,  within ten Business Days after the receipt of
such request,  provide the Depositor, the Servicer or such Certificateholders at
such recipients' expense the most recent list of the  Certificateholders of such
Trust   Fund  held  by  the   Trustee,   if  any.   The   Depositor   and  every
Certificateholder,  by  receiving  and  holding a  Certificate,  agree  that the
Trustee shall not be held  accountable  by reason of the  disclosure of any such
information as to the list of the  Certificateholders  hereunder,  regardless of
the source from which such information was derived.

              Section 5.06 MAINTENANCE OF OFFICE OR AGENCY.

              The Trustee will maintain or cause to be maintained at its expense
an office or offices or agency or agencies  in New York City where  Certificates
may be  surrendered  for  registration  of  transfer  or  exchange.  The Trustee
initially  designates its offices for such purposes  located at 100 Wall Street,
Suite 2000,  New York,  New York 10005.  The  Trustee  will give prompt  written
notice to the  Certificateholders  of any  change in such  location  of any such
office or agency.

                                      -80-
<PAGE>

                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

              Section  6.01  RESPECTIVE  LIABILITIES  OF THE  DEPOSITOR  AND THE
SERVICER.

              The Depositor and the Servicer  shall each be liable in accordance
herewith only to the extent of the  obligations  specifically  and  respectively
imposed upon and undertaken by them herein.

              Section  6.02  MERGER OR  CONSOLIDATION  OF THE  DEPOSITOR  OR THE
SERVICER.

              The  Depositor  and the Servicer will each keep in full effect its
existence,  rights and franchises as a corporation  or federal  savings bank, as
the case may be, under the laws of the United States or under the laws of one of
the states  thereof and will each obtain and  preserve its  qualification  to do
business  as  a  foreign   corporation  in  each   jurisdiction  in  which  such
qualification   is  or  shall  be   necessary   to  protect  the   validity  and
enforceability  of this  Agreement,  or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

              Any Person into which the  Depositor or the Servicer may be merged
or  consolidated,  or any Person  resulting from any merger or  consolidation to
which the Depositor or the Servicer shall be a party,  or any person  succeeding
to the business of the Depositor or the Servicer,  shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder,  without the execution
or  filing  of any paper or any  further  act on the part of any of the  parties
hereto, anything herein to the contrary notwithstanding; PROVIDED, HOWEVER, that
the  successor  or surviving  Person to the Servicer  shall be qualified to sell
mortgage  loans to, and to service  mortgage  loans on behalf of,  Fannie Mae or
FHLMC.

              Section  6.03  LIMITATION  ON  LIABILITY  OF  THE  DEPOSITOR,  THE
SERVICER AND OTHERS.

              Neither the  Depositor,  the Servicer nor any of their  directors,
officers,  employees or agents of the Depositor  shall be under any liability to
the Certificateholders for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement,  or for errors in judgment;
PROVIDED,  HOWEVER,  that this provision  shall not protect the  Depositor,  the
Servicer or any such Person against any breach of  representations or warranties
made by it herein or protect the Depositor or any such Person from any liability
which would otherwise be imposed by reasons of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties  hereunder.  The Depositor and any director,  officer,
employee or agent of the Depositor may rely in good faith on any document of any
kind prima FACIE  properly  executed and submitted by any Person  respecting any
matters arising hereunder. The Depositor and any director,  officer, employee or
agent of the Depositor  shall be indemnified by the Trust Fund and held harmless
against any loss,  liability or expense  incurred in connection  with any audit,
controversy or judicial  proceeding  relating to a governmental taxing authority
or any legal action relating to this Agreement or the  Certificates,  other than
any loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans  (except  as any such  loss,  liability  or  expense  shall  be  otherwise
reimbursable  pursuant to this  Agreement)  and any loss,  liability  or expense
incurred by reason of willful misfeasance, bad

                                      -81-
<PAGE>

faith or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder.  The Depositor shall not
be under any obligation to appear in,  prosecute or defend any legal action that
is not  incidental to its respective  duties  hereunder and which in its opinion
may  involve  it in any  expense  or  liability;  PROVIDED,  HOWEVER,  that  the
Depositor  may in its  discretion  undertake  any such  action  that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties  hereto and  interests  of the  Trustee  and the  Certificateholders
hereunder.  In such event,  the legal  expenses and costs of such action and any
liability  resulting  therefrom shall be expenses,  costs and liabilities of the
Trust Fund, and the Depositor shall be entitled to be reimbursed therefor out of
the Collection Account.

              Neither the Servicer nor any of the officers,  employees or agents
of the Servicer shall be under any liability to the Trustee or the Depositor for
any action taken or for  refraining  from the taking of any action in good faith
pursuant to this  Agreement;  PROVIDED,  HOWEVER,  that this provision shall not
protect  the  Servicer or any such person  against any breach of  warranties  or
representations  made herein,  or failure to perform its  obligations  in strict
compliance  with the  terms of this  Agreement,  or any  liability  which  would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement.  The Servicer and any officer,  employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising  hereunder.  The Servicer
shall not be under any  obligation  to appear in,  prosecute or defend any legal
action which is not  incidental  to its duties to service the Mortgage  Loans in
accordance  with this  Agreement  and which in its opinion may involve it in any
expenses or liability;  PROVIDED,  HOWEVER,  that the Servicer may undertake any
such  action  which  it may deem  necessary  or  desirable  in  respect  to this
Agreement and the rights and duties of the parties  hereto.  In such event,  the
legal  expenses and costs of such action and any liability  resulting  therefrom
shall be expenses,  costs and liabilities for which the Depositor or the Trustee
will be  liable  as set  forth  in this  Agreement,  and the  Servicer  shall be
entitled  to be  reimbursed  therefor  from the  Depositor  or the  Trustee,  as
applicable, upon written demand.

              Section 6.04 LIMITATION ON RESIGNATION OF THE SERVICER.

              The  Servicer  shall not assign this  Agreement or resign from the
obligations  and duties  hereby  imposed  on it except by mutual  consent of the
Servicer,  the  Depositor  and the  Trustee or upon the  determination  that its
duties  hereunder  are no  longer  permissible  under  applicable  law and  such
incapacity cannot be cured by the Servicer.  Any such  determination  permitting
the  resignation  of the Servicer shall be evidenced by an Opinion of Counsel to
such effect  delivered to the Depositor and the Trustee which Opinion of Counsel
shall be in form and substance  acceptable to the Depositor and the Trustee.  No
such resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder.

              Section 6.05  ADDITIONAL  INDEMNIFICATION  BY THE SERVICER;  THIRD
PARTY CLAIMS.

              The Servicer shall indemnify the Responsible  Party, the Depositor
and the Trustee  and hold them  harmless  against  any and all  claims,  losses,
damages, penalties, fines, forfeitures,  reasonable and necessary legal fees and
related costs, judgments, and any other costs, fees and

                                      -82-
<PAGE>

expenses  that any of them may  sustain in any way  related to any breach by the
Servicer,  of any of its  representations  and warranties referred to in Section
2.03(a) or the  failure of the  Servicer  to perform  its duties and service the
Mortgage  Loans in  strict  compliance  with the  terms of this  Agreement.  The
Servicer  immediately  shall notify the  Depositor and the Trustee if a claim is
made by a third party with  respect to this  Agreement  or the  Mortgage  Loans,
assume (with the prior  written  consent of the  Depositor  and the Trustee) the
defense  of any  such  claim  and  pay all  expenses  in  connection  therewith,
including counsel fees, and promptly pay,  discharge and satisfy any judgment or
decree which may be entered against it or the Responsible  Party,  the Depositor
or the Trustee in respect of such claim.

                                  ARTICLE VII

                                     DEFAULT

              Section 7.01 EVENTS OF DEFAULT.

              "EVENT OF DEFAULT,"  wherever  used  herein,  means any one of the
following events:

              (a) any  failure  by the  Servicer  to  remit to the  Trustee  any
payment  required to be made under the terms of this Agreement  which  continues
unremedied  for a period of one Business  Day after the date upon which  written
notice of such failure, requiring the same to be remedied, shall have been given
to the  Servicer  by  the  Depositor  or the  Trustee  or to the  Servicer,  the
Depositor and the Trustee by Certificateholders  evidencing percentage interests
of at least 25% in the Certificates; or

              (b) 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 set forth in this Agreement which continues unremedied for a period
of forty-five days (except that such number of days shall be fifteen in the case
of a  failure  to pay  any  premium  for any  insurance  policy  required  to be
maintained  under  this  Agreement)  after the  earlier of (i) the date on which
written  notice of such failure,  requiring the same to be remedied,  shall have
been given to the Servicer by the Depositor or the Trustee,  or to the Servicer,
the Depositor and the Trustee by Certificateholders  of Certificates  evidencing
percentage  interests  of at  least  25% in the  Certificates  and  (ii)  actual
knowledge of such failure by a Servicing Officer of the Servicer; or

              (c) a  decree  or  order  of a  court  or  agency  or  supervisory
authority  having  jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency,  bankruptcy,  readjustment of debt, 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 sixty days; or

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

                                      -83-
<PAGE>

              (e) the Servicer  shall admit in writing its  inability to pay its
debts  generally  as they become due,  file a petition to take  advantage of any
applicable  insolvency or  reorganization  statute,  make an assignment  for the
benefit of its creditors, or voluntarily suspend payment of its obligations;

              (f) any failure by the Servicer of the Servicer  Termination Test;
or

              (g) any  failure of the  Servicer  to make any P&I  Advance on any
Remittance  Date required to be made from its own funds pursuant to Section 4.01
which  continues  unremedied  for one Business  Day  immediately  following  the
Remittance Date; or

              (h) A breach of any  representation  and  warranty of the Servicer
referred to in Section  2.03(a),  which  materially  and  adversely  affects the
interests of the  Certificateholders and which continues unremedied for a period
of thirty days after the date upon which written  notice of such breach is given
to the Servicer by the Trustee or the Depositor, or to the Servicer, the Trustee
and the Depositor by  Certificateholders  entitled to at least 25% of the Voting
Rights in the Certificates.

              If an Event of Default  described  in clauses  (a)  through (h) of
this Section 7.01 shall occur, then, and in each and every such case, so long as
such Event of Default shall not have been  remedied,  the Trustee may, or at the
direction of 51% of the Voting Rights,  the Trustee shall,  by notice in writing
to the Servicer (with a copy to each Rating Agency), terminate all of the rights
and  obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the  proceeds  thereof,  other than its rights as a  Certificateholder
hereunder;  provided  however,  that the  Trustee  shall not be required to give
written  notice  to the  Servicer  of the  occurrence  of an  Event  of  Default
described  in clauses (b) through  (h) of this  Section  7.01 unless and until a
Responsible  Officer of the Trustee has actual  knowledge of the  occurrence  of
such an Event of  Default.  On and after the  receipt  by the  Servicer  of such
written notice, all authority and power of the Servicer hereunder,  whether with
respect to the Mortgage  Loans or otherwise,  shall pass to and be vested in the
Trustee.  The Trustee is hereby authorized and empowered to execute and deliver,
on  behalf  of the  Servicer,  as  attorney-in-fact  or  otherwise,  any and all
documents  and other  instruments,  and to do or  accomplish  all other  acts or
things  necessary  or  appropriate  to effect  the  purposes  of such  notice of
termination,  whether to complete the transfer and  endorsement or assignment of
the  Mortgage  Loans and  related  documents,  or  otherwise.  Unless  expressly
provided in such written notice, no such termination shall affect any obligation
of the  Servicer to pay amounts  owed  pursuant to Article  VIII.  The  Servicer
agrees to  cooperate  with the  Trustee  in  effecting  the  termination  of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the  transfer  to the  Trustee of all cash  amounts  which  shall at the time be
credited to the  Collection  Account,  or thereafter be received with respect to
the Mortgage Loans.

              Notwithstanding  any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a  Scheduled  Payment  on a  Mortgage  Loan which was due prior to the notice
terminating  such Servicer's  rights and  obligations as Servicer  hereunder and
received  after such notice,  that portion  thereof to which such Servicer would
have been entitled pursuant to Sections 3.11, and any other amounts payable

                                      -84-
<PAGE>

to  such  Servicer  hereunder  the  entitlement  to  which  arose  prior  to the
termination of its activities hereunder.

              Section 7.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

              On  and  after  the  time  the  Servicer   receives  a  notice  of
termination pursuant to Section 3.24 or Section 7.01, the Trustee shall, subject
to and to the extent  provided in Section 3.05, be the successor 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 and  applicable  law  including  the  obligation  to make P&I
Advances  or  Servicing  Advances  pursuant  to Section  4.01.  As  compensation
therefor,  the Trustee  shall be entitled to all funds  relating to the Mortgage
Loans that the  Servicer  would have been  entitled to charge to the  Collection
Account  if the  Servicer  had  continued  to act  hereunder  including,  if the
Servicer was receiving  the  Servicing  Fee, the Servicing Fee and the income on
investments  or gain  related to the  Collection  Account.  Notwithstanding  the
foregoing, if the Trustee has become the successor to the Servicer in accordance
with  Section  7.01,  the Trustee  may, if it shall be  unwilling  to so act, or
shall,  if it is  prohibited  by  applicable  law from making P&I  Advances  and
Servicing  Advances  pursuant to Section 4.01 or if it is otherwise unable to so
act,  appoint,  or petition a court of competent  jurisdiction  to appoint,  any
established  mortgage loan servicing  institution  the appointment of which does
not adversely  affect the then current rating of the Certificates by each Rating
Agency,  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.  Any  successor to the Servicer  shall be an  institution  which is a
Fannie Mae and FHLMC approved  seller/servicer in good standing, which has a net
worth of at least  $30,000,000,  which is willing to service the Mortgage  Loans
and which  executes and delivers to the  Depositor  and the Trustee an agreement
accepting  such  delegation  and  assignment,  containing  an assumption by such
Person  of  the  rights,  powers,  duties,  responsibilities,   obligations  and
liabilities  of the  Servicer  (other than  liabilities  of the  Servicer  under
Section 6.03 incurred  prior to termination of the Servicer under Section 7.01),
with like effect as if originally  named as a party to this Agreement;  PROVIDED
that each Rating  Agency  acknowledges  that its rating of the  Certificates  in
effect immediately prior to such assignment and delegation will not be qualified
or reduced,  as a result of such assignment and delegation.  Pending appointment
of a successor to the  Servicer  hereunder,  the Trustee,  unless the Trustee is
prohibited by law from so acting,  shall,  subject to Section 3.05,  act in such
capacity as  hereinabove  provided.  In  connection  with such  appointment  and
assumption,  the Trustee may make such arrangements for the compensation of such
successor  out of  payments  on Mortgage  Loans as it and such  successor  shall
agree;  PROVIDED,  HOWEVER,  that no such compensation shall be in excess of the
Servicing  Fee Rate and  amounts  paid to the  Servicer  from  investments.  The
Trustee  and such  successor  shall  take  such  action,  consistent  with  this
Agreement, as shall be necessary to effectuate any such succession.  Neither the
Trustee  nor any other  successor  servicer  shall be  deemed  to be in  default
hereunder  by  reason  of any  failure  to make,  or any  delay in  making,  any
distribution  hereunder or any portion thereof or any failure to perform, or any
delay in performing,  any duties or responsibilities  hereunder,  in either case
caused by the failure of the  Servicer  to deliver or  provide,  or any delay in
delivering or providing, any cash, information, documents or records to it.

                                      -85-
<PAGE>

              Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall,  during the term of its service
as  servicer,  maintain  in force the policy or  policies  that the  Servicer is
required to maintain pursuant to Section 6.05.

              Section 7.03 NOTIFICATION TO CERTIFICATEHOLDERS.

              (a) Upon any  termination  of or appointment of a successor to the
Servicer,   the  Trustee   shall  give   prompt   written   notice   thereof  to
Certificateholders and to each Rating Agency.

              (b) Within 60 days after the  occurrence  of any Event of Default,
the Trustee  shall  transmit by mail to all  Certificateholders  and each Rating
Agency  notice of each such Event of  Default  hereunder  known to the  Trustee,
unless such Event of Default shall have been cured or waived.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

              Section 8.01 DUTIES OF THE TRUSTEE.

              The  Trustee,  before the  occurrence  of an Event of Default  and
after  the  curing  of all  Events  of  Default  that may have  occurred,  shall
undertake  to perform such duties and only such duties as are  specifically  set
forth in this  Agreement.  In case an Event of Default has  occurred and remains
uncured,  the Trustee shall  exercise such of the rights and powers vested in it
by this  Agreement,  and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.

              The  Trustee,  upon  receipt  of  all  resolutions,  certificates,
statements,  opinions, reports, documents, orders or other instruments furnished
to the Trustee that are  specifically  required to be furnished  pursuant to any
provision of this Agreement shall examine them to determine  whether they are in
the form required by this  Agreement.  The Trustee shall not be responsible  for
the  accuracy or content of any  resolution,  certificate,  statement,  opinion,
report, document, order, or other instrument.

              No provision of this  Agreement  shall be construed to relieve the
Trustee from liability for its own negligent  action,  its own negligent failure
to act or its own willful misconduct.

              Unless an Event of Default  known to the Trustee has  occurred and
is continuing,

              (a) the duties and  obligations of the Trustee shall be determined
solely by the express  provisions  of this  Agreement,  the Trustee shall not be
liable except for the performance of the duties and obligations specifically set
forth in this Agreement,  no implied covenants or obligations shall be read into
this Agreement against the Trustee, and the Trustee may conclusively rely, as to
the  truth of the  statements  and the  correctness  of the  opinions  expressed
therein,  upon  any  certificates  or  opinions  furnished  to the  Trustee  and
conforming to the

                                      -86-
<PAGE>

requirements of this Agreement which it believed in good faith to be genuine and
to have been duly  executed  by the proper  authorities  respecting  any matters
arising hereunder;

              (b) the Trustee  shall not be liable for an error of judgment made
in good faith by a Responsible  Officer or Responsible  Officers of the Trustee,
unless it is finally proven that the Trustee was negligent in  ascertaining  the
pertinent facts; and

              (c) the  Trustee  shall not be liable  with  respect to any action
taken,  suffered,  or omitted to be taken by it in good faith in accordance with
the  direction of Holders of  Certificates  evidencing  not less than 25% of the
Voting  Rights  of  Certificates  relating  to the  time,  method,  and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Agreement.

              Section 8.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.

              Except as otherwise provided in Section 8.01:

              (a) the Trustee  may request and rely upon and shall be  protected
in acting or refraining from acting upon any resolution,  Officer's Certificate,
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 and the  Trustee  shall have no  responsibility  to
ascertain  or confirm  the  genuineness  of any  signature  of any such party or
parties;

              (b) the Trustee may consult with  counsel,  financial  advisers or
accountants  and  the  advice  of  any  such  counsel,   financial  advisers  or
accountants 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 Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement;

              (d) the Trustee shall not be bound to make any investigation  into
the  facts  or  matters  stated  in  any  resolution,   certificate,  statement,
instrument,  opinion, report, notice, request, consent, order, approval, bond or
other  paper or  document,  unless  requested  in writing so to do by Holders of
Certificates evidencing not less than 25% of the Voting Rights allocated to each
Class of Certificates;

              (e) the Trustee may execute any of the trusts or powers  hereunder
or perform  any  duties  hereunder  either  directly  or by or  through  agents,
accountants  or  attorneys  and the  Trustee  shall not be  responsible  for any
misconduct  or negligence  on the part of any agents,  accountants  or attorneys
appointed with due care by it hereunder;

              (f) the  Trustee  shall not be  required to risk or expend its own
funds or otherwise  incur any financial  liability in the  performance of any of
its duties or in the exercise of any of its

                                      -87-
<PAGE>

rights or powers  hereunder if it shall have  reasonable  grounds for  believing
that  repayment  of such  funds  or  adequate  indemnity  against  such  risk or
liability is not assured to it;

              (g) the Trustee shall not be liable for any loss on any investment
of funds  pursuant to this  Agreement  (other  than as issuer of the  investment
security);

              (h) the Trustee shall not be deemed to have  knowledge of an Event
of Default  until a  Responsible  Officer  of the  Trustee  shall have  received
written notice thereof; and

              (i) the Trustee  shall be under no  obligation  to exercise any of
the trusts,  rights or powers  vested in it by this  Agreement or to  institute,
conduct or defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders, pursuant to this Agreement,
unless such  Certificateholders  shall have  offered to the  Trustee  reasonable
security or indemnity  satisfactory to the Trustee  against the costs,  expenses
and liabilities which may be incurred therein or thereby.

              Section  8.03  TRUSTEE  NOT LIABLE FOR  CERTIFICATES  OR  MORTGAGE
LOANS.

              The recitals  contained  herein and in the  Certificates  shall be
taken  as  the   statements  of  the  Depositor  and  the  Trustee   assumes  no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement or of the  Certificates  or of any
Mortgage  Loan or  related  document  other than with  respect to the  Trustee's
execution and  countersignature  of the  Certificates.  The Trustee shall not be
accountable  for the use or  application by the Depositor or the Servicer of any
funds paid to the Depositor or the Servicer in respect of the Mortgage  Loans or
deposited in or withdrawn  from the  Collection  Account by the Depositor or the
Servicer.

              The Trustee shall have no  responsibility  for filing or recording
any financing or  continuation  statement in any public office at any time or to
otherwise  perfect or maintain the  perfection of any security  interest or lien
granted to it  hereunder  (unless  the Trustee  shall have become the  successor
Servicer).

              The  Trustee  executes  the  Certificates  not in  its  individual
capacity but solely as Trustee of the Trust Fund created by this  Agreement,  in
the  exercise  of the powers and  authority  conferred  and vested in it by this
Agreement.  Each of the  undertakings  and  agreements  made on the  part of the
Trustee on behalf of the Trust Fund in the Certificates is made and intended not
as a personal  undertaking  or agreement by the Trustee but is made and intended
for the purpose of binding only the Trust Fund.

              Section 8.04 TRUSTEE MAY OWN CERTIFICATES.

              The Trustee in its individual or any other capacity may become the
owner or pledgee  of  Certificates  with the same  rights as it would have if it
were not the Trustee.

              Section 8.05 TRUSTEE'S FEES AND EXPENSES.

              As  compensation  for its  activities  under this  Agreement,  the
Trustee may withdraw from the Distribution Account on each Distribution Date the
Trustee Fee for the

                                      -88-
<PAGE>

Distribution  Date  and any  interest  or  investment  income  earned  on  funds
deposited in the Distribution  Account.  The Trustee and any director,  officer,
employee,  or agent of the Trustee shall be indemnified by the Servicer  against
any loss, liability, or expense (including reasonable attorney's fees) resulting
from any error in any tax or  information  return  prepared  by the  Servicer or
incurred in connection with any claim or legal action relating to

              (a) this Agreement,

              (b) the Certificates, or

              (c) the  performance  of any of the  Trustee's  duties  under this
Agreement,

              other than any loss,  liability,  or expense  incurred  because of
willful  misfeasance,  bad faith, or negligence in the performance of any of the
Trustee's  duties  under  this  Agreement.  This  indemnity  shall  survive  the
termination of this Agreement or the resignation or removal of the Trustee under
this Agreement.  Without limiting the foregoing, except as otherwise agreed upon
in writing  by the  Depositor  and the  Trustee,  and  except  for any  expense,
disbursement,  or advance arising from the Trustee's  negligence,  bad faith, or
willful  misconduct,  the Servicer  shall pay or reimburse the Trustee,  for all
reasonable expenses, disbursements, and advances incurred or made by the Trustee
in accordance with this Agreement with respect to

              (A) the reasonable  compensation,  expenses,  and disbursements of
its counsel not associated with the closing of the issuance of the Certificates,

              (B) the reasonable  compensation,  expenses,  and disbursements of
any  accountant,  engineer,  or appraiser that is not regularly  employed by the
Trustee,  to the extent  that the Trustee  must engage them to perform  services
under this Agreement, and

              (C) printing and engraving  expenses in connection  with preparing
any Definitive Certificates.

              Except as  otherwise  provided  in this  Agreement  or a  separate
letter agreement between the Trustee and the Depositor, the Trustee shall not be
entitled to payment or reimbursement  for any routine ongoing expenses  incurred
by the Trustee in the ordinary  course of its duties as Trustee,  Registrar,  or
Paying Agent under this Agreement or for any other expenses.

              Section 8.06 ELIGIBILITY REQUIREMENTS FOR THE TRUSTEE.

              The  Trustee  hereunder  shall at all  times be a  corporation  or
association organized and doing business under the laws of a state or the United
States of  America,  authorized  under  such laws to  exercise  corporate  trust
powers,  having a combined capital and surplus of at least $50,000,000,  subject
to supervision  or  examination by federal or state  authority and with a credit
rating  which  would not cause  either of the Rating  Agencies  to reduce  their
respective  then current  ratings of the  Certificates  (or having provided such
security  from  time  to time as is  sufficient  to  avoid  such  reduction)  as
evidenced in writing by each Rating Agency.  If such  corporation or association
publishes reports of condition at least annually, pursuant to law or to

                                      -89-
<PAGE>

the requirements of the aforesaid  supervising or examining authority,  then for
the  purposes  of this  Section  8.06 the  combined  capital and surplus of such
corporation  or  association  shall be deemed  to be its  combined  capital  and
surplus as set forth in its most recent  report of  condition so  published.  In
case at any time the Trustee shall cease to be eligible in accordance  with this
Section 8.06,  the Trustee shall resign  immediately  in the manner and with the
effect  specified in Section 8.07. The entity serving as Trustee may have normal
banking and trust  relationships  with the Depositor  and its  affiliates or the
Servicer and its affiliates;  provided,  however,  that such entity cannot be an
affiliate of the Depositor or the Servicer other than the Trustee in its role as
successor to the Servicer.

              Section 8.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.

              The  Trustee  may at any time  resign and be  discharged  from the
trusts hereby  created by giving written notice of resignation to the Depositor,
the Servicer, each Rating Agency not less than 60 days before the date specified
in such notice,  when,  subject to Section  8.08,  such  resignation  is to take
effect,  and acceptance by a successor  trustee in accordance  with Section 8.08
meeting the  qualifications  set forth in Section 8.06. If no successor  trustee
meeting  such  qualifications  shall have been so  appointed  and have  accepted
appointment  within 30 days after the giving of such notice or resignation,  the
resigning  Trustee may  petition  any court of  competent  jurisdiction  for the
appointment of a successor trustee.

              If  at  any  time  the  Trustee  shall  cease  to be  eligible  in
accordance  with  Section 8.06 and shall fail to resign  after  written  request
thereto by the Depositor,  or if at any time the Trustee shall become  incapable
of acting,  or shall be adjudged as bankrupt or insolvent,  or a receiver of the
Trustee or of its property shall be appointed,  or any public officer shall take
charge or control of the  Trustee or of its  property or affairs for the purpose
of rehabilitation, conservation or liquidation, or a tax is imposed with respect
to the Trust Fund by any state in which the Trustee or the Trust Fund is located
and the  imposition  of such  tax  would  be  avoided  by the  appointment  of a
different trustee, then the Depositor or the Servicer may remove the Trustee and
appoint a successor trustee by written  instrument,  in triplicate,  one copy of
which shall be delivered  to the Trustee,  one copy to the Servicer and one copy
to the successor trustee.

              The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the  Trustee  and  appoint a successor  trustee by
written  instrument or  instruments,  in  triplicate,  signed by such Holders or
their  attorneys-in-fact  duly  authorized,  one  complete set of which shall be
delivered  by the  successor  Trustee to the  Servicer,  one complete set to the
Trustee so removed and one  complete  set to the  successor  so  appointed.  The
successor trustee shall notify each Rating Agency of any removal of the Trustee.

              Any  resignation  or removal of the Trustee and  appointment  of a
successor  trustee  pursuant to this Section 8.07 shall  become  effective  upon
acceptance of appointment by the successor trustee as provided in Section 8.08.

              Section 8.08 SUCCESSOR TRUSTEE.

              Any successor  trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
and the Servicer an

                                      -90-
<PAGE>

instrument accepting such appointment hereunder and thereupon the resignation or
removal of the  predecessor  trustee shall become  effective and such  successor
trustee, without any further act, deed or conveyance,  shall become fully vested
with  all  the  rights,  powers,  duties  and  obligations  of  its  predecessor
hereunder,  with the like effect as if originally  named as trustee herein.  The
Depositor,  the Servicer and the  predecessor  trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for more
fully and certainly  vesting and  confirming  in the successor  trustee all such
rights, powers, duties, and obligations.

              No successor trustee shall accept  appointment as provided in this
Section  8.08 unless at the time of its  acceptance,  the  successor  trustee is
eligible under Section 8.06 and its  appointment  does not adversely  affect the
then current rating of the Certificates.

              Upon acceptance of appointment by a successor  trustee as provided
in this Section 8.08, the Depositor  shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice  within 10 days after  acceptance  of  appointment  by the successor
trustee,  the  successor  trustee  shall  cause such  notice to be mailed at the
expense of the Depositor.

              Section 8.09 MERGER OR CONSOLIDATION OF THE TRUSTEE.

              Any corporation  into which the Trustee may be merged or converted
or with  which it may be  consolidated  or any  corporation  resulting  from any
merger,  conversion or  consolidation  to which the Trustee shall be a party, or
any  corporation  succeeding  to the  business  of  the  Trustee,  shall  be the
successor of the Trustee  hereunder,  provided  that such  corporation  shall be
eligible  under  Section  8.06  without the  execution or filing of any paper or
further act on the part of any of the  parties  hereto,  anything  herein to the
contrary notwithstanding.

              Section 8.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

              Notwithstanding  any other  provisions of this  Agreement,  at any
time, for the purpose of meeting any legal  requirements of any  jurisdiction in
which any part of the Trust Fund or property  securing any Mortgage  Note may at
the time be located,  the Servicer and the Trustee acting jointly shall have the
power and shall  execute  and  deliver  all  instruments  to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons,  in such capacity and for the
benefit  of the  Certificateholders,  such  title to the Trust  Fund or any part
thereof,  whichever is applicable,  and, subject to the other provisions of this
Section  8.10,  such  powers,  duties,  obligations,  rights  and  trusts as the
Servicer and the Trustee may  consider  appropriate.  If the Servicer  shall not
have  joined in such  appointment  within 15 days  after the  receipt by it of a
request to do so, or in the case an Event of Default  shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment.  No
co-trustee or separate trustee  hereunder shall be required to meet the terms of
eligibility  as a  successor  trustee  under  Section  8.06  and  no  notice  to
Certificateholders  of the  appointment  of any  co-trustee or separate  trustee
shall be required under Section 8.08.

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

                                      -91-
<PAGE>

              (a) To the extent  necessary  to  effectuate  the purposes of this
Section 8.10, all rights,  powers,  duties and obligations  conferred or imposed
upon the Trustee,  except for the obligation of the Trustee under this Agreement
to advance funds on behalf of the  Servicer,  shall be conferred or imposed upon
and  exercised  or  performed  by the  Trustee  and  such  separate  trustee  or
co-trustee jointly (it being understood that such separate trustee or co-trustee
is not  authorized to act separately  without the Trustee  joining in such act),
except  to the  extent  that  under  any law of any  jurisdiction  in which  any
particular act or acts are to be performed  (whether as Trustee  hereunder or as
successor  to the  Servicer  hereunder),  the Trustee  shall be  incompetent  or
unqualified  to perform such act or acts,  in which event such  rights,  powers,
duties and obligations  (including the holding of title to the applicable  Trust
Fund or any portion  thereof in any such  jurisdiction)  shall be exercised  and
performed  singly by such  separate  trustee  or  co-trustee,  but solely at the
direction of the Trustee;

              (b) No trustee  hereunder shall be held personally  liable because
of any act or omission of any other trustee hereunder and such appointment shall
not,  and  shall not be deemed  to,  constitute  any such  separate  trustee  or
co-trustee as agent of the Trustee;

              (c) The  Trustee  may at any time  accept  the  resignation  of or
remove any separate  trustee or  co-trustee;  and (d) The Servicer,  and not the
Trustee,   shall  be  liable  for  the  payment  of   reasonable   compensation,
reimbursement and indemnification to any such separate trustee or co-trustee.

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

                  Any  separate   trustee  or  co-trustee   may,  at  any  time,
constitute  the  Trustee  its agent or  attorney-in-fact,  with  full  power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting,  resign or be removed,  all
of its  estates,  properties,  rights,  remedies and trusts shall vest in and be
exercised  by  the  Trustee,  to  the  extent  permitted  by  law,  without  the
appointment of a new or successor trustee.

              Section 8.11 TAX MATTERS.

              It is  intended  that the assets  with  respect to which any REMIC
election  pertaining  to the  Trust  Fund is to be  made,  as set  forth  in the
Preliminary  Statement,  shall  constitute,  and that  the  conduct  of  matters
relating to such assets shall be such as to qualify such assets as, a

                                      -92-
<PAGE>

"real estate mortgage  investment  conduit" as defined in and in accordance with
the REMIC  Provisions.  In furtherance of such intention,  the Trustee covenants
and agrees  that it shall act as agent (and the Trustee is hereby  appointed  to
act as agent) on behalf of any the REMIC and that in such capacity it shall:

              (a)  prepare  and  file in a timely  manner,  a U.S.  Real  Estate
Mortgage  Investment  Conduit Income Tax Return (Form 1066 or any successor form
adopted by the Internal  Revenue Service) and prepare and file with the Internal
Revenue  Service and  applicable  state or local tax  authorities  income tax or
information  returns for each taxable year with respect to any REMIC,  described
in the Preliminary Statement containing such information and at the times and in
the  manner  as may be  required  by the  Code  or  state  or  local  tax  laws,
regulations,   or  rules,  and  furnish  to  Certificateholders  the  schedules,
statements  or  information  at such times and in such manner as may be required
thereby;

              (b)  within  thirty  days  of the  Closing  Date,  furnish  to the
Internal Revenue  Service,  on Forms 8811 or as otherwise may be required by the
Code,  the name,  title,  address,  and telephone  number of the person that the
holders of the  Certificates may contact for tax information  relating  thereto,
together with such  additional  information as may be required by such Form, and
update such information at the time or times in the manner required by the Code;

              (c) make an  election  that each of the Lower  Tier  REMIC and the
Upper Tier REMIC be treated as a REMIC on the  federal  tax return for its first
taxable year (and, if necessary, under applicable state law);

              (d)  prepare  and  forward  to the  Certificateholders  and to the
Internal  Revenue  Service  and,  if  necessary,  state  tax  authorities,   all
information  returns and reports as and when  required to be provided to them in
accordance with the REMIC Provisions,  including the calculation of any original
issue  discount  using the  Prepayment  Assumption (as defined in the Prospectus
Supplement);

              (e)  provide  information  necessary  for the  computation  of tax
imposed on the  transfer  of a Residual  Certificate  to a Person  that is not a
Permitted  Transferee,  or an  agent  (including  a  broker,  nominee  or  other
middleman) of a Non-Permitted  Transferee,  or a pass-through  entity in which a
Non-Permitted  Transferee is the record  holder of an interest  (the  reasonable
cost of computing and furnishing  such  information may be charged to the Person
liable for such tax);

              (f) to the extent that they are under its control, conduct matters
relating to such assets at all times that any Certificates are outstanding so as
to maintain the status as a REMIC under the REMIC Provisions;

              (g) not knowingly or intentionally take any action or omit to take
any action that would  cause the  termination  of the REMIC  status of any REMIC
created hereunder;

              (h) pay, from the sources  specified in the last paragraph of this
Section  8.11,  the amount of any  federal or state  tax,  including  prohibited
transaction  taxes as described  below,  imposed on any REMIC created  hereunder
before its termination when and as the same shall be

                                      -93-
<PAGE>

due and payable (but such obligation  shall not prevent the Trustee or any other
appropriate  Person from contesting any such tax in appropriate  proceedings and
shall not prevent the Trustee from withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings);

              (i)  cause  federal,  state or  local  income  tax or  information
returns to be signed by the  Trustee or such other  person as may be required to
sign such returns by the Code or state or local laws, regulations or rules;

              (j) maintain  records  relating to each REMIC  created  hereunder,
including the income,  expenses,  assets, and liabilities  thereof on a calendar
year basis and on the accrual method of accounting and the fair market value and
adjusted basis of the assets  determined at such intervals as may be required by
the Code,  as may be  necessary  to prepare the  foregoing  returns,  schedules,
statements or information; and

              (k) as and when  necessary and  appropriate,  represent each REMIC
created hereunder in any administrative or judicial  proceedings  relating to an
examination  or  audit  by  any  governmental   taxing  authority,   request  an
administrative  adjustment  as  to  any  taxable  year  of  each  REMIC  created
hereunder, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations  relating to any tax item of any REMIC created
hereunder,  and  otherwise  act on behalf of the  REMIC in  relation  to any tax
matter or controversy involving it.

              The   Trustee   shall   treat   the   rights   of  the   Class   P
Certificateholders   to  Prepayment  Charges  as  the  beneficial  ownership  of
interests in a grantor  trust,  and not as an  obligation  of any REMIC  created
hereunder, for federal income tax purposes.

              To enable the Trustee to perform its duties under this  Agreement,
the  Depositor  shall  provide to the Trustee  within ten days after the Closing
Date all information or data that the Trustee requests in writing and determines
to be relevant for tax  purposes to the  valuations  and offering  prices of the
Certificates,  including the price, yield, prepayment assumption,  and projected
cash flows of the Certificates and the Mortgage Loans.  Moreover,  the Depositor
shall provide  information to the Trustee  concerning the value to each Class of
Certificates  of the right to receive Basis Risk  CarryForward  Amounts from the
Excess  Reserve Fund.  Thereafter,  the  Depositor  shall provide to the Trustee
promptly upon written request  therefor any additional  information or data that
the Trustee may, from time to time,  reasonably request to enable the Trustee to
perform its duties under this Agreement.  The Depositor  hereby  indemnifies the
Trustee for any losses, liabilities, damages, claims, or expenses of the Trustee
arising from any errors or  miscalculations  of the Trustee that result from any
failure  of the  Depositor  to  provide,  or to cause to be  provided,  accurate
information or data to the Trustee on a timely basis.

              If any tax is imposed on  "prohibited  transactions"  of any REMIC
created  hereunder  as defined in Section  860F(a)(2)  of the Code,  on the "net
income from foreclosure property" of such REMIC as defined in Section 860G(c) of
the Code,  on any  contribution  to the REMIC after the Startup Day  pursuant to
Section 860G(d) of the Code, or any other tax is imposed,  including any minimum
tax imposed on the REMIC  pursuant to Sections 23153 and 24874 of the California
Revenue and Taxation Code, if not paid as otherwise provided for

                                      -94-
<PAGE>

herein,  the tax shall be paid by (i) the  Trustee  if such tax arises out of or
results  from  negligence  of  the  Trustee  in  the  performance  of any of its
obligations  under this  Agreement,  (ii) the Servicer,  in the case of any such
minimum tax, and otherwise if such tax arises out of or results from a breach by
the Servicer of any of its obligations under this Agreement, (iii) a Responsible
Party if such  tax  arises  out of or  results  from  that  Responsible  Party's
obligation  to  repurchase a Mortgage  Loan pursuant to Section 2.03, or (iv) in
all other cases, or if the Trustee, the Servicer, or the Responsible Party fails
to honor its obligations  under the preceding  clauses (i), (ii), or (iii),  any
such  tax  will  be  paid  with  amounts  otherwise  to be  distributed  to  the
Certificateholders, as provided in Section 4.02(a).

              Section 8.12 PERIODIC FILINGS.

              Pursuant to written  instructions from the Depositor,  the Trustee
shall  prepare,  execute  and file  all  periodic  reports  required  under  the
Securities  Exchange  Act of 1934 in  conformity  with the  terms of the  relief
granted to issuers similar to the Trust Fund. In connection with the preparation
and filing of such periodic reports, the Depositor and the Servicer shall timely
provide to the  Trustee  all  material  information  available  to them which is
required  to be  included  in such  reports  and not  known to them to be in the
possession of the Trustee and such other  information as the Trustee  reasonably
may request from either of them and otherwise  reasonably  shall  cooperate with
the Trustee.  The Trustee shall have no liability with respect to any failure to
properly prepare or file such periodic reports resulting from or relating to the
Trustee's  inability or failure to obtain any information not resulting from its
own negligence or willful misconduct.

              Section 8.13 TAX CLASSIFICATION OF THE EXCESS RESERVE FUND ACCOUNT

              For  federal  income tax  purposes,  the  Trustee  shall treat the
Excess  Reserve Fund Account as an outside  reserve fund,  within the meaning of
Treasury Regulation ss. 1.860-2(h),  that is beneficially owned by the holder of
the Class X  Certificate.  The Trustee shall treat the rights that each Class of
Certificates has to receive payments of Basis Risk CarryForward Amounts from the
Excess Reserve Fund Account as rights to receive payments under an interest rate
cap contract  written by the Class X  Certificateholder  in favor of each Class.
Accordingly,  each  Class of  Certificates  (excluding  the Class X, Class P and
Class R  Certificates)  will  comprise  two  components  - an Upper Tier Regular
Interest and an interest in a cap contract. The Trustee shall allocate the issue
price  for a Class of  Certificates  between  two  components  for  purposes  of
determining the issue price of the Upper Tier Regular  Interest  component based
on information received from the Depositor.

                                   ARTICLE IX

                                   TERMINATION

              Section  9.01  TERMINATION  UPON  LIQUIDATION  OR  PURCHASE OF THE
MORTGAGE LOANS.

              Subject to Section 9.03, the obligations and  responsibilities  of
the Depositor,  the Servicer and the Trustee  created hereby with respect to the
Trust Fund shall  terminate upon the earlier of (a) the purchase by the Servicer
of all Mortgage Loans (and REO Properties) at the

                                      -95-
<PAGE>

price  equal  to the sum of (i) 100% of the  Stated  Principal  Balance  of each
Mortgage Loan (other than in respect of REO Property)  plus one month's  accrued
interest thereon at the applicable Adjusted Mortgage Rate and (ii) the lesser of
(x) the  appraised  value of any REO Property as determined by the higher of two
appraisals  completed by two independent  appraisers selected by the Servicer at
the  expense  of the  Servicer  and (y) the  Stated  Principal  Balance  of each
Mortgage Loan related to any REO Property,  in each case plus accrued and unpaid
interest thereon at the applicable  Adjusted Net Mortgage Rate and (b) the later
of (i) the maturity or other  liquidation (or any Advance with respect  thereto)
of the last Mortgage Loan remaining in the Trust Fund and the disposition of all
REO  Property and (ii) the  distribution  to  Certificateholders  of all amounts
required to be distributed to them pursuant to this Agreement. In no event shall
the trusts  created hereby  continue  beyond the expiration of 21 years from the
death  of the  survivor  of the  descendants  of  Joseph  P.  Kennedy,  the late
Ambassador of the United States to the Court of St. James's,  living on the date
hereof.

              The right to  repurchase  all  Mortgage  Loans and REO  Properties
pursuant  to clause (a) above shall be  conditioned  upon the  aggregate  Stated
Principal  Balance of the Mortgage  Loans,  at the time of any such  repurchase,
aggregating ten percent or less of the Cut-off Date Pool Principal Balance.

              Section 9.02 FINAL DISTRIBUTION ON THE CERTIFICATES.

              If on any Determination  Date, the Servicer  determines that there
are no Outstanding Mortgage Loans and no other funds or assets in the Trust Fund
other than the funds in the  Collection  Account,  the Servicer shall direct the
Trustee promptly to send a Notice of Final Distribution each  Certificateholder.
If the  Servicer  elects to terminate  the Trust Fund  pursuant to clause (a) of
Section  9.01,  at  least  20  days  prior  to the  date  the  Notice  of  Final
Distribution  is to be mailed to the  affected  Certificateholders  the Servicer
shall notify the Depositor  and the Trustee of the date the Servicer  intends to
terminate the Trust Fund and of the applicable  repurchase price of the Mortgage
Loans and REO Properties.

              A Notice of Final  Distribution,  specifying the Distribution Date
on which  Certificateholders may surrender their Certificates for payment of the
final  distribution and cancellation,  shall be given promptly by the Trustee by
letter to Certificateholders  mailed not earlier than the 15th day and not later
than  the  10th  day of the  month  next  preceding  the  month  of  such  final
distribution.  Any such  Notice  of Final  Distribution  shall  specify  (a) the
Distribution Date upon which final distribution on the Certificates will be made
upon   presentation   and  surrender  of  Certificates  at  the  office  therein
designated,  (b) the amount of such final distribution,  (c) the location of the
office or agency at which such  presentation and surrender must be made, and (d)
that the Record  Date  otherwise  applicable  to such  Distribution  Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Servicer will give such Notice
of Final  Distribution  to each  Rating  Agency at the time such Notice of Final
Distribution is given to Certificateholders.

              In the event  such  Notice  of Final  Distribution  is given,  the
Servicer shall cause all funds in the  Collection  Account to be remitted to the
Trustee for deposit in the Distribution Account on the Business Day prior to the
applicable  Distribution  Date in an amount equal to the final  distribution  in
respect of the Certificates. Upon such final deposit with respect to the Trust

                                      -96-
<PAGE>

Fund and the  receipt by the  Trustee of a Request  for  Release  therefor,  the
Trustee  shall  promptly  release to the  Servicer the  Custodial  Files for the
Mortgage Loans.

              Upon presentation and surrender of the  Certificates,  the Trustee
shall cause to be distributed to the  Certificateholders  of each Class, in each
case on the final  Distribution Date and in the order set forth in Section 4.02,
in  proportion  to  their  respective  Percentage  Interests,  with  respect  to
Certificateholders of the same Class, an amount equal to (i) as to each Class of
Regular Certificates  (except the Class X Certificate),  the Certificate Balance
thereof plus for each such Class and the Class X  Certificate  accrued  interest
thereon  in the  case  of an  interest-bearing  Certificate  and  (ii) as to the
Residual  Certificates,  the  amount,  if any,  which  remains on deposit in the
Distribution  Account  (other than the amounts  retained to meet  claims)  after
application pursuant to clause (i) above.

              In the  event  that  any  affected  Certificateholders  shall  not
surrender  Certificates  for  cancellation  within  six  months  after  the date
specified in the above mentioned written notice, the Trustee shall give a second
written  notice  to  the  remaining   Certificateholders   to  surrender   their
Certificates for cancellation  and receive the final  distribution  with respect
thereto.  If within  six  months  after the  second  notice  all the  applicable
Certificates  shall not have been surrendered for cancellation,  the Trustee may
take appropriate  steps, or may appoint an agent to take  appropriate  steps, to
contact  the  remaining   Certificateholders   concerning   surrender  of  their
Certificates,  and the cost  thereof  shall be paid out of the  funds  and other
assets  which  remain a part of the Trust  Fund.  If within  one year  after the
second notice all Certificates shall not have been surrendered for cancellation,
the Class R  Certificateholders  shall be  entitled to all  unclaimed  funds and
other assets of the Trust Fund which remain subject hereto.

              Section 9.03 ADDITIONAL TERMINATION REQUIREMENTS.

              In the event the  Servicer  exercises  its  purchase  option  with
respect to the Mortgage  Loans as provided in Section 9.01, the Trust Fund shall
be terminated in accordance with the following additional  requirements,  unless
the Trustee has been supplied with an Opinion of Counsel,  at the expense of the
Servicer, to the effect that the failure to comply with the requirements of this
Section  9.03 will not (i)  result  in the  imposition  of taxes on  "prohibited
transactions"  on either REMIC as defined in Section  860F of the Code,  or (ii)
cause  either the Lower Tier REMIC or the Upper Tier REMIC to fail to qualify as
a REMIC at any time that any Certificates are outstanding:

              (a) The Trustee  shall sell all of the assets of the Trust Fund to
the  Servicer,  and,  within  90 days  of such  sale,  shall  distribute  to the
Certificateholders  the proceeds of such sale in complete liquidation of each of
the Lower Tier REMIC and the Upper Tier REMIC.

              (b) The  Trustee  shall  attach a statement  to the final  federal
income  tax  return  for each of the Lower  Tier  REMIC and the Upper Tier REMIC
stating that pursuant to Treasury Regulation ss. 1.860F-1,  the first day of the
90-day  liquidation period for each such REMIC was the date on which the Trustee
sold the assets of the Trust Fund to the Servicer.

                                      -97-
<PAGE>

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

              Section 10.01 AMENDMENT.

              This  Agreement may be amended from time to time by the Depositor,
the Responsible  Party,  the Servicer and the Trustee without the consent of any
of the  Certificateholders (i) to cure any ambiguity or mistake, (ii) to correct
any defective  provision  herein or to supplement any provision herein which may
be inconsistent with any other provision  herein,  (iii) to add to the duties of
the Depositor or the Servicer,  (iv) to add any other provisions with respect to
matters or questions arising hereunder or (v) to modify, alter, amend, add to or
rescind any of the terms or provisions  contained in this  Agreement;  PROVIDED,
that any action pursuant to clauses (iv) or (v) above shall not, as evidenced by
an Opinion of Counsel  (which  Opinion of Counsel shall not be an expense of the
Trustee  or the Trust  Fund),  adversely  affect  in any  material  respect  the
interests  of any  Certificateholder;  and PROVIDED  FURTHER that the  amendment
shall not be deemed to adversely affect in any material respect the interests of
the  Certificateholders  if the Person requesting the amendment obtains a letter
from each  Rating  Agency  stating  that the  amendment  would not result in the
downgrading  or  withdrawal  of the  respective  ratings  then  assigned  to the
Certificates;  it being  understood  and agreed  that any such  letter in and of
itself will not  represent a  determination  as to the  materiality  of any such
amendment  and will  represent  a  determination  only as to the  credit  issues
affecting any such rating. The Trustee, the Depositor, the Responsible Party and
the  Servicer  also may at any time and from time to time amend  this  Agreement
without the consent of the Certificateholders to modify, eliminate or add to any
of its  provisions  to such  extent  as shall be  necessary  or  helpful  to (i)
maintain  the  qualification  of the Lower  Tier  REMIC and the Upper Tier REMIC
under the Code,  (ii) avoid or minimize the risk of the imposition of any tax on
the Lower Tier REMIC or the Upper Tier REMIC  pursuant to the Code that would be
a claim at any time prior to the final  redemption of the  Certificates or (iii)
comply with any other requirements of the Code,  PROVIDED,  that the Trustee has
been  provided an Opinion of Counsel,  which  opinion shall be an expense of the
party  requesting  such  opinion  but in any case shall not be an expense of the
Trustee  or the Trust  Fund,  to the effect  that such  action is  necessary  or
helpful  to, as  applicable,  (i)  maintain  such  qualification,  (ii) avoid or
minimize the risk of the  imposition of such a tax or (iii) comply with any such
requirements of the Code.

              This  Agreement  may  also  be  amended  from  time to time by the
Depositor,  the Servicer, the Responsible Party and the Trustee with the consent
of the Holders of Certificates  evidencing  Percentage Interests aggregating not
less than 66 2/3% of each Class of Certificates affected thereby for the purpose
of adding any provisions to or changing in any manner or eliminating  any of the
provisions  of this  Agreement  or of  modifying in any manner the rights of the
Holders of  Certificates;  PROVIDED,  HOWEVER,  that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments required to
be  distributed  on any  Certificate  without  the consent of the Holder of such
Certificate,  (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing,  as
to such Class,  Percentage Interests aggregating not less than 66 2/3%, or (iii)
reduce the aforesaid

                                      -98-
<PAGE>

percentages of Certificates  the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all such Certificates then
outstanding.

              Notwithstanding  any  contrary  provision of this  Agreement,  the
Trustee  shall not consent to any  amendment to this  Agreement  unless it shall
have first received an Opinion of Counsel, which opinion shall not be an expense
of the Trustee or the Trust Fund,  to the effect  that such  amendment  will not
cause the imposition of any tax on any REMIC or the  Certificateholders or cause
any REMIC to fail to  qualify as a REMIC at any time that any  Certificates  are
outstanding.

              Notwithstanding  the foregoing  provisions of this Section  10.01,
with  respect  to  any  amendment  that  significantly  modifies  the  permitted
activities of the Trustee or the Servicer, any Certificate beneficially owned by
the Depositor or any of its Affiliates or by the Responsible Party or any of its
Affiliates  shall be deemed not to be  outstanding  (and shall not be considered
when  determining  the  percentage  of  Certificateholders  consenting  or  when
calculating the total number of  Certificates  entitled to consent) for purposes
of  determining  if the  requisite  consents  of  Certificateholders  under this
Section 10.01 have been obtained.

              Promptly  after the execution of any  amendment to this  Agreement
requiring the consent of  Certificateholders,  the Trustee shall furnish written
notification   of  the   substance   or  a  copy  of  such   amendment  to  each
Certificateholder and each Rating Agency.

              It shall not be  necessary  for the consent of  Certificateholders
under  this  Section  10.01  to  approve  the  particular  form of any  proposed
amendment,  but it  shall  be  sufficient  if such  consent  shall  approve  the
substance  thereof.  The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.

              Nothing in this Agreement  shall require the Trustee to enter into
an amendment without receiving an Opinion of Counsel (which Opinion shall not be
an expense of the Trustee or the Trust Fund),  satisfactory  to the Trustee that
(i) such amendment is permitted and is not prohibited by this Agreement and that
all  requirements  for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely  affect in any material  respect the
interests  of any  Certificateholder  or (B) the  conclusion  set  forth  in the
immediately  preceding clause (A) is not required to be reached pursuant to this
Section 10.01.

              Notwithstanding  the  foregoing,  any amendment to this  Agreement
shall  require  the prior  written  consent of FSA if such  amendment  adversely
affects  in any  respect  the  rights  or  interests  of FSA or of the Class A-3
Certificateholders (without regard to the FSA Policy).

              Section 10.02 RECORDATION OF AGREEMENT; COUNTERPARTS.

              This Agreement is subject to recordation in all appropriate public
offices  for real  property  records  in all the  counties  or other  comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated,  and in any other  appropriate  public  recording office or elsewhere,
such  recordation  to be effected by the Servicer at its expense,  but only upon

                                      -99-
<PAGE>

receipt of an Opinion of Counsel to the effect that such recordation  materially
and beneficially affects the interests of the Certificateholders.

              For the purpose of facilitating  the recordation of this Agreement
as herein  provided  and for other  purposes,  this  Agreement  may be  executed
simultaneously in any number of counterparts,  each of which  counterparts shall
be deemed to be an original,  and such counterparts shall constitute but one and
the same instrument.

              Section 10.03 GOVERNING LAW.

              THIS AGREEMENT  SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE  SUBSTANTIVE  LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE  PERFORMED  IN THE STATE OF NEW YORK AND THE  OBLIGATIONS,  RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

              Section 10.04 INTENTION OF PARTIES.

              It is the express intent of the parties hereto that the conveyance
(i) of the  Mortgage  Loans by the  Depositor  and (ii) of the Trust Fund by the
Depositor to the Trustee each be, and be construed as, an absolute sale thereof.
It is, further, not the intention of the parties that such conveyances be deemed
a pledge thereof. However, in the event that,  notwithstanding the intent of the
parties,  such assets are held to be the property of the Depositor,  as the case
may be, or if for any other reason this  Agreement is held or deemed to create a
security interest in either such assets, then (i) this Agreement shall be deemed
to be a security  agreement within the meaning of the Uniform Commercial Code of
the State of New York and (ii) the  conveyances  provided for in this  Agreement
shall be deemed to be an assignment and a grant by the Depositor to the Trustee,
for the benefit of the Certificateholders,  of a security interest in all of the
assets transferred, whether now owned or hereafter acquired.

              The Depositor for the benefit of the Certificateholders  shall, to
the extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement  were deemed to create a security  interest in
the Trust  Fund,  such  security  interest  would be  deemed  to be a  perfected
security  interest of first priority under applicable law and will be maintained
as such  throughout the term of the Agreement.  The Depositor  shall arrange for
filing any Uniform  Commercial Code  continuation  statements in connection with
any security  interest granted or assigned to the Trustee for the benefit of the
Certificateholders.

              Section 10.05 NOTICES.

              (a) The Trustee  shall use its best  efforts to  promptly  provide
notice to each Rating  Agency with respect to each of the  following of which it
has actual knowledge:

              1. Any material change or amendment to this Agreement;

              2. The occurrence of any Eventof Default that has not been cured;

                                     -100-
<PAGE>

              3. The  resignation  or termination of the Servicer or the Trustee
and the appointment of any successor;

              4. The  repurchase or  substitution  of Mortgage Loans pursuant to
Section 2.03; and

              5. The final payment to  Certificateholders.

              (b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:

              1. Each report to  Certificateholders  described in Section  4.03;
and

              2. Any notice of a purchase of a Mortgage Loan pursuant to Section
2.02, 2.03 or 3.11.

              All directions,  demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when delivered to (a) in the case of
the Depositor or the  Underwriter,  Morgan Stanley Dean Witter Capital I Inc. or
Morgan  Stanley & Co.  Incorporated.  1585  Broadway,  New York, New York 10036,
Attention:  Gregory Walker, Esq., (b) in the case of the Servicer, Ocwen Federal
Bank FSB,  1675 Palm Beach Lakes  Blvd.,  Suite 10A,  West Palm  Beach,  Florida
33401, Attention: Secretary, or such other address as may be hereafter furnished
to the  Depositor,  the  Responsible  Party and the  Trustee by the  Servicer in
writing, (c) in the case of the Trustee to the Corporate Trust Office, U.S. Bank
National  Association,  180  East  Fifth  Street,  St.  Paul,  Minnesota  55101,
Attention:  Structured  Finance/MSDW  2001-NC3,  or such  other  address  as the
Trustee  may  hereafter  furnish  to the  Depositor,  the  Responsible  Party or
Servicer;  (d) in the case of the  Responsible  Party,  NC Capital  Corporation,
18400 Van Karman,  Suite 1000,  Irvine,  California  92612,  Attention:  Patrick
Flanagan,  President,  or  such  other  address  as the  Responsible  Party  may
hereafter furnish to the Depositor, the Trustee or the Servicer; (e) in the case
of each of the Rating Agencies, the address specified therefor in the definition
corresponding  to the name of such  Rating  Agency and (f) in the case of FSA to
Financial  Security  Assurance Inc., 350 Park Avenue,  New York, New York 10022,
Attention:  Managing Director - Transaction  Oversight Re: Mortgage Pass-Through
Certificates,   Series  2001-NC3,  Policy  No.:  51197-N;  Telecopy  No.:  (212)
339-3518,  Confirmation No.: (212) 826-0100. Notices to Certificateholders shall
be deemed given when mailed,  first class postage  prepaid,  to their respective
addresses appearing in the Certificate Register.

              Section 10.06 SEVERABILITY OF PROVISIONS.

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

                                     -101-
<PAGE>

              Section 10.07 ASSIGNMENT.

              Notwithstanding  anything to the contrary contained herein, except
as provided in Section 6.02,  this Agreement may not be assigned by the Servicer
without  the prior  written  consent of the  Trustee  and  Depositor;  provided,
however, that the Servicer may pledge its interest in any reimbursements for P&I
Advances or Servicing Advances hereunder.

              Section 10.08 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.

              The death or incapacity of any Certificateholder shall not operate
to  terminate  this  Agreement  or the trust  created  hereby,  nor entitle such
Certificateholder's  legal  representative or heirs to claim an accounting or to
take any  action or  commence  any  proceeding  in any court for a  petition  or
winding  up of the  trust  created  hereby,  or  otherwise  affect  the  rights,
obligations and liabilities of the parties hereto or any of them.

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

                  No  Certificateholder  shall  have any  right by  virtue or by
availing  itself of any  provisions  of this  Agreement to  institute  any suit,
action or  proceeding  in equity or at law upon or under or with respect to this
Agreement,  unless  such  Holder  previously  shall have given to the  Trustee a
written notice of an Event of Default and of the continuance  thereof, as herein
provided, and unless the Holders of Certificates evidencing not less than 25% of
the Voting  Rights  evidenced by the  Certificates  shall also have made written
request to the Trustee to institute  such action,  suit or proceeding in its own
name as Trustee  hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs,  expenses,  and liabilities to be
incurred therein or thereby,  and the Trustee,  for 60 days after its receipt of
such notice,  request and offer of indemnity  shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being  expressly  covenanted  by each  Certificateholder  with  every  other
Certificateholder  and the Trustee,  that no one or more Holders of Certificates
shall have any right in any manner  whatever by virtue or by availing  itself or
themselves of any provisions of this  Agreement to affect,  disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this  Agreement,  except in the manner  herein  provided and for the
common benefit of all Certificateholders.  For the protection and enforcement of
the provisions of this Section 10.08, each and every  Certificateholder  and the
Trustee  shall be entitled  to such  relief as can be given  either at law or in
equity.

              Section 10.09 INSPECTION AND AUDIT RIGHTS.

              The Servicer  agrees that,  on reasonable  prior  notice,  it will
permit any  representative  of the Depositor or the Trustee during such Person's
normal business hours, to

                                     -102-
<PAGE>

examine all the books of  account,  records,  reports  and other  papers of such
Person relating to the Mortgage Loans, to make copies and extracts therefrom, to
cause  such  books to be audited by  independent  certified  public  accountants
selected by the  Depositor or the Trustee and to discuss its  affairs,  finances
and accounts  relating to the Mortgage  Loans with its  officers,  employees and
independent  public  accountants  (and by this  provision  the  Servicer  hereby
authorizes said  accountants to discuss with such  representative  such affairs,
finances  and  accounts),  all at such  reasonable  times and as often as may be
reasonably requested.  Any out-of-pocket expense of the Servicer incident to the
exercise by the  Depositor or the Trustee of any right under this Section  10.09
shall be borne by the Servicer.

              Section 10.10 CERTIFICATES NONASSESSABLE AND FULLY PAID.

              It is the  intention of the  Depositor  that  Certificate  holders
shall not be  personally  liable for  obligations  of the Trust  Fund,  that the
interests  in  the  Trust  Fund  represented  by  the   Certificates   shall  be
nonassessable for any reason  whatsoever,  and that the  Certificates,  upon due
authentication thereof by the Trustee pursuant to this Agreement,  are and shall
be deemed fully paid.

                                  * * * * * * *

                                     -103-
<PAGE>

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

                                       MORGAN STANLEY DEAN WITTER CAPITAL I INC.
                                           as Depositor

                                       By: /s/ Cecilia Tarrant
                                           Name: Cecilia Tarrant
                                           Title: Vice President

                                       U.S. BANK NATIONAL ASSOCIATION,
                                           solely as Trustee and not in its]
                                           individual capacity

                                       By: /s/ Eve D. Kaplan
                                           Name: Eve D. Kaplan
                                           Title: Vice President

                                       OCWEN FEDERAL BANK FSB
                                           as Servicer

                                       By: /s/ Richard Delgado
                                           Name:  Richard Delgado
                                           Title: Vice President

                                       NC CAPITAL CORPORATION
                                           as Responsible Party

                                       By: /s/ Kevin M.Cloyd
                                           Name: Kevin M. Cloyd
                                           Title:  Exec. Vice President

                                                 POOLING AND SERVICING AGREEMENT

<PAGE>

                                   SCHEDULE I

                             Mortgage Loan Schedule
                        [Delivered at Closing to Trustee]

                                      S-I-1

<PAGE>

                                   SCHEDULE II

                       Mortgage Pass-Through Certificates,
                                 Series 2001-NC3

                 REPRESENTATIONS AND WARRANTIES OF THE SERVICER

              OCWEN  FEDERAL  BANK  FSB  (the   "SERVICER")   hereby  makes  the
representations  and  warranties  set forth in this Schedule II to the Depositor
and the Trustee,  as of the Closing Date, or if so specified  herein,  as of the
Cut-off Date.  Capitalized terms used but not otherwise defined in this Schedule
II shall  have the  meanings  ascribed  thereto  in the  Pooling  and  Servicing
Agreement   (the   "POOLING   AND   SERVICING   AGREEMENT")   relating   to  the
above-referenced Series.

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

              (2) The Servicer has the full power and  authority to service each
       Mortgage Loan, and to execute, deliver and perform, and to enter into and
       consummate the  transactions  contemplated  by this Pooling and Servicing
       Agreement and has duly authorized by all necessary  action on the part of
       the Servicer the execution,  delivery and performance of this Pooling and
       Servicing Agreement;  and this Pooling and Servicing Agreement,  assuming
       the due  authorization,  execution and delivery thereof by the Depositor,
       the  Responsible  Party and the Trustee,  constitutes a legal,  valid and
       binding obligation of the Servicer,  enforceable  against the Servicer in
       accordance   with  its  terms,   except  to  the  extent   that  (a)  the
       enforceability   thereof  may  be  limited  by  bankruptcy,   insolvency,
       moratorium,  receivership  and other  similar laws relating to creditors'
       rights  generally  and  (b)  the  remedy  of  specific   performance  and
       injunctive  and other  forms of  equitable  relief  may be subject to the
       equitable  defenses and to the  discretion  of the court before which any
       proceeding therefor may be brought;

              (3) The  execution  and  delivery of this  Pooling  and  Servicing
       Agreement by the  Servicer,  the  servicing of the Mortgage  Loans by the
       Servicer hereunder,  the consummation by the Servicer of any other of the
       transactions  herein  contemplated,  and the fulfillment of or compliance
       with the terms  hereof  are in the  ordinary  course of  business  of the
       Servicer  and will not (A) result in a breach of any term or provision of
       the organizational documents of the Servicer or (B) conflict with, result
       in a breach,  violation or acceleration of, or result in a default under,
       the terms of any other  material  agreement  or  instrument  to which the
       Servicer is a party or by which it may be bound, or any statute, order or
       regulation  applicable  to the  Servicer of any court,  regulatory  body,
       administrative  agency or governmental body having  jurisdiction over the
       Servicer; and

                                     S-II-1
<PAGE>

       the  Servicer is not a party to,  bound by, or in breach or  violation of
       any  indenture  or other  agreement  or  instrument,  or subject to or in
       violation of any statute,  order or regulation  of any court,  regulatory
       body, administrative agency or governmental body having jurisdiction over
       it,  which  materially  and  adversely  affects  or,  to  the  Servicer's
       knowledge,  would in the future materially and adversely affect,  (x) the
       ability of the Servicer to perform its obligations under this Pooling and
       Servicing Agreement or (y) the business, operations, financial condition,
       properties or assets of the Servicer taken as a whole;

              (4) the Servicer is an approved  seller/servicer for Fannie Mae or
       Freddie Mac in good standing and is a HUD approved  mortgagee pursuant to
       Section 203 and Section 211 of the National Housing Act;

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

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

              (7) The Servicer  covenants  that its  computer and other  systems
       used in servicing  the Mortgage  Loans  operate in a manner such that the
       Servicer can service the Mortgage  Loans in accordance  with the terms of
       this Pooling and Servicing Agreement.

                                     S-II-2
<PAGE>

                                  SCHEDULE III

                       Mortgage Pass-Through Certificates,
                                 Series 2001-NC3

             REPRESENTATIONS AND WARRANTIES AS TO THE MORTGAGE LOANS

                  NC Capital  Corporation hereby makes the  representations  and
warranties  set forth in this Schedule III as to the Mortgage  Loans only to the
Depositor and the Trustee, as of November 28, 2001 or date of origination of the
Mortgage Loan (as applicable).  Capitalized terms used but not otherwise defined
in this Schedule III shall have the meanings ascribed thereto in the Pooling and
Servicing Agreement.

              (1)  MORTGAGE  LOANS AS  DESCRIBED.  NC  Capital  Corporation  has
       delivered  to the  Purchaser,  as of  November  1,  2001,  the Data  Tape
       Information  and  that  Data  Tape   Information  is  true  and  correct,
       including,  without  limitation,  the terms of the prepayment charges, if
       any, as of November 28, 2001;

              (2)  PAYMENTS  CURRENT.  All  payments  required  to be made up to
       November 1, 2001 for the  Mortgage  Loan under the terms of the  Mortgage
       Note have been made and credited.  No payment required under the Mortgage
       Loan is 30 days or more delinquent nor has any payment under the Mortgage
       Loan been 30 days or more delinquent at any time since the origination of
       the Mortgage  Loan.  The first Monthly  Payment was or shall be made with
       respect to the Mortgage  Loan on its Due Date or within the grace period,
       all in accordance with the terms of the related Mortgage Note;

              (3) NO  OUTSTANDING  CHARGES.  There are no defaults in  complying
       with the terms of the Mortgage, and all taxes,  governmental assessments,
       insurance  premiums,  water,  sewer  and  municipal  charges,   leasehold
       payments or ground rents which previously  became due and owing have been
       paid, or an escrow of funds has been established in an amount  sufficient
       to pay for  every  such  item  which  remains  unpaid  and which has been
       assessed but is not yet due and payable.  Neither NC Capital  Corporation
       nor any Affiliate 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 under the
       Mortgage Loan, except for interest accruing from the date of the Mortgage
       Note or date of disbursement of the Mortgage Loan proceeds,  whichever is
       earlier, to the day which precedes by one month the Due Date of the first
       installment of principal and interest;

              (4) ORIGINAL TERMS UNMODIFIED.  The terms of the Mortgage Note and
       Mortgage  have not been  impaired,  waived,  altered or  modified  in any
       respect  from the date of  origination,  except by a  written  instrument
       which has been  recorded,  if necessary  to protect the  interests of the
       Purchaser,  and which has been  delivered to the Trustee and the terms of
       which  are  reflected  in the  Mortgage  Loan  Schedule,  the  Data  Tape
       Information  or included in the Mortgage  File. The substance of any such
       waiver,  alteration  or  modification  has  been  approved  by the  title
       insurer,  if any, to the extent required by the policy, and its terms are
       reflected on the Mortgage Loan Schedule. No

                                     S-III-1
<PAGE>

       Mortgagor has been  released,  in whole or in part,  except in connection
       with an assumption agreement approved by the title insurer, to the extent
       required by the policy,  and which  assumption  agreement  is part of the
       Mortgage  Loan File  delivered  to the Trustee and the terms of which are
       reflected in the Mortgage Loan Schedule and the Data Tape Information;

              (5) NO DEFENSES.  The Mortgage Loan is not subject to any right of
       rescission,   set-off,   counterclaim  or  defense,  including,   without
       limitation,  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,  and no such  right of  rescission,
       set-off,  counterclaim or defense has been asserted with respect thereto,
       and no  Mortgagor  was a debtor in any  state or  Federal  bankruptcy  or
       insolvency proceeding at the time the Mortgage Loan was originated;

              (6) HAZARD INSURANCE.  Pursuant to the terms of the Mortgage,  all
       buildings or other  improvements upon the Mortgaged  Property are insured
       by a  generally  acceptable  insurer  against  loss by fire,  hazards  of
       extended  coverage  and such  other  hazards as are  provided  for in the
       Fannie  Mae  Guides  or  by  Freddie  Mac,  as  well  as  all  additional
       requirements  set forth in  Section  3.13 of the  Pooling  and  Servicing
       Agreement.  If required by the Flood Disaster  Protection Act of 1973, as
       amended, the Mortgage Loan is covered by a flood insurance policy meeting
       the  requirements  of the current  guidelines  of the  Federal  Insurance
       Administration  is in effect  which  policy  conforms  to Fannie  Mae and
       Freddie Mac, as well as all additional  requirements set forth in Section
       3.13 of the Pooling and Servicing  Agreement.  All  individual  insurance
       policies   contain  a  standard   mortgagee   clause  naming  NC  Capital
       Corporation and its successors and assigns as mortgagee, and all premiums
       thereon have been paid. The Mortgage  obligates the Mortgagor  thereunder
       to  maintain  the hazard  insurance  policy at the  Mortgagor's  cost and
       expense,  and on the Mortgagor's  failure to do so, authorizes the holder
       of the Mortgage to obtain and maintain such insurance at such Mortgagor's
       cost and expense, and to seek reimbursement  therefor from the Mortgagor.
       Where required by state law or  regulation,  the Mortgagor has been given
       an  opportunity to choose the carrier of the required  hazard  insurance,
       provided  the  policy is not a "master"  or  "blanket"  hazard  insurance
       policy covering a condominium,  or any hazard  insurance  policy covering
       the common facilities of a planned unit development. The hazard 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  Trustee  upon  the  consummation  of  the  transactions
       contemplated  by this Agreement.  NC Capital  Corporation has not engaged
       in, and has no knowledge of the Mortgagor's having engaged in, any act or
       omission which would impair the coverage of any such policy, the benefits
       of the  endorsement  provided  for herein,  or the  validity  and binding
       effect  of  either,  including,  without  limitation,  no  unlawful  fee,
       commission,  kickback or other unlawful compensation or value of any kind
       has been or will be received,  retained or realized by any attorney, firm
       or other person or entity, and no such unlawful items have been received,
       retained or realized by NC Capital Corporation;

                                    S-III-2
<PAGE>

              (7) COMPLIANCE WITH APPLICABLE  LAWS. 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  and disclosure laws applicable to
       the  Mortgage  Loan have been  complied  with,  the  consummation  of the
       transactions  contemplated  hereby will not involve the  violation of any
       such laws or regulations,  and NC Capital  Corporation  shall maintain in
       its   possession,   available  for  the   Purchaser's  or  the  Trustee's
       inspection,  and shall deliver to the Purchaser upon demand,  evidence of
       compliance with all such requirements;

              (8) NO  SATISFACTION  OF  MORTGAGE.  The  Mortgage  has  not  been
       satisfied, cancelled, subordinated or rescinded, in whole or in part, and
       the  Mortgaged  Property  has not  been  released  from  the  lien of the
       Mortgage,  in whole or in part, nor has any instrument been executed that
       would effect any such release, cancellation, subordination or rescission.
       NC Capital Corporation has not waived the performance by the Mortgagor of
       any action, if the Mortgagor's failure to perform such action would cause
       the Mortgage Loan to be in default, nor has NC Capital Corporation waived
       any default resulting from any action or inaction by the Mortgagor;

              (9)  LOCATION  AND  TYPE  OF  MORTGAGED  PROPERTY.  The  Mortgaged
       Property is located in the state identified in the Mortgage Loan Schedule
       and consists of a single parcel of real  property with a detached  single
       family residence erected thereon, or a two- to four-family  dwelling,  or
       an individual  condominium unit in a low rise condominium  project, or an
       individual  unit in a planned unit  development  or a de minimis  planned
       unit  development  which is in each case four stories or less;  PROVIDED,
       HOWEVER, that any condominium unit, planned unit development, mobile home
       (double  wide  only) or  manufactured  dwelling  shall  conform  with the
       applicable  Fannie  Mae  and  Freddie  Mac  requirements  regarding  such
       dwellings and that no Mortgage Loan is secured by a single parcel of real
       property with a cooperative  housing  corporation , a log home or, except
       as described in Exhibit I hereto,  a mobile home erected  thereon or by a
       mixed use  property,  a  property  in excess of 10 acres or other  unique
       property  types.  As of  the  date  of  origination,  no  portion  of the
       Mortgaged Property has been used for commercial  purposes,  and since the
       date of  origination,  no portion of the Mortgaged  Property was used for
       commercial purposes;  provided, that Mortgaged Properties which contain a
       home office shall not be considered as being used for commercial purposes
       as long as the  Mortgaged  Property has not been  altered for  commercial
       purposes  and is not storing any  chemicals or raw  materials  other than
       those commonly used for homeowner  repair,  maintenance  and/or household
       purposes.  With  respect to any  Mortgage  Loan  secured  by a  Mortgaged
       Property improved by manufactured  housing,  (i) the related manufactured
       housing  unit is  permanently  affixed to the land,  and (ii) the related
       manufactured  housing unit and the related land are subject to a Mortgage
       properly filed in the appropriate  public  recording office and naming NC
       Capital Corporation as mortgagee;

              (10)  VALID  FIRST  LIEN.  The  Mortgage  is a valid,  subsisting,
       enforceable and perfected first lien on the Mortgaged Property, including
       all  buildings  and  improvements  on  the  Mortgaged  Property  and  all
       installations  and  mechanical,  electrical,  plumbing,  heating  and air
       conditioning  systems  located in or annexed to such  buildings,  and all

                                    S-III-3
<PAGE>

       additions,  alterations and replacements made at any time with respect to
       the foregoing. The lien of the Mortgage is subject only to:

                   (i) the lien of current real property  taxes and  assessments
               not yet due and payable;

                   (ii) covenants,  conditions and restrictions,  rights of way,
               easements  and other  matters of the public record as of the date
               of recording  acceptable to prudent mortgage lending institutions
               generally  and  specifically  referred to in the  lender's  title
               insurance policy delivered to the originator of the Mortgage Loan
               and (a) specifically  referred to or otherwise  considered in the
               appraisal  made for the  originator  of the Mortgage  Loan or (b)
               which  do  not  adversely  affect  the  Appraised  Value  of  the
               Mortgaged Property set forth in such appraisal; and

                   (iii) other  matters to which like  properties  are  commonly
               subject which do not  materially  interfere  with the benefits of
               the security  intended to be provided by the Mortgage or the use,
               enjoyment,  value  or  marketability  of  the  related  Mortgaged
               Property.

              (11)  VALIDITY OF MORTGAGE  DOCUMENTS.  The Mortgage  Note and the
       Mortgage and any other agreement executed and delivered by a Mortgagor in
       connection with a Mortgage Loan are genuine, and each is the legal, valid
       and binding  obligation  of the maker thereof  enforceable  in accordance
       with its terms.  All parties to the Mortgage  Note,  the Mortgage and any
       other  such  related  agreement  had  legal  capacity  to enter  into the
       Mortgage Loan and to execute and deliver the Mortgage  Note, the Mortgage
       and any such agreement, and the Mortgage Note, the Mortgage and any other
       such related agreement have been duly and properly executed by other such
       related parties. No fraud, error, omission, misrepresentation, negligence
       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. NC Capital Corporation has reviewed all
       of the  documents  constituting  the  Servicing  File and has  made  such
       inquiries  as it deems  necessary to make and confirm the accuracy of the
       representations set forth herein;

              (12) FULL  DISBURSEMENT  OF PROCEEDS.  The Mortgage  Loan has been
       closed and the  proceeds of the Mortgage  Loan have been fully  disbursed
       and there is no requirement for future advances  thereunder,  and any and
       all requirements as to completion of any on-site or off-site  improvement
       and as to  disbursements  of any escrow funds therefor have been complied
       with.  All costs,  fees and  expenses  incurred  in making or closing the
       Mortgage  Loan and the  recording  of the  Mortgage  were  paid,  and the
       Mortgagor  is not entitled to any refund of any amounts paid or due under
       the Mortgage Note or Mortgage;

              (13) OWNERSHIP.  Immediately prior to the transfer contemplated by
       the NCCC Purchase  Agreements,  NC Capital Corporation was the sole owner
       of record and holder of the Mortgage Loan and the indebtedness  evidenced
       by each  Mortgage  Note and upon  the sale of the  Mortgage  Loans to the
       Purchaser, NC Capital Corporation retained the Mortgage Files or any part
       thereof  with  respect  thereto not  delivered  to

                                    S-III-4
<PAGE>

       the Purchaser or the Purchaser's  designee, in trust only for the purpose
       of servicing and  supervising  the servicing of each Mortgage  Loan.  The
       Mortgage Loan was not assigned or pledged, and NC Capital Corporation had
       good,  indefeasible and marketable  title thereto,  and has full right to
       transfer and sell the Mortgage  Loan to the  Purchaser  free and clear of
       any encumbrance,  equity,  participation interest,  lien, pledge, charge,
       claim or security  interest,  and has full right and authority subject to
       no interest or  participation  of, or agreement with, any other party, to
       sell  and  assign  each  Mortgage  Loan  pursuant  to the  NCCC  Purchase
       Agreements  and following the sale of each Mortgage  Loan,  the Purchaser
       will own such  Mortgage Loan free and clear of any  encumbrance,  equity,
       participation interest, lien, pledge, charge, claim or security interest;

              (14) DOING  BUSINESS.  All parties  which have had any interest in
       the Mortgage Loan, whether as mortgagee,  assignee, pledgee or otherwise,
       are (or,  during  the  period  in which  they held and  disposed  of such
       interest,  were) (1) in compliance with any and all applicable  licensing
       requirements  of the laws of the state wherein the Mortgaged  Property is
       located,  and (2) either (i) organized  under the laws of such state,  or
       (ii) qualified to do business in such state,  or (iii) a federal  savings
       and  loan  association,  a  savings  bank or a  national  bank  having  a
       principal office in such state, or (3) not doing business in such state;

              (15) LTV. No Mortgage Loan has an LTV greater than 100%;

              (16)  TITLE  INSURANCE.  The  Mortgage  Loan is covered by an ALTA
       lender's title insurance policy, or with respect to any Mortgage Loan for
       which the  related  Mortgaged  Property is located in  California  a CLTA
       lender's title insurance  policy,  or other generally  acceptable form of
       policy or insurance  acceptable to Fannie Mae or Freddie Mac with respect
       to  Mortgage  Loans and each such title  insurance  policy is issued by a
       title insurer acceptable to Fannie Mae or Freddie Mac and qualified to do
       business in the  jurisdiction  where the  Mortgaged  Property is located,
       insuring NC Capital  Corporation,  its successors and assigns,  as to the
       first priority lien of the Mortgage in the original  principal  amount of
       the Mortgage Loan,  subject only to the  exceptions  contained in clauses
       (i), (ii) and (iii) of representation 10 of this Schedule III, and in the
       case of Adjustable Rate Mortgage Loans, against any loss by reason of the
       invalidity or  unenforceability of the lien resulting from the provisions
       of the  Mortgage  providing  for  adjustment  to the  Mortgage  Rate  and
       Scheduled  Payment.  Where  required  by  state  law or  regulation,  the
       Mortgagor  has been given the  opportunity  to choose the  carrier of the
       required  mortgage  title  insurance.  Additionally,  such lender's title
       insurance policy  affirmatively  insures ingress and egress,  and against
       encroachments by or upon the Mortgaged  Property or any interest therein.
       NC Capital Corporation,  its successor and assigns, are the sole insureds
       of  such  lender's  title  insurance  policy,  and  such  lender's  title
       insurance  policy is valid and  remains in full force and effect and will
       be in  force  and  effect  upon  the  consummation  of  the  transactions
       contemplated  by this  Agreement.  No claims  have been made  under  such
       lender's  title  insurance  policy,  and no prior  holder of the  related
       Mortgage, including NC Capital Corporation, has done, by act or omission,
       anything which would impair the coverage of such lender's title insurance
       policy,  including,  without  limitation,  no unlawful  fee,  commission,
       kickback or other unlawful

                                    S-III-5
<PAGE>

       compensation or value of any kind has been or will be received,  retained
       or realized by any attorney,  firm or other person or entity, and no such
       unlawful  items have been  received,  retained  or realized by NC Capital
       Corporation;

              (17) NO  DEFAULTS.  Other  than  payments  due but not yet 30 days
       delinquent,  there is no default,  breach, violation or event which would
       permit acceleration  existing under the Mortgage or the Mortgage Note and
       no  event  which,  with  the  passage  of  time or  with  notice  and the
       expiration  of any grace or cure  period,  would  constitute  a  default,
       breach,  violation or event which would permit acceleration,  and neither
       NC Capital  Corporation  nor its  affiliates  or any of their  respective
       predecessors  have waived any default,  breach,  violation or event which
       would permit acceleration;

              (18) NO MECHANICS' LIENS. As of the date of origination, there are
       no  mechanics' or similar liens or claims which have been filed for work,
       labor or  material  (and no rights are  outstanding  that under law could
       give rise to such liens) affecting the related  Mortgaged  Property which
       are or may be liens prior to, or equal or  coordinate  with,  the lien of
       the related Mortgage;

              (19) LOCATION OF IMPROVEMENTS; NO ENCROACHMENTS.  All improvements
       which were considered in determining the Appraised Value of the Mortgaged
       Property lay wholly within the boundaries and building  restriction lines
       of the Mortgaged  Property,  and no improvements on adjoining  properties
       encroach  upon the  Mortgaged  Property.  As of the date of  origination,
       there  are no  improvements  located  on or being  part of the  Mortgaged
       Property in violation of any applicable zoning law or regulation;

              (20) ORIGINATION;  PAYMENT TERMS. Either (a) the Mortgage Loan was
       originated by a Mortgagee  approved by the Secretary of Housing and Urban
       Development pursuant to Sections 203 and 211 of the National Housing Act,
       a savings and loan association, a savings bank, a commercial bank, credit
       union, insurance company or other similar institution which is supervised
       and  examined  by a  federal  or state  authority,  or (b) the  following
       requirements  have been met with respect to the Mortgage Loan: NC Capital
       Corporation  meets the requirements set forth in clause (a), and (i) such
       Mortgage Loan was  underwritten in accordance with standards  established
       by NC Capital  Corporation,  using  application  forms and related credit
       documents approved by NC Capital Corporation, (ii) NC Capital Corporation
       approved  each  application  and the related  credit  documents  before a
       commitment by the  correspondent  was issued,  and no such commitment was
       issued until NC Capital  Corporation  agreed to fund such Mortgage  Loan,
       (iii) the closing documents for such Mortgage Loan were prepared on forms
       approved  by NC  Capital  Corporation,  and (iv) such  Mortgage  Loan was
       actually funded by NC Capital Corporation and was purchased by NC Capital
       Corporation at closing or soon thereafter. The documents, instruments and
       agreements submitted for loan underwriting were not falsified and contain
       no untrue  statement  of material  fact or omit to state a material  fact
       required to be stated  therein or necessary to make the  information  and
       statements  therein not  misleading.  Principal  payments on the Mortgage
       Loan  commenced  no more than sixty days after  funds were  disbursed  in
       connection  with the Mortgage  Loan. The Mortgage Rate is as set forth on
       Mortgage Loan Schedule  hereto  (including in the case of Adjustable Rate
       Mortgage Loans, the

                                    S-III-6
<PAGE>

       interest rate and payment limitations set forth on Mortgage Loan Schedule
       hereto). All Mortgage Loans have Due Dates on the first day of each month
       except as specified on the Mortgage Loan Schedule.  Each Mortgage Note is
       payable in equal monthly  installments  of principal and interest,  which
       installments of interest, with respect to Adjustable Rate Mortgage Loans,
       are subject to change due to the adjustments to the Mortgage Rate on each
       Interest Rate Adjustment  Date,  with interest  calculated and payable in
       arrears and is not  calculated on a simple  interest  basis.  The monthly
       principal  payments on each  Mortgage  Loan is sufficient to amortize the
       Mortgage Loan fully by the stated maturity date, over an original term of
       not more than thirty years from commencement of amortization. There is no
       negative  amortization allowed in the terms of any Mortgage Note. None of
       the Mortgage Loans allows for negative  amortization or the conversion of
       the interest rate thereon from an adjustable rate to a fixed rate or from
       a fixed rate to an adjustable rate. No Mortgage Loan is a Balloon Loan;

              (21) CUSTOMARY  PROVISIONS.  The Mortgage  contains  customary and
       enforceable  provisions  such as to render the rights and remedies of the
       holder  thereof  adequate  for  the  realization  against  the  Mortgaged
       Property of the benefits of the security provided thereby, including, (i)
       in the case of a Mortgage  designated  as a deed of trust,  by  trustee's
       sale,  and (ii)  otherwise  by judicial  foreclosure.  Upon  default by a
       Mortgagor on a Mortgage Loan and  foreclosure  on, or trustee's  sale of,
       the Mortgaged Property pursuant to the proper  procedures,  the holder of
       the Mortgage Loan will be able to deliver good and merchantable  title to
       the  Mortgaged  Property.  There  is  no  homestead  or  other  exemption
       available to a Mortgagor which would interfere with the right to sell the
       Mortgaged  Property at a  trustee's  sale or the right to  foreclose  the
       Mortgage,  subject to  applicable  federal  and state  laws and  judicial
       precedent  with respect to bankruptcy  and right of redemption or similar
       law;

              (22) INDEX.  With respect to Adjustable Rate Mortgage  Loans,  the
       Index set forth in the Mortgage Note is LIBOR;

              (23) OCCUPANCY OF THE MORTGAGED  PROPERTY.  As of the Closing Date
       the Mortgaged  Property is lawfully  occupied under  applicable  law. All
       inspections, licenses and certificates required to be made or issued with
       respect to all occupied  portions of the  Mortgaged  Property  and,  with
       respect to the use and occupancy of the same, including,  but not limited
       to,  certificates of occupancy and fire underwriting  certificates,  have
       been made or obtained from the appropriate authorities;

              (24) NO  ADDITIONAL  COLLATERAL.  The Mortgage Note is not and has
       not been secured by any collateral  except the lien of the  corresponding
       Mortgage and the security interest of any applicable  security  agreement
       or chattel mortgage;

              (25) DEEDS OF TRUST. In the event the Mortgage  constitutes a deed
       of trust, a trustee,  authorized and duly qualified under  applicable law
       to serve as such,  has been properly  designated  and currently so serves
       and is named in the Mortgage,  and no fees or expenses are or will become
       payable by the Purchaser to the trustee  under the deed of trust,  except
       in connection with a trustee's sale after default by the Mortgagor;

                                    S-III-7
<PAGE>

              (26)  DELIVERY OF  MORTGAGE  DOCUMENTS.  The  Mortgage  Note,  the
       Mortgage,  the Assignment of Mortgage and any other documents required to
       be  delivered  under  this  Agreement  for each  Mortgage  Loan have been
       delivered to the Purchaser;

              (27) TRANSFER OF MORTGAGE LOANS.  The Assignment of Mortgage is in
       recordable form, other than the assignee's name and recording information
       not yet  returned  from  the  recording  office,  and is  acceptable  for
       recording  under  the laws of the  jurisdiction  in which  the  Mortgaged
       Property is located.  The  transfer,  assignment  and  conveyance  of the
       Mortgage  Notes  and the  Mortgages  by NC  Capital  Corporation  are not
       subject to the bulk transfer or similar statutory provisions in effect in
       any applicable jurisdiction;

              (28)  DUE-ON-SALE.  With respect to each Fixed Rate Mortgage Loan,
       the Mortgage  contains an enforceable  provision for the  acceleration of
       the payment of the unpaid  principal  balance of the Mortgage Loan in the
       event that the  Mortgaged  Property  is sold or  transferred  without the
       prior written consent of the mortgagee thereunder,  and to the best of NC
       Capital Corporation's knowledge, such provision is enforceable;

              (29) NO BUYDOWN  PROVISIONS  NO GRADUATED  PAYMENTS OR  CONTINGENT
       INTERESTS.  The  Mortgage  Loan does not contain  provisions  pursuant to
       which Monthly Payments are paid or partially paid with funds deposited in
       any  separate  account  established  by  NC  Capital   Corporation,   the
       Mortgagor,  or anyone on behalf of the  Mortgagor,  or paid by any source
       other than the Mortgagor nor does it contain any other similar provisions
       which may  constitute a "buydown"  provision.  The Mortgage Loan is not a
       graduated  payment  mortgage  loan and the Mortgage  Loan does not have a
       shared appreciation or other contingent interest feature;

              (30)  ASSUMABILITY.  With respect to each Adjustable Rate Mortgage
       Loan,  the Mortgage Loan  Documents  provide that after the related first
       Interest  Rate  Adjustment  Date,  a  related  Mortgage  Loan may only be
       assumed if the party  assuming such  Mortgage  Loan meets certain  credit
       requirements stated in the Mortgage Loan Documents;

              (31) CONSOLIDATION OF FUTURE ADVANCES. Any future advances made to
       the Mortgagor prior to the Cut-off Date have been  consolidated  with the
       outstanding  principal  amount  secured by the Mortgage,  and the secured
       principal  amount,  as  consolidated,  bears a single  interest  rate and
       single repayment term. The lien of the Mortgage securing the consolidated
       principal amount is expressly  insured as having first lien priority by a
       title  insurance  policy,  an  endorsement  to the  policy  insuring  the
       mortgagee's  consolidated  interest or by other title evidence acceptable
       to Fannie Mae and Freddie Mac. The consolidated principal amount does not
       exceed the original principal amount of the Mortgage Loan;

              (32) MORTGAGED PROPERTY  UNDAMAGED;  NO CONDEMNATION  PROCEEDINGS.
       There is no  proceeding  pending or  threatened  for the total or partial
       condemnation  of  the  Mortgaged  Property.  The  Mortgaged  Property  is
       undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
       tornado or other casualty so as to affect adversely

                                    S-III-8
<PAGE>

       the value of the Mortgaged  Property as security for the Mortgage Loan or
       the use for which the premises were intended and each Mortgaged  Property
       is in good repair. There have not been any condemnation  proceedings with
       respect  to the  Mortgaged  Property  and NC Capital  Corporation  has no
       knowledge of any such proceedings in the future;

              (33)  COLLECTION   PRACTICES;   ESCROW  PAYMENTS;   INTEREST  RATE
       ADJUSTMENTS. The origination,  servicing and collection practices used by
       NC Capital  Corporation  and its Affiliates  with respect to the Mortgage
       Loan have been in all  respects in  compliance  with  Accepted  Servicing
       Practices, applicable laws and regulations, and have been in all respects
       legal and proper. With respect to escrow deposits and Escrow Payments, if
       any, all such payments are in the possession of, or under the control of,
       NC Capital  Corporation  and there exist no  deficiencies  in  connection
       therewith for which customary arrangements for repayment thereof have not
       been made.  All Escrow  Payments have been  collected in full  compliance
       with state and federal  law and the  provisions  of the related  Mortgage
       Note and Mortgage. An escrow of funds is not prohibited by applicable law
       and has been  established  in an amount  sufficient to pay for every item
       that remains unpaid and has been assessed but is not yet due and payable.
       No escrow deposits or Escrow Payments or other charges or payments due NC
       Capital  Corporation  have been  capitalized  under the  Mortgage  or the
       Mortgage  Note.  All Mortgage Rate  adjustments  have been made in strict
       compliance  with  state  and  federal  law and the  terms of the  related
       Mortgage  Note.  Any  interest  required  to be paid  pursuant  to state,
       federal and local law has been properly paid and credited;

              (34) OTHER INSURANCE  POLICIES.  No action,  inaction or event has
       occurred and no state of facts exists or has existed that has resulted or
       will  result in the  exclusion  from,  denial of, or defense to  coverage
       under any insurance policy related to the Mortgage Loans, irrespective of
       the cause of such failure of coverage.  In connection  with the placement
       of any such insurance, no commission, fee, or other compensation has been
       or  will  be  received  by NC  Capital  Corporation  or by  any  officer,
       director,  or employee of NC Capital  Corporation  or any  designee of NC
       Capital Corporation or any corporation in which NC Capital Corporation or
       any officer,  director,  or employee had a financial interest at the time
       of placement of such insurance;

              (35) NO  VIOLATION  OF  ENVIRONMENTAL  LAWS.  There is no  pending
       action or proceeding  directly  involving the Mortgaged Property in which
       compliance  with any  environmental  law, rule or regulation is an issue;
       there is no violation of any  environmental  law, rule or regulation with
       respect to the Mortgaged Property; and nothing further remains to be done
       to satisfy in full all  requirements of each such law, rule or regulation
       constituting a prerequisite to use and enjoyment of said property;

              (36)  SOLDIERS'  AND SAILORS'  CIVIL RELIEF ACT. The Mortgagor has
       not notified NC Capital  Corporation,  and NC Capital  Corporation has no
       knowledge of any relief  requested or allowed to the Mortgagor  under the
       Soldiers' and Sailors' Civil Relief Act of 1940;

              (37)  APPRAISAL.  The Mortgage  File  contains an appraisal of the
       related Mortgaged Property signed by a qualified appraiser, acceptable to
       NC Capital

                                    S-III-9
<PAGE>

       Corporation,  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 the
       Mortgage   Loan,  and  the  appraisal  and  appraiser  both  satisfy  the
       requirements  of Fannie Mae or Freddie Mac and Title XI of the  Financial
       Institutions  Reform,  Recovery,  and  Enforcement  Act of  1989  and the
       regulations  promulgated  thereunder,  all as in  effect  on the date the
       Mortgage Loan was originated;

              (38) DISCLOSURE MATERIALS.  The Mortgagor has executed a statement
       to the effect that the  Mortgagor has received all  disclosure  materials
       required by, and the originator has complied with all applicable law with
       respect to the making of the Mortgage Loans;

              (39)  CONSTRUCTION OR  REHABILITATION  OF MORTGAGED  PROPERTY.  No
       Mortgage  Loan  was  made  in  connection   with  the   construction   or
       rehabilitation  of a Mortgaged  Property or facilitating  the trade-in or
       exchange of a Mortgaged Property;

              (40) VALUE OF MORTGAGED  PROPERTY.  NC Capital  Corporation has no
       knowledge of any circumstances existing that could reasonably be expected
       to  adversely  affect  the value or the  marketability  of any  Mortgaged
       Property or Mortgage Loan or to cause the Mortgage Loans to prepay during
       any period  materially  faster or slower than similar mortgage loans held
       by NC Capital  Corporation  generally  secured by  properties in the same
       geographic area as the related Mortgaged Property;

              (41) NO DEFENSE TO INSURANCE COVERAGE. No action has been taken or
       failed to be taken, no event has occurred and no state of facts exists or
       has existed on or prior to the Closing  Date  (whether or not known to NC
       Capital  Corporation on or prior to such date) which has resulted or will
       result in an exclusion from,  denial of, or defense to coverage under any
       primary  mortgage   insurance   (including,   without   limitation,   any
       exclusions,   denials  or  defenses  which  would  limit  or  reduce  the
       availability  of the  timely  payment  of the  full  amount  of the  loss
       otherwise due thereunder to the insured)  whether arising out of actions,
       representations,  errors,  omissions,  negligence, or fraud of NC Capital
       Corporation,   the  related  Mortgagor  or  any  party  involved  in  the
       application  for  such  coverage,  including  the  appraisal,  plans  and
       specifications and other exhibits or documents submitted therewith to the
       insurer under such insurance  policy,  or for any other reason under such
       coverage,  but not including the failure of such insurer to pay by reason
       of such  insurer's  breach of such  insurance  policy  or such  insurer's
       financial inability to pay;

              (42) ESCROW  ANALYSIS.  With respect to each Mortgage,  NC Capital
       Corporation  or its Affiliate  has within the last twelve months  (unless
       such Mortgage was  originated  within such twelve month period)  analyzed
       the required Escrow Payments for each Mortgage and adjusted the amount of
       such  payments so that,  assuming all required  payments are timely made,
       any deficiency  will be eliminated on or before the first  anniversary of
       such  analysis,  or any overage  will be refunded  to the  Mortgagor,  in
       accordance with RESPA and any other applicable law;

                                    S-III-10
<PAGE>

              (43) PRIOR SERVICING.  Each Mortgage Loan has been serviced in all
       material respects in strict compliance with Accepted Servicing Practices;

              (44) CREDIT INFORMATION. As to each consumer report (as defined in
       the Fair  Credit  Reporting  Act,  Public  Law  91-508)  or other  credit
       information  furnished by NC Capital  Corporation to the Purchaser,  that
       Seller  has full  right  and  authority  and is not  precluded  by law or
       contract from furnishing such information to the Purchaser;

              (45)  LEASEHOLDS.  If the Mortgage  Loan is secured by a long-term
       residential  lease,  (1) the  lessor  under the lease  holds a fee simple
       interest in the land;  (2) the terms of such lease  expressly  permit the
       mortgaging of the leasehold  estate,  the assignment of the lease without
       the lessor's consent and the acquisition by the holder of the Mortgage of
       the  rights of the  lessee  upon  foreclosure  or  assignment  in lieu of
       foreclosure  or provide  the holder of the  Mortgage  with  substantially
       similar  protections;  (3) the  terms of such  lease do not (a) allow the
       termination  thereof upon the lessee's  default without the holder of the
       Mortgage being entitled to receive  written notice of, and opportunity to
       cure,  such default,  (b) allow the termination of the lease in the event
       of damage or  destruction  as long as the Mortgage is in  existence,  (c)
       prohibit  the holder of the  Mortgage  from being  insured (or  receiving
       proceeds  of  insurance)  under the hazard  insurance  policy or policies
       relating to the  Mortgaged  Property  or (d) permit any  increase in rent
       other than  pre-established  increases  set forth in the  lease;  (4) the
       original  term of such  lease is not less than 15 years;  (5) the term of
       such lease does not terminate  earlier than five years after the maturity
       date of the Mortgage Note; and (6) the Mortgaged Property is located in a
       jurisdiction  in  which  the use of  leasehold  estates  in  transferring
       ownership in residential properties is a generally accepted practice;

              (46) PREDATORY LENDING  REGULATIONS;  HIGH COST LOANS. None of the
       Mortgage  Loans are  classified  as (a) "high  cost" loans under the Home
       Ownership  and  Equity  Protection  Act  of  1994  or  (b)  "high  cost,"
       "threshold,"  or  "predatory"  loans  under any other  applicable  state,
       federal or local law;

              (47) [Reserved]

              (48) [Reserved]

              (49)  CONFORMANCE  WITH  AGENCY AND  UNDERWRITING  STANDARDS.  The
       Mortgage  Loan was  underwritten  in  accordance  with  the  Underwriting
       Standards (as defined in the NCCC Purchase Agreements). The Mortgage Note
       and  Mortgage  are on forms  acceptable  to Freddie Mac or Fannie Mae and
       neither  the NC  Capital  Corporation  nor any  Affiliate  has  made  any
       representations  to a Mortgagor that are  inconsistent  with the mortgage
       instruments used;

              (50) NO CREDIT INSURANCE:  No proceeds from any Mortgage Loan were
       used to acquire a single premium credit life insurance policy;

              (51)  ACCEPTABLE   INVESTMENT.   There  are  no  circumstances  or
       conditions  with respect to the  Mortgage,  the Mortgaged  Property,  the
       Mortgagor, the Mortgage File or the

                                    S-III-11
<PAGE>

       Mortgagor's  credit  standing  that can  reasonably  be expected to cause
       private  institutional  investors who invest in mortgage loans similar to
       the  Mortgage  Loan  to  regard  the  Mortgage  Loan  as an  unacceptable
       investment,  cause the Mortgage Loan to become  delinquent,  or adversely
       affect the value or  marketability  of the  Mortgage  Loan,  or cause the
       Mortgage  Loans to prepay during any period  materially  faster or slower
       than the mortgage loans originated by the Seller generally;

              (52)  CONDOMINIUMS/PLANNED  UNIT  DEVELOPMENTS.  If the  Mortgaged
       Property is a condominium unit or a planned unit development  (other than
       a de minimis planned unit  development)  such condominium or planned unit
       development project such Mortgage Loan was originated in accordance with,
       and  the  Mortgaged  Property  meets  the  guidelines  set  forth  in the
       Originator's Underwriting Guidelines.

                                    S-III-12
<PAGE>

                                   SCHEDULE IV

              NC  Capital  Corporation  hereby  makes  the  representations  and
warranties set forth in this Schedule IV to the Depositor and the Trustee, as of
the Closing Date.

(a)    DUE  ORGANIZATION AND AUTHORITY.  The Responsible  Party is a corporation
       duly organized,  validly  existing and in good standing under the laws of
       the state of  California  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 wherein it owns or leases any material  properties
       or 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 Responsible Party, and in any event the Responsible
       Party is in  compliance  with the  laws of any such  state to the  extent
       necessary;  the Responsible Party has the full corporate power, authority
       and legal right to execute and deliver this  Agreement and to perform its
       obligations  hereunder;  the execution,  delivery and performance of this
       Agreement  by  the  Responsible   Party  and  the   consummation  of  the
       transactions  contemplated  hereby have been duly and validly authorized;
       this  Agreement  and all  agreements  contemplated  hereby have been duly
       executed and  delivered  and  constitute  the valid,  legal,  binding and
       enforceable  obligations of the Responsible Party,  regardless of whether
       such  enforcement  is sought in a proceeding in equity or at law; and all
       requisite  corporate  action has been taken by the  Responsible  Party to
       make this  Agreement  and all  agreements  contemplated  hereby valid and
       binding upon the Responsible Party in accordance with their terms;

(b)    NO CONFLICTS.  Neither the execution and delivery of this Agreement,  the
       consummation of the transactions contemplated hereby, nor the fulfillment
       of or compliance  with the terms and conditions of this  Agreement,  will
       conflict  with or result in a breach of any of the terms,  conditions  or
       provisions  of the  Responsible  Party's  charter or by-laws or any legal
       restriction or any agreement or instrument to which the Responsible Party
       is now a party or by which it is bound, or constitute a default or result
       in an acceleration under any of the foregoing, or result in the violation
       of any law,  rule,  regulation,  order,  judgment  or decree to which the
       Responsible  Party or its property is subject,  or result in the creation
       or  imposition  of any lien,  charge or  encumbrance  that  would have an
       adverse  effect upon any of its  properties  pursuant to the terms of any
       mortgage, contract, deed of trust or other instrument;

(c)    NO  LITIGATION  PENDING.   There  is  no  action,  suit,   proceeding  or
       investigation pending or threatened against the Responsible Party, before
       any  court,   administrative  agency  or  other  tribunal  asserting  the
       invalidity of this Agreement,  seeking to prevent the consummation of any
       of the  transactions  contemplated by this Agreement or 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  Responsible  Party,  or in any material  impairment of the
       right or  ability  of the  Responsible  Party  to  carry on its  business
       substantially as now conducted,  or in any material liability on the part
       of the Responsible  Party, or which would draw into question the validity
       of this  Agreement  or of any action  taken or to be taken in  connection
       with the obligations of the Responsible  Party  contemplated  herein,  or
       which would be likely to impair materially the ability of the Responsible
       Party to perform under the terms of this Agreement;

                                     S-IV-1
<PAGE>

(d)    NO CONSENT REQUIRED. No consent, approval,  authorization or order of, or
       registration  or filing  with,  or  notice  to any court or  governmental
       agency  or body  including  HUD,  the FHA or the VA is  required  for the
       execution,  delivery  and  performance  by the  Responsible  Party  of or
       compliance  by  the   Responsible   Party  with  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;

                                     S-IV-2
<PAGE>

                                    EXHIBIT A

[[To  be  added  to the  Class  A-1  Certificate  while  it  remains  a  Private
Certificate.]  IF THIS  CERTIFICATE  IS A  PHYSICAL  CERTIFICATE,  NEITHER  THIS
CERTIFICATE  NOR ANY  INTEREST  HEREIN MAY BE  TRANSFERRED  UNLESS THE  PROPOSED
TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER (THE "TRANSFEROR LETTER")
IN THE FORM OF EXHIBIT H TO THE AGREEMENT  REFERRED TO HEREIN AND EITHER (I) THE
TRUSTEE RECEIVES A RULE 144A LETTER (THE "144A LETTER") IN THE FORM OF EXHIBIT I
TO THE AGREEMENT  REFERRED TO HEREIN OR (II) THE TRUSTEE  RECEIVES AN OPINION OF
COUNSEL,  DELIVERED AT THE EXPENSE OF THE TRANSFEROR,  THAT SUCH TRANSFER MAY BE
MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

IF THIS CERTIFICATE IS A BOOK-ENTRY CERTIFICATE, THE PROPOSED TRANSFEROR WILL BE
DEEMED  TO HAVE  MADE EACH OF THE  CERTIFICATIONS  SET  FORTH IN THE  TRANSFEROR
LETTER  AND THE  PROPOSED  TRANSFEREE  WILL BE  DEEMED  TO HAVE MADE EACH OF THE
CERTIFICATIONS  SET  FORTH  IN THE RULE  144A  LETTER,  in each  case as if such
Certificate were evidenced by a Physical Certificate.]

In the event  that a transfer  of a Private  Certificate  which is a  Book-Entry
Certificate  is to be made in reliance upon an exemption from the Securities Act
and such laws, in order to assure  compliance  with the  Securities Act and such
laws, the  Certificateholder  desiring to effect such transfer will be deemed to
have made as of the transfer  date each of the  certifications  set forth in the
Transferor Certificate in respect of such Certificate and the transferee will be
deemed to have made as of the transfer date each of the certifications set forth
in the Rule 144A Letter in respect of such Certificate,  in each case as if such
Certificate were evidenced by a Physical Certificate.

Unless this  Certificate  is presented by an  authorized  representative  of the
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer,  exchange,  or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized  representative  of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE  REPRESENTS AN
INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE  TERMS ARE  DEFINED,  RESPECTIVELY,  IN  SECTIONS  860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND CERTAIN OTHER ASSETS.

Certificate No.                            :

                                      A-1
<PAGE>

Cut-off Date                               :                 November 1, 2001

First Distribution Date                    :                 December 25, 2001

Initial Certificate Balance of this
Certificate ("DENOMINATION")               :                 $

Initial Certificate Balances of all
Certificates of this Class                 :                 $

CUSIP                                      :

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.

            Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
               Mortgage Pass-Through Certificates, Series 2001-NC3
                         [Class A-][Class M-][Class B-1]

              evidencing  a  percentage  interest  in  the  distributions
              allocable  to  the Certificates of the above-referenced Class.

              Principal in respect of this Certificate is distributable  monthly
as set forth herein.  Accordingly,  the  Certificate  Balance at any time may be
less than the Certificate Balance as set forth herein. This Certificate does not
evidence an  obligation  of, or an  interest  in, and is not  guaranteed  by the
Depositor,  the Responsible Party, the Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.

              This  certifies  that  CEDE & CO. is the  registered  owner of the
Percentage  Interest  evidenced  by this  Certificate  (obtained by dividing the
denomination of this  Certificate by the aggregate of the  denominations  of all
Certificates of the Class to which this Certificate  belongs) in certain monthly
distributions  pursuant to a Pooling  and  Servicing  Agreement  dated as of the
Cut-off Date specified above (the "AGREEMENT")  among Morgan Stanley Dean Witter
Capital I Inc.,  as  depositor  (the  "DEPOSITOR"),  Ocwen  Federal  Bank FSB as
servicer (the " SERVICER"),  NC Capital  Corporation,  as responsible party (the
"RESPONSIBLE  PARTY")  and U.S.  Bank  National  Association,  as  trustee  (the
"TRUSTEE").  To the extent not defined herein, the capitalized terms used herein
have the meanings  assigned in the Agreement.  This  Certificate is issued under
and is subject to the terms,  provisions  and  conditions of the  Agreement,  to
which  Agreement  the  Holder of this  Certificate  by virtue of the  acceptance
hereof assents and by which such Holder is bound.

              Reference  is  hereby  made  to the  further  provisions  of  this
Certificate set forth on the reverse hereof,  which further provisions shall for
all purposes have the same effect as if set forth at this place.

              This  Certificate  shall not be entitled to any benefit  under the
Agreement  or be valid  for any  purpose  unless  manually  countersigned  by an
authorized signatory of the Trustee.

                                      A-2
<PAGE>

                                      * * *

                                      A-3
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

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

                                     By  _______________________________________

Countersigned:

By   _____________________________________________________
     Authorized Signatory of
     U.S. BANK NATIONAL ASSOCIATION,
     not in its individual capacity,
     but solely as Trustee

                                      A-4
<PAGE>

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.
            Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
                       Mortgage Pass-Through Certificates

              This Certificate is one of a duly authorized issue of Certificates
designated as Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3  Mortgage
Pass-Through  Certificates,  of the Series  specified on the face hereof (herein
collectively called the "CERTIFICATES"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.

              The  Certificateholder,  by its  acceptance  of this  Certificate,
agrees  that it will look  solely to the funds on  deposit  in the  Distribution
Account  for  payment  hereunder  and  that the  Trustee  is not  liable  to the
Certificateholders  for  any  amount  payable  under  this  Certificate  or  the
Agreement  or,  except as expressly  provided in the  Agreement,  subject to any
liability under the Agreement.

              This  Certificate  does not purport to summarize the Agreement and
reference is made to the Agreement for the interests,  rights and limitations of
rights,  benefits,  obligations and duties  evidenced  thereby,  and the rights,
duties and immunities of the Trustee.

              Pursuant to the terms of the  Agreement,  a  distribution  will be
made on the 25th day of each  month or, if such day is not a Business  Day,  the
Business Day immediately following (the "DISTRIBUTION DATE"),  commencing on the
first  Distribution  Date  specified on the face hereof,  to the Person in whose
name this  Certificate  is registered at the close of business on the applicable
Record  Date in an  amount  equal  to the  product  of the  Percentage  Interest
evidenced  by this  Certificate  and the amount  required to be  distributed  to
Holders of Certificates of the Class to which this  Certificate  belongs on such
Distribution Date pursuant to the Agreement.  The Record Date applicable to each
Distribution  Date is the Business Date immediately  preceding such Distribution
Date, provided,  however, that for any Definitive Certificates,  the Record Date
shall be the last  Business  Day of the month next  preceding  the month of such
Distribution Date.

              Distributions on this  Certificate  shall be made by wire transfer
of immediately  available funds to the account of the Holder hereof at a bank or
other entity having appropriate  facilities therefor, if such  Certificateholder
shall have so notified the Trustee in writing at least five  Business Days prior
to the  related  Record  Date  and  such  Certificateholder  shall  satisfy  the
conditions  to receive such form of payment set forth in the  Agreement,  or, if
not,   by  check   mailed  by  first   class   mail  to  the   address  of  such
Certificateholder  appearing in the Certificate Register. The final distribution
on each Certificate  will be made in like manner,  but only upon presentment and
surrender of such Certificate at the offices  designated by the Trustee for such
purposes,  or such other location specified in the notice to  Certificateholders
of such final distribution.

              The Agreement  permits,  with certain exceptions therein provided,
the amendment  thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor,  the  Responsible  Party the Servicer and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any

                                      A-5
<PAGE>

such consent by the Holder of this  Certificate  shall be conclusive and binding
on such  Holder  and upon all  future  Holders  of this  Certificate  and of any
Certificate  issued upon the transfer hereof or in exchange  therefor or in lieu
hereof  whether or not notation of such  consent is made upon this  Certificate.
The  Agreement  also  permits  the  amendment   thereof,   in  certain   limited
circumstances, without the consent of the Holders of any of the Certificates.

              As provided in the  Agreement  and subject to certain  limitations
therein  set forth,  the  transfer of this  Certificate  is  registrable  in the
Certificate  Register of the Trustee  upon  surrender  of this  Certificate  for
registration  of  transfer  at the  offices  designated  by the Trustee for such
purposes,  accompanied by a written  instrument of transfer in form satisfactory
to the Trustee and the Certificate  Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing,  and thereupon one or more
new  Certificates of the same Class in authorized  denominations  and evidencing
the same aggregate  Percentage  Interest in the Trust Fund will be issued to the
designated transferee or transferees.

              The  Certificates  are issuable  only as  registered  Certificates
without coupons in denominations  specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest,  as requested by the
Holder surrendering the same.

              No  service  charge  will be made  for any  such  registration  of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

              The Depositor, the Servicer, the Responsible Party and the Trustee
and any agent of the Depositor or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor,  the Trustee,  nor any such agent shall be affected by any notice
to the contrary.

              On any  Distribution  Date on which the aggregate Stated Principal
Balance of the  Mortgage  Loans is less than or equal to 10% of the Cut-off Date
Pool  Principal  Balance,  the Servicer will have the option to  repurchase,  in
whole,  from the  Trust  Fund all  remaining  Mortgage  Loans  and all  property
acquired in respect of the  Mortgage  Loans at a purchase  price  determined  as
provided in the Agreement.  The obligations and responsibilities  created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.

              Any term used herein that is defined in the  Agreement  shall have
the  meaning  assigned in the  Agreement,  and  nothing  herein  shall be deemed
inconsistent with that meaning.

                                      A-6
<PAGE>

                                   ASSIGNMENT

FOR VALUE RECEIVED,  the undersigned  hereby sell(s),  assign(s) and transfer(s)
unto

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

(Please  print  or  typewrite  name and  address  including  postal  zip code of
assignee)

the  Percentage   Interest  evidenced  by  the  within  Certificate  and  hereby
authorizes the transfer of registration of such Percentage  Interest to assignee
on the Certificate Register of the Trust Fund.

              I (We) further direct the Trustee to issue a new  Certificate of a
like  denomination  and Class,  to the above named  assignee  and  deliver  such
Certificate to the following address:

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

Dated:

                                      ------------------------------------------
                                      Signature by or on behalf of assignor

                                      A-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

              The  assignee   should  include  the  following  for  purposes  of
distribution:

              Distributions  shall be made, by wire  transfer or  otherwise,  in
immediately  available  funds  to  ____________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _________,  or, if mailed by check, to  ________________________,
Applicable  statements should be mailed to  ___________________________________,
_______________________________________________________________________________.

              This information is provided by  ________________________________,
the assignee named above, or___________________________________________________,
as its agent.

                                      A-8
<PAGE>

                                    EXHIBIT B

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
PROPOSED  TRANSFEROR  DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT  H TO THE  AGREEMENT  REFERRED  TO HEREIN  AND  EITHER  (I) THE  TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE  AGREEMENT  REFERRED
TO HEREIN OR (II) THE TRUSTEE  RECEIVES AN OPINION OF COUNSEL,  DELIVERED AT THE
EXPENSE OF THE TRANSFEROR,  THAT SUCH TRANSFER MAY BE MADE WITHOUT  REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
TRANSFEREE  DELIVERS TO THE TRUSTEE  EITHER (i) A  REPRESENTATION  LETTER TO THE
EFFECT THAT SUCH  TRANSFEREE IS NOT AN EMPLOYEE  BENEFIT PLAN SUBJECT TO TITLE I
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA") OF
A PLAN  SUBJECT TO  SECTION  4975 OF THE CODE OR A PLAN  SUBJECT  TO  APPLICABLE
FEDERAL,  STATE OR LOCAL LAW ("SIMILAR LAW") MATERIALLY SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE, OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN
ASSETS OF SUCH A PLAN,  OR (ii) IF SUCH  TRANSFEREE IS AN INSURANCE  COMPANY,  A
REPRESENTATION  LETTER THAT IT IS USING THE ASSETS OF ITS GENERAL  ACCOUNT,  AND
THAT THE PURCHASE AND HOLDING OF THIS  CERTIFICATE  ARE COVERED UNDER SECTIONS I
AND III OF PROHIBITED  TRANSACTION  CLASS EXEMPTION 95-60 OR (iii) AN OPINION OF
COUNSEL  SATISFACTORY  TO THE TRUSTEE AND THE  SERVICER,  TO THE EFFECT THAT THE
PURCHASE  OR  HOLDING OF THIS  CERTIFICATE  WILL NOT RESULT IN THE ASSETS OF THE
TRUST FUND  BEING  DEEMED TO BE "PLAN  ASSETS"  AND  SUBJECT  TO THE  PROHIBITED
TRANSACTION PROVISIONS OF ERISA AND THE CODE OR SIMILAR VIOLATION OF SIMILAR LAW
AND WILL NOT SUBJECT THE TRUSTEE OR THE SERVICER TO ANY  OBLIGATION  IN ADDITION
TO  THOSE   EXPRESSLY   UNDERTAKEN  IN  THIS  AGREEMENT  OR  TO  ANY  LIABILITY.
NOTWITHSTANDING  ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS  CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I
OF ERISA,  SECTION  4975 OF THE CODE OR SIMILAR LAW  WITHOUT THE  REPRESENTATION
LETTER OR THE OPINION OF COUNSEL  SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE
SHALL BE VOID AND OF NO EFFECT.

Certificate No.                       :                1

Cut-off Date                          :                November 1, 2001

First Distribution Date               :                December 25, 2001

Percentage Interest of this
Certificate ("DENOMINATION")          :                100%

                                      B-1
<PAGE>
CUSIP                                 :

              MORGAN STANLEY DEAN WITTER CAPITAL I INC.

            Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
               Mortgage Pass-Through Certificates, Series 2001-NC3

                                     Class P

              evidencing  a  percentage  interest  in  the  distributions
              allocable to the Certificates of the above-referenced Class.

              Distributions  in respect of this  Certificate  are  distributable
monthly as set forth herein.  This  Certificate  does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor,  the  Responsible
Party,  the Servicer or the Trustee referred to below or any of their respective
affiliates.  Neither this  Certificate  nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.

              This certifies that U.S. Bank National  Association,  as Indenture
Trustee,  is the registered owner of the Percentage  Interest  evidenced by this
Certificate  (obtained by dividing the  denomination of this  Certificate by the
aggregate of the  denominations  of all  Certificates of the Class to which this
Certificate belongs) in certain monthly distributions  pursuant to a Pooling and
Servicing   Agreement  dated  as  of  the  Cut-off  Date  specified  above  (the
"AGREEMENT")  among Morgan Stanley Dean Witter Capital I Inc., as depositor (the
"DEPOSITOR"),  Ocwen Federal Bank FSB, as servicer (the "SERVICER"),  NC Capital
Corporation,  as  responsible  Party (the  "RESPONSIBLE  PARTY"),  and U.S. Bank
National  Association,  as trustee  (the  "TRUSTEE").  To the extent not defined
herein,  the  capitalized  terms used herein have the  meanings  assigned in the
Agreement.  This  Certificate  is issued  under  and is  subject  to the  terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of the  acceptance  hereof assents and by which such
Holder is bound.

              This  Certificate  does not have a  Pass-Through  Rate and will be
entitled  to  distributions  only to the extent set forth in the  Agreement.  In
addition,  any distribution of the proceeds of any remaining assets of the Trust
will be made only upon  presentment  and  surrender of this  Certificate  at the
offices  designated  by the  Trustee for such  purpose,  or the office or agency
maintained by the Trustee.

              No  transfer of a  Certificate  of this Class shall be made unless
such disposition is exempt from the registration  requirements of the Securities
Act of 1933, as amended (the "1933 ACT"),  and any applicable  state  securities
laws or is made in  accordance  with the 1933 Act and such laws. In the event of
any such  transfer,  the  Trustee  shall  require  the  transferor  to execute a
transferor  certificate (in  substantially  the form attached to the Pooling and
Servicing  Agreement) and deliver either (i) a Rule 144A Letter,  in either case
substantially  in the form attached to the Agreement,  or (ii) a written Opinion
of  Counsel  to the  Trustee  that  such  transfer  may be made  pursuant  to an
exemption, describing the applicable exemption and the basis

                                      B-2
<PAGE>

therefor,  from the 1933 Act or is being made  pursuant  to the 1933 Act,  which
Opinion of Counsel shall be an expense of the transferor.

              No  transfer of a  Certificate  of this Class shall be made unless
the Trustee  shall have  received  either (i) a  representation  letter from the
transferee  of  such  Certificate,  acceptable  to and  in  form  and  substance
satisfactory  to the  Trustee,  to the  effect  that such  transferee  is not an
employee benefit plan subject to Section 406 of ERISA,  Section 4975 of the Code
or Similar Law, or a person acting on behalf of or investing  plan assets of any
such plan,  which  representation  letter shall not be an expense of the Trustee
or, (ii) if the transferee is an insurance company, a representation letter that
it is purchasing  this  Certificate  with the assets of its general  account and
that the purchase and holding of the  certificate  are covered under  Sections I
and III of Prohibited  Transaction Class Exemption 95-60 or (iii) in the case of
a Certificate presented for registration in the name of an employee benefit plan
subject to ERISA,  or a plan or arrangement  subject to Section 4975 of the Code
(or  comparable  provisions  of any  subsequent  enactments)  or any  materially
similar provisions of applicable Federal, state or local law ("SIMILAR LAW"), or
a trustee of any such plan or any other person acting on behalf of any such plan
or  arrangement  or using such  plan's or  arrangement's  assets,  an Opinion of
Counsel  satisfactory to the Trustee and the Servicer,  which Opinion of Counsel
shall not be an  expense  of the  Trustee,  the  Servicer,  or the  Trust  Fund,
addressed  to the  Trustee,  to the effect that the  purchase or holding of this
Certificate  will not result in the assets of the Trust Fund being  deemed to be
"plan assets" and subject to the prohibited  transaction provisions of ERISA and
the Code or similar violation of Similar Law and will not subject the Trustee or
the Servicer to any obligation in addition to those expressly undertaken in this
Agreement or to any liability.

              Reference  is  hereby  made  to the  further  provisions  of  this
Certificate set forth on the reverse hereof,  which further provisions shall for
all purposes have the same effect as if set forth at this place.

              This  Certificate  shall not be entitled to any benefit  under the
Agreement  or be valid  for any  purpose  unless  manually  countersigned  by an
authorized signatory of the Trustee.

                                      * * *

                                      B-3
<PAGE>

         IN WITNESS WHEREOF,  the Trustee has caused this Certificate to be duly
executed.

Dated:

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

                            By  ________________________________________________

Countersigned:

By   _____________________________________________________
     Authorized Signatory of
     U.S. BANK NATIONAL ASSOCIATION,
     not in its individual capacity,
     but solely as Trustee

                                      B-4
<PAGE>

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.
            Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
                       Mortgage Pass-Through Certificates

              This Certificate is one of a duly authorized issue of Certificates
designated as Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3  Mortgage
Pass-Through  Certificates,  of the Series  specified on the face hereof (herein
collectively called the "CERTIFICATES"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.

              The  Certificateholder,  by its  acceptance  of this  Certificate,
agrees  that it will look  solely to the funds on  deposit  in the  Distribution
Account  for  payment  hereunder  and  that the  Trustee  is not  liable  to the
Certificateholders  for  any  amount  payable  under  this  Certificate  or  the
Agreement  or,  except as expressly  provided in the  Agreement,  subject to any
liability under the Agreement.

              This  Certificate  does not purport to summarize the Agreement and
reference is made to the Agreement for the interests,  rights and limitations of
rights,  benefits,  obligations and duties  evidenced  thereby,  and the rights,
duties and immunities of the Trustee.

              Pursuant to the terms of the  Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately following (the "DISTRIBUTION Date"),  commencing on
the first Distribution Date specified on the face hereof, to the Person in whose
name this  Certificate  is registered at the close of business on the applicable
Record  Date in an  amount  equal  to the  product  of the  Percentage  Interest
evidenced  by this  Certificate  and the amount  required to be  distributed  to
Holders of Certificates of the Class to which this  Certificate  belongs on such
Distribution Date pursuant to the Agreement.  The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

              Distributions on this  Certificate  shall be made by wire transfer
of immediately  available funds to the account of the Holder hereof at a bank or
other entity having appropriate  facilities therefor, if such  Certificateholder
shall have so notified the Trustee in writing at least five  Business Days prior
to the  related  Record  Date  and  such  Certificateholder  shall  satisfy  the
conditions  to receive such form of payment set forth in the  Agreement,  or, if
not,   by  check   mailed  by  first   class   mail  to  the   address  of  such
Certificateholder  appearing in the Certificate Register. The final distribution
on each Certificate  will be made in like manner,  but only upon presentment and
surrender of such Certificate at the offices  designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.

              The Agreement  permits,  with certain exceptions therein provided,
the amendment  thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor,  the Servicer,  the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent by
the Holder of this  Certificate  shall be conclusive  and binding on such Holder
and upon all future Holders of this  Certificate and of any  Certificate  issued
upon the

                                      B-5
<PAGE>

transfer  hereof  or in  exchange  therefor  or in lieu  hereof  whether  or not
notation  of such  consent is made upon this  Certificate.  The  Agreement  also
permits the amendment  thereof,  in certain limited  circumstances,  without the
consent of the Holders of any of the Certificates.

              As provided in the  Agreement  and subject to certain  limitations
therein  set forth,  the  transfer of this  Certificate  is  registrable  in the
Certificate  Register of the Trustee  upon  surrender  of this  Certificate  for
registration  of  transfer  at the  offices  designated  by the Trustee for such
purposes  or the office or agency  maintained  by the  Trustee in New York,  New
York,  accompanied by a written  instrument of transfer in form  satisfactory to
the Trustee and the Certificate  Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates  of the same Class in authorized  denominations  and evidencing the
same  aggregate  Percentage  Interest  in the  Trust  Fund will be issued to the
designated transferee or transferees.

              The  Certificates  are issuable  only as  registered  Certificates
without coupons in denominations  specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest,  as requested by the
Holder surrendering the same.

              No  service  charge  will be made  for any  such  registration  of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

              The Depositor, the Servicer, the Responsible Party and the Trustee
and any agent of the Depositor or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor,  the Trustee,  nor any such agent shall be affected by any notice
to the contrary.

              On any  Distribution  Date on which the aggregate Stated Principal
Balance of the  Mortgage  Loans is less than or equal to 10% of the Cut-off Date
Pool  Principal  Balance,  the Servicer will have the option to  repurchase,  in
whole,  from the  Trust  Fund all  remaining  Mortgage  Loans  and all  property
acquired in respect of the  Mortgage  Loans at a purchase  price  determined  as
provided in the Agreement.  The obligations and responsibilities  created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.

              Any term used herein that is defined in the  Agreement  shall have
the  meaning  assigned in the  Agreement,  and  nothing  herein  shall be deemed
inconsistent with that meaning.

                                      B-6
<PAGE>

                                   ASSIGNMENT

              FOR VALUE RECEIVED, the undersigned hereby sell(s),  assign(s) and
transfer(s)  unto  _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the  Percentage   Interest  evidenced  by  the  within  Certificate  and  hereby
authorizes the transfer of registration of such Percentage  Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further  direct the Trustee to issue a new  Certificate
of a like  denomination  and Class, to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________.

Dated:

                                      ------------------------------------------
                                      Signature by or on behalf of assignor

                                      B-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

              The  assignee   should  include  the  following  for  purposes  of
distribution:

              Distributions  shall be made, by wire  transfer or  otherwise,  in
immediately  available  funds  to  ____________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _________,  or, if mailed by check, to  ________________________,
Applicable  statements should be mailed to  ___________________________________,
_______________________________________________________________________________.

              This information is provided by  ________________________________,
the assignee named above, or___________________________________________________,
as its agent.

                                      B-8
<PAGE>
                                    EXHIBIT C

SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL  ESTATE  MORTGAGE  INVESTMENT  CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
PROPOSED  TRANSFEREE  DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
TRANSFEREE  DELIVERS TO THE TRUSTEE A  REPRESENTATION  LETTER TO THE EFFECT THAT
SUCH TRANSFEREE IS AN EMPLOYEE  BENEFIT PLAN SUBJECT TO THE EMPLOYEE  RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),  OR A PLAN SUBJECT TO SECTION
4975  OF  THE  CODE  OR A PLAN  SUBJECT  TO  MATERIALLY  SIMILAR  PROVISIONS  OF
APPLICABLE FEDERAL,  STATE OR LOCAL LAW ("SIMILAR LAW") OR A PERSON INVESTING ON
BEHALF  OF OR  WITH  PLAN  ASSETS  OF  SUCH A  PLAN.  In  the  event  that  such
representation  is  violated,  or any  attempt IS MADE to  transfer to a plan or
arrangement  subject to Section 406 of ERISA,  a plan subject to Section 4975 of
the Code OR A PLAN SUBJECT TO SIMILAR  LAW, or a person  acting on behalf of any
such plan or  arrangement  or using the assets of any such plan or  arrangement,
such attempted transfer or acquisition shall be void and of no effect.

Certificate No.                          :              1

Cut-off Date                             :              November 1, 2001

First Distribution Date                  :              December 25, 2001

Percentage Interest of this              :              100%
Certificate ("DENOMINATION")

CUSIP                                    :

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.

            Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
               Mortgage Pass-Through Certificates, Series 2001-NC3

                                     Class R

              evidencing  a  percentage  interest  in  the  distributions
              allocable to the Certificates of the above-referenced Class.

                                       C-1
<PAGE>

              Distributions  in respect  of this  Certificate  is  distributable
monthly as set forth herein. This Class R Certificate has no Certificate Balance
and is not entitled to distributions  in respect of principal or interest.  This
Certificate  does not evidence an  obligation  of, or an interest in, and is not
guaranteed by the Depositor,  the Servicer, the Responsible Party or the Trustee
referred  to  below  or  any  of  their  respective  affiliates.   Neither  this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.

              This  certifies  that  Morgan  Stanley & Co.  Incorporated  is the
registered  owner of the  Percentage  Interest  specified  above of any  monthly
distributions  due to  the  Class  R  Certificates  pursuant  to a  Pooling  and
Servicing   Agreement  dated  as  of  the  Cut-Off  Date  specified  above  (the
"AGREEMENT")  among Morgan Stanley Dean Witter Capital I Inc., as depositor (the
"DEPOSITOR"),  Ocwen Federal Bank FSB, as servicer (the "SERVICER"),  NC Capital
Corporation,  as  responsible  party (the  "RESPONSIBLE  PARTY")  and U.S.  Bank
National  Association,  as trustee  (the  "TRUSTEE").  To the extent not defined
herein,  the  capitalized  terms used herein have the  meanings  assigned in the
Agreement.  This  Certificate  is issued  under  and is  subject  to the  terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of the  acceptance  hereof assents and by which such
Holder is bound.

              Any  distribution  of the proceeds of any remaining  assets of the
Trust  Fund will be made only upon  presentment  and  surrender  of this Class R
Certificate  at the offices  designated  by the Trustee for such purposes or the
office or agency maintained by the Trustee in California.

              No  transfer  of a Class R  Certificate  shall be made  unless the
Trustee shall have received a representation  letter from the transferee of such
Certificate,  acceptable  to and  in  form  and  substance  satisfactory  to the
Trustee,  to the effect that such transferee is not an employee  benefit plan or
arrangement  subject to Section 406 of ERISA, a plan or  arrangement  subject to
Section 4975 of the Code or a plan subject to Similar Law, or a person acting on
behalf of any such plan or arrangement  nor using the assets of any such plan or
arrangement to effect such transfer, which representation letter shall not be an
expense of the Trustee,  the Servicer or the Trust Fund.  In the event that such
representation  is  violated,  or any  attempt is made to  transfer to a plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section 4975 of
the Code or a plan subject to Similar  Law, or a person  acting on behalf of any
such plan or  arrangement  or using the assets of any such plan or  arrangement,
such attempted transfer or acquisition shall be void and of no effect.

              Each  Holder of this  Class R  Certificate  shall be deemed by the
acceptance or acquisition  an Ownership  Interest in this Class R Certificate to
have  agreed to be bound by the  following  provisions,  and the  rights of each
Person  acquiring  any  Ownership  Interest  in  this  Class R  Certificate  are
expressly  subject  to the  following  provisions:  (i) each  Person  holding or
acquiring  any  Ownership  Interest  in this  Class  R  Certificate  shall  be a
Permitted  Transferee  and shall  promptly  notify the  Trustee of any change or
impending  change in its status as a  Permitted  Transferee,  (ii) no  Ownership
Interest in this Class R  Certificate  may be  registered on the Closing Date or
thereafter transferred,  and the Trustee shall not register the Transfer of this
Certificate unless, in addition to the certificates  required to be delivered to
the Trustee under Section 5.02(b) of the Agreement,  the Trustee shall have been
furnished  with a  Transfer  Affidavit  of the  initial  owner  or the  proposed
transferee in the form attached as Exhibit G to the Agreement, (iii) each Person
holding or acquiring any Ownership Interest in this Class R

                                      C-2
<PAGE>

Certificate shall agree (A) to obtain a Transfer Affidavit from any other Person
to whom such Person  attempts to Transfer its  Ownership  Interest  this Class R
Certificate,  (B) to obtain a Transfer  Affidavit  from any Person for whom such
Person is acting as nominee, trustee or agent in connection with any Transfer of
this Class R Certificate and (C) not to Transfer the Ownership  Interest in this
Class R Certificate  or to cause the Transfer of the Ownership  Interest in this
Class R  Certificate  to any other Person if it has actual  knowledge  that such
Person  is not a  Permitted  Transferee  and (iv)  any  attempted  or  purported
Transfer of the Ownership  Interest in this Class R Certificate  in violation of
the provisions herein shall be absolutely null and void and shall vest no rights
in the purported Transferee.

              Reference  is  hereby  made  to the  further  provisions  of  this
Certificate set forth on the reverse hereof,  which further provisions shall for
all purposes have the same effect as if set forth at this place.

              This  Certificate  shall not be entitled to any benefit  under the
Agreement  or be valid  for any  purpose  unless  manually  countersigned  by an
authorized signatory of the Trustee.

                                      C-3
<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated:

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

                               By  _____________________________________________

Countersigned:

By    ____________________________________________________
       Authorized Signatory of
       U.S. BANK NATIONAL ASSOCIATION
          not in its individual capacity,
          but solely as Trustee

                                      C-4
<PAGE>

            Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
                       Mortgage Pass-Through Certificates

              This Certificate is one of a duly authorized issue of Certificates
designated as Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3  Mortgage
Pass-Through  Certificates,  of the Series  specified on the face hereof (herein
collectively called the "CERTIFICATES"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.

              The  Certificateholder,  by its  acceptance  of this  Certificate,
agrees  that it will look  solely to the funds on  deposit  in the  Distribution
Account  for  payment  hereunder  and  that the  Trustee  is not  liable  to the
Certificateholders  for  any  amount  payable  under  this  Certificate  or  the
Agreement  or,  except as expressly  provided in the  Agreement,  subject to any
liability under the Agreement.

              This  Certificate  does not purport to summarize the Agreement and
reference is made to the Agreement for the interests,  rights and limitations of
rights,  benefits,  obligations and duties  evidenced  thereby,  and the rights,
duties and immunities of the Trustee.

              Pursuant to the terms of the  Agreement,  a  distribution  will be
made on the 25th day of each  month or, if such day is not a Business  Day,  the
Business Day immediately following (the "DISTRIBUTION DATE"),  commencing on the
first  Distribution  Date  specified on the face hereof,  to the Person in whose
name this  Certificate  is registered at the close of business on the applicable
Record  Date in an  amount  equal  to the  product  of the  Percentage  Interest
evidenced  by this  Certificate  and the amount  required to be  distributed  to
Holders of Certificates of the Class to which this  Certificate  belongs on such
Distribution Date pursuant to the Agreement.  The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

              Distributions on this  Certificate  shall be made by wire transfer
of immediately  available funds to the account of the Holder hereof at a bank or
other entity having appropriate  facilities therefor, if such  Certificateholder
shall have so notified the Trustee in writing at least five  Business Days prior
to the  related  Record  Date  and  such  Certificateholder  shall  satisfy  the
conditions  to receive such form of payment set forth in the  Agreement,  or, if
not,   by  check   mailed  by  first   class   mail  to  the   address  of  such
Certificateholder  appearing in the Certificate Register. The final distribution
on each Certificate  will be made in like manner,  but only upon presentment and
surrender of such Certificate at the offices  designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.

              The Agreement  permits,  with certain exceptions therein provided,
the amendment  thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor,  the Servicer,  the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent by
the Holder of this  Certificate  shall be conclusive  and binding on such Holder
and upon all future Holders of this  Certificate and of any  Certificate  issued
upon the transfer  hereof or in exchange  therefor or in lieu hereof  whether or
not notation of such consent

                                      C-5
<PAGE>

is made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited  circumstances,  without the consent of the Holders of any of
the Certificates.

              As provided in the  Agreement  and subject to certain  limitations
therein  set forth,  the  transfer of this  Certificate  is  registrable  in the
Certificate  Register of the Trustee  upon  surrender  of this  Certificate  for
registration  of  transfer  at the  offices  designated  by the Trustee for such
purposes  or the  office or agency  maintained  by the  Trustee  in  California,
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's  attorney  duly  authorized  in writing,  and thereupon one or more new
Certificates  of the same Class in authorized  denominations  and evidencing the
same  aggregate  Percentage  Interest  in the  Trust  Fund will be issued to the
designated transferee or transferees.

              The  Certificates  are issuable  only as  registered  Certificates
without coupons in denominations  specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest,  as requested by the
Holder surrendering the same.

              No  service  charge  will be made  for any  such  registration  of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

              The Depositor, the Servicer, the Responsible Party and the Trustee
and any agent of the Depositor or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor,  the Trustee,  nor any such agent shall be affected by any notice
to the contrary.

              On any  Distribution  Date on which the aggregate Stated Principal
Balance of the  Mortgage  Loans is less than or equal to 10% of the Cut-off Date
Pool  Principal  Balance,  the Servicer will have the option to  repurchase,  in
whole,  from the  Trust  Fund all  remaining  Mortgage  Loans  and all  property
acquired in respect of the  Mortgage  Loans at a purchase  price  determined  as
provided in the Agreement.  The obligations and responsibilities  created by the
Agreement will terminate as provided in Section 9.01 of the Agreement.

              Any term used herein that is defined in the  Agreement  shall have
the  meaning  assigned in the  Agreement,  and  nothing  herein  shall be deemed
inconsistent with that meaning.

                                      C-6
<PAGE>

                                   ASSIGNMENT

              FOR VALUE RECEIVED, the undersigned hereby sell(s),  assign(s) and
transfer(s)  unto  _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the  Percentage   Interest  evidenced  by  the  within  Certificate  and  hereby
authorizes the transfer of registration of such Percentage  Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further  direct the Trustee to issue a new  Certificate
of a like  denomination  and Class, to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________.

Dated:

                                      ------------------------------------------
                                      Signature by or on behalf of assignor

                                      C-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

              The  assignee   should  include  the  following  for  purposes  of
distribution:

              Distributions  shall be made, by wire  transfer or  otherwise,  in
immediately  available  funds  to  ____________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _________,  or, if mailed by check, to  ________________________,
Applicable  statements should be mailed to  ___________________________________,
_______________________________________________________________________________.

              This information is provided by  ________________________________,
the assignee named above, or___________________________________________________,
as its agent.

                                      C-8
<PAGE>

                                    EXHIBIT D

SOLELY FOR U.S.  FEDERAL  INCOME TAX PURPOSES,  THIS  CERTIFICATE  IS A "REGULAR
INTEREST" IN A "REAL  ESTATE  MORTGAGE  INVESTMENT  CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
PROPOSED  TRANSFEROR  DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT  H TO THE  AGREEMENT  REFERRED  TO HEREIN  AND  EITHER  (I) THE  TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE  AGREEMENT  REFERRED
TO HEREIN OR (II) THE TRUSTEE  RECEIVES AN OPINION OF COUNSEL,  DELIVERED AT THE
EXPENSE OF THE TRANSFEROR,  THAT SUCH TRANSFER MAY BE MADE WITHOUT  REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

NEITHER THIS  CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED  UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION  LETTER TO THE EFFECT
THAT SUCH  TRANSFEREE  IS NOT AN EMPLOYEE  BENEFIT  PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),  OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE,  OR, IF THE TRANSFEREE IS AN INSURANCE  COMPANY,  A
REPRESENTATION  LETTER  THAT IT IS USING THE ASSETS OF ITS  GENERAL  ACCOUNT AND
THAT THE PURCHASE AND HOLDING OF THIS  CERTIFICATE  ARE COVERED UNDER SECTIONS I
AND III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 OR AN OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE AND THE SERVICER, TO THE EFFECT THAT THE PURCHASE OR
HOLDING  OF THIS  CERTIFICATE  WILL NOT  RESULT IN THE  ASSETS OF THE TRUST FUND
BEING  DEEMED TO BE "PLAN  ASSETS"  AND  SUBJECT TO THE  PROHIBITED  TRANSACTION
PROVISIONS  OF ERISA AND THE CODE OR SIMILAR  VIOLATION  OF SIMILAR LAW AND WILL
NOT SUBJECT THE TRUSTEE OR THE SERVICER TO ANY  OBLIGATION  IN ADDITION TO THOSE
EXPRESSLY  UNDERTAKEN  IN THIS  AGREEMENT OR TO ANY  LIABILITY.  NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE
TO OR ON BEHALF OF AN  EMPLOYEE  BENEFIT  PLAN  SUBJECT  TO ERISA OR TO THE CODE
WITHOUT THE  REPRESENTATION  LETTER AS  DESCRIBED  ABOVE SHALL BE VOID AND OF NO
EFFECT.

Certificate No.                            :            1

Cut-off Date                               :            November 1, 2001

First Distribution Date                    :            December 25, 2001

Percentage Interest of this Certificate
("DENOMINATION")                           :            100%

                                      D-1
<PAGE>

CUSIP                                      :

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.

            Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
               Mortgage Pass-Through Certificates, Series 2001-NC3

                                     Class X

              evidencing  a  percentage  interest  in  the  distributions
              allocable to the Certificates of the above-referenced Class.

              Distributions  in respect of this  Certificate  are  distributable
monthly as set forth herein.  This  Certificate  does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Servicer, the
Responsible  Party or the Trustee  referred to below or any of their  respective
affiliates.  Neither this  Certificate  nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.

              This certifies that U.S. Bank National  Association,  as Indenture
Trustee,  is the registered owner of the Percentage  Interest  evidenced by this
Certificate  (obtained by dividing the  denomination of this  Certificate by the
aggregate of the  denominations  of all  Certificates of the Class to which this
Certificate belongs) in certain monthly distributions  pursuant to a Pooling and
Servicing   Agreement  dated  as  of  the  Cut-off  Date  specified  above  (the
"AGREEMENT")  among Morgan Stanley Dean Witter Capital I Inc., as depositor (the
"DEPOSITOR"),  Ocwen Federal Bank FSB, as servicer (the "SERVICER"),  NC Capital
Corporation,  as  responsible  party (the  "RESPONSIBLE  PARTY")  and U.S.  Bank
National  Association,  as trustee  (the  "TRUSTEE").  To the extent not defined
herein,  the  capitalized  terms used herein have the  meanings  assigned in the
Agreement.  This  Certificate  is issued  under  and is  subject  to the  terms,
provisions  and conditions of the  Agreement,  to which  Agreement the Holder of
this  Certificate by virtue of the  acceptance  hereof assents and by which such
Holder is bound.

              This   Certificate   does  not  have  a  Certificate   Balance  or
Pass-Through  Rate and will be entitled to distributions  only to the extent set
forth in the Agreement.  In addition,  any  distribution  of the proceeds of any
remaining  assets of the Trust will be made only upon  presentment and surrender
of this  Certificate at the offices  designated by the Trustee for such purposes
or the office or agency maintained by the Trustee.

              No  transfer of a  Certificate  of this Class shall be made unless
such disposition is exempt from the registration  requirements of the Securities
Act of 1933, as amended (the "1933 ACT"),  and any applicable  state  securities
laws or is made in  accordance  with the 1933 Act and such laws. In the event of
any such  transfer,  the  Trustee  shall  require  the  transferor  to execute a
transferor  certificate (in  substantially  the form attached to the Pooling and
Servicing  Agreement) and deliver either (i) a Rule 144A Letter,  in either case
substantially  in the form attached to the Agreement,  or (ii) a written Opinion
of  Counsel  to the  Trustee  that  such  transfer  may be made  pursuant  to an
exemption, describing the applicable exemption and the basis

                                      D-2
<PAGE>

therefor,  from the 1933 Act or is being made  pursuant  to the 1933 Act,  which
Opinion of Counsel shall be an expense of the transferor.

              No  transfer of a  Certificate  of this Class shall be made unless
the Trustee  shall have  received  either (i) a  representation  letter from the
transferee  of  such  Certificate,  acceptable  to and  in  form  and  substance
satisfactory  to the  Trustee,  to the  effect  that such  transferee  is not an
employee  benefit  plan  subject to Section 406 of ERISA or Section  4975 of the
Code or any materially similar provisions of applicable Federal,  state or local
law ("SIMILAR  LAW") or a person acting on behalf of or investing plan assets of
any such  plan,  which  representation  letter  shall not be an  expense  of the
Trustee,  or (ii) if the transferee is an insurance  company,  a  representation
letter that it is purchasing  such  Certificates  with the assets of its general
account and that the purchase and holding of such Certificates are covered under
Sections  I and  III of PTCE  95-60,  or  (iii)  in the  case  of a  Certificate
presented for  registration  in the name of an employee  benefit plan subject to
ERISA,  or a plan  or  arrangement  subject  to  Section  4975 of the  Code  (or
comparable provisions of any subsequent enactments) or a plan subject to Similar
Law, or a trustee of any such plan or any other  person  acting on behalf of any
such plan or  arrangement  or using  such  plan's or  arrangement's  assets,  an
Opinion of Counsel  satisfactory to the Trustee and the Servicer,  which Opinion
of Counsel  shall not be an expense of the  Trustee,  the  Servicer or the Trust
Fund,  addressed to the  Trustee,  to the effect that the purchase or holding of
such Certificate will not result in the assets of the Trust Fund being deemed to
be "plan assets" and subject to the prohibited  transaction  provisions of ERISA
and the Code and will not subject the Trustee or the Servicer to any  obligation
in addition to those expressly undertaken in this Agreement or to any liability.

              Reference  is  hereby  made  to the  further  provisions  of  this
Certificate set forth on the reverse hereof,  which further provisions shall for
all purposes have the same effect as if set forth at this place.

              This  Certificate  shall not be entitled to any benefit  under the
Agreement  or be valid  for any  purpose  unless  manually  countersigned  by an
authorized signatory of the Trustee.

                                      * * *

                                      D-3
<PAGE>

              IN WITNESS WHEREOF,  the Trustee has caused this Certificate to be
duly executed.

Dated:

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

                              By  ______________________________________________

Countersigned:

By    ____________________________________________________
       Authorized Signatory of
       U.S. BANK NATIONAL ASSOCIATION,
          not in its individual capacity,
          but solely as Trustee

                                      D-4
<PAGE>

                    MORGAN STANLEY DEAN WITTER CAPITAL I INC.
            Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
                       Mortgage Pass-Through Certificates

              This Certificate is one of a duly authorized issue of Certificates
designated as Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3  Mortgage
Pass-Through  Certificates,  of the Series  specified on the face hereof (herein
collectively called the "CERTIFICATES"), and representing a beneficial ownership
interest in the Trust Fund created by the Agreement.

              The  Certificateholder,  by its  acceptance  of this  Certificate,
agrees  that it will look  solely to the funds on  deposit  in the  Distribution
Account  for  payment  hereunder  and  that the  Trustee  is not  liable  to the
Certificateholders  for  any  amount  payable  under  this  Certificate  or  the
Agreement  or,  except as expressly  provided in the  Agreement,  subject to any
liability under the Agreement.

              This  Certificate  does not purport to summarize the Agreement and
reference is made to the Agreement for the interests,  rights and limitations of
rights,  benefits,  obligations and duties  evidenced  thereby,  and the rights,
duties and immunities of the Trustee.

              Pursuant to the terms of the  Agreement,  a  distribution  will be
made on the 25th day of each month or, if such 25th day is not a  Business  Day,
the Business Day immediately following (the "DISTRIBUTION Date"),  commencing on
the first Distribution Date specified on the face hereof, to the Person in whose
name this  Certificate  is registered at the close of business on the applicable
Record  Date in an  amount  equal  to the  product  of the  Percentage  Interest
evidenced  by this  Certificate  and the amount  required to be  distributed  to
Holders of Certificates of the Class to which this  Certificate  belongs on such
Distribution Date pursuant to the Agreement.  The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.

              Distributions on this  Certificate  shall be made by wire transfer
of immediately  available funds to the account of the Holder hereof at a bank or
other entity having appropriate  facilities therefor, if such  Certificateholder
shall have so notified the Trustee in writing at least five  Business Days prior
to the  related  Record  Date  and  such  Certificateholder  shall  satisfy  the
conditions  to receive such form of payment set forth in the  Agreement,  or, if
not,   by  check   mailed  by  first   class   mail  to  the   address  of  such
Certificateholder  appearing in the Certificate Register. The final distribution
on each Certificate  will be made in like manner,  but only upon presentment and
surrender of such Certificate at the offices  designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.

              The Agreement  permits,  with certain exceptions therein provided,
the amendment  thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor,  the Servicer,  the Responsible Party and the Trustee with the
consent of the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent by
the Holder of this  Certificate  shall be conclusive  and binding on such Holder
and upon all future Holders of this  Certificate and of any  Certificate  issued
upon the

                                      D-5
<PAGE>

transfer  hereof  or in  exchange  therefor  or in lieu  hereof  whether  or not
notation  of such  consent is made upon this  Certificate.  The  Agreement  also
permits the amendment  thereof,  in certain limited  circumstances,  without the
consent of the Holders of any of the Certificates.

              As provided in the  Agreement  and subject to certain  limitations
therein  set forth,  the  transfer of this  Certificate  is  registrable  in the
Certificate  Register of the Trustee  upon  surrender  of this  Certificate  for
registration  of  transfer  at the  offices  designated  by the Trustee for such
purposes  or the office or agency  maintained  by the  Trustee in New York,  New
York,  accompanied by a written  instrument of transfer in form  satisfactory to
the Trustee and the Certificate  Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates  of the same Class in authorized  denominations  and evidencing the
same  aggregate  Percentage  Interest  in the  Trust  Fund will be issued to the
designated transferee or transferees.

              The  Certificates  are issuable  only as  registered  Certificates
without coupons in denominations  specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized  denominations
and  evidencing  the same  aggregate  Percentage  Interest,  as requested by the
Holder surrendering the same.

              No  service  charge  will be made  for any  such  registration  of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

              The Depositor, the Servicer, the Responsible Party and the Trustee
and any agent of the Depositor or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Depositor,  the Trustee,  nor any such agent shall be affected by any notice
to the contrary.

              On any  Distribution  Date on which the aggregate Stated Principal
Balance of the  Mortgage  Loans is less than or equal to 10% of the Cut-off Date
Principal  Balance,  the Servicer will have the option to repurchase,  in whole,
from the Trust Fund all remaining  Mortgage  Loans and all property  acquired in
respect of the Mortgage Loans at a purchase price  determined as provided in the
Agreement.  The obligations and  responsibilities  created by the Agreement will
terminate as provided in Section 9.01 of the Agreement.

              Any term used herein that is defined in the  Agreement  shall have
the  meaning  assigned in the  Agreement,  and  nothing  herein  shall be deemed
inconsistent with that meaning.

                                      D-6
<PAGE>

                                   ASSIGNMENT

              FOR VALUE RECEIVED, the undersigned hereby sell(s),  assign(s) and
transfer(s)  unto  _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)

the  Percentage   Interest  evidenced  by  the  within  Certificate  and  hereby
authorizes the transfer of registration of such Percentage  Interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further  direct the Trustee to issue a new  Certificate
of a like  denomination  and Class, to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________.

Dated:

                                      ------------------------------------------
                                      Signature by or on behalf of assignor

                                      D-7
<PAGE>

                            DISTRIBUTION INSTRUCTIONS

              The  assignee   should  include  the  following  for  purposes  of
distribution:

              Distributions  shall be made, by wire  transfer or  otherwise,  in
immediately  available  funds  to  ____________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _________,  or, if mailed by check, to  ________________________.
Applicable  statements should be mailed to  ___________________________________,
_______________________________________________________________________________.

              This information is provided by  ________________________________,
the assignee named above, or___________________________________________________,
as its agent.

                                      D-8
<PAGE>

                                     EXHIBIT E

                    FORM OF INITIAL CERTIFICATION OF TRUSTEE

                                     [date]

[Depositor]

[Servicer]

[Originator]
______________
______________

              Re:    Pooling and Servicing  Agreement  among Morgan Stanley Dean
                     Witter  Capital I Inc.,  as  Depositor,  Ocwen Federal Bank
                     FSB,  as  and   Servicer,   NC  Capital   Corporation,   as
                     Responsible Party, and U.S. Bank National  Association,  as
                     Trustee, Morgan Stanley Dean - WITTER CAPITAL I INC. TRUST,
                     SERIES 2001-NC3

Gentlemen:

              In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "POOLING AND SERVICING  AGREEMENT"),  for each Mortgage
Loan listed in the Mortgage Loan  Schedule  (other than any Mortgage Loan listed
in the attached schedule), it has received:

                     (i) the original Mortgage Note, endorsed as provided in the
              following form: "Pay to the order of ________,  without recourse";
              and

                     (ii) a duly executed  assignment of the Mortgage (which may
              be included in a blanket assignment or assignments).

              Based on its review and  examination  and only as to the foregoing
documents,  such  documents  appear  regular on their  face and  related to such
Mortgage Loan.

              The Trustee has made no  independent  examination of any documents
contained in each Mortgage File beyond the review  specifically  required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents  contained  in  each  Mortgage  File  of  any of  the  Mortgage  Loans
identified  on  the  Mortgage  Loan  Schedule,   or  (ii)  the   collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.

                                      E-1
<PAGE>

                  Capitalized  words and  phrases  used  herein  shall  have the
respective meanings assigned to them in the Pooling and Servicing Agreement.

                                         U.S. BANK NATIONAL ASSOCIATION,
                                             as Trustee

                                         By:____________________________________
                                         Name:__________________________________
                                         Title:_________________________________

                                      E-2

<PAGE>

                                    EXHIBIT F

                         FORM OF DOCUMENT CERTIFICATION
                         AND EXCEPTION REPORT OF TRUSTEE

                                     [date]

[Depositor]

[Servicer]

[Originator]
______________
______________

              Re:    Pooling and Servicing  Agreement  among Morgan Stanley Dean
                     Witter  Capital I Inc.,  as  Depositor,  Ocwen Federal Bank
                     FSB,  as  and   Servicer,   NC  Capital   Corporation,   as
                     Responsible Party, and U.S. Bank National  Association,  as
                     Trustee,  Morgan STANLEY DEAN WITTER CAPITAL I INC.  TRUST,
                     SERIES 2001-NC3,

Gentlemen:

              In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "POOLING AND SERVICING AGREEMENT"), the undersigned, as
Trustee,  hereby  certifies that as to each Mortgage Loan listed in the Mortgage
Loan  Schedule  (other  than any  Mortgage  Loan  paid in full or  listed on the
attached Document Exception Report) it has received:

              (i) The original  Mortgage Note,  endorsed in the form provided in
       Section 2.01 of the Pooling and Servicing Agreement, with all intervening
       endorsements  showing a complete chain of endorsement from the originator
       to the last endorsee.

              (ii) The original recorded Mortgage.

              (iii) A duly  executed  assignment  of the  Mortgage  in the  form
       provided in Section 2.01 of the Pooling and Servicing  Agreement;  or, if
       the Responsible  Party has certified or the Trustee  otherwise knows that
       the related Mortgage has not been returned from the applicable  recording
       office, a copy of the assignment of the Mortgage  (excluding  information
       to be provided by the recording office).

              (iv) The original or duplicate  original  recorded  assignment  or
       assignments of the Mortgage  showing a complete chain of assignment  from
       the originator to the last endorsee.

              (v) The original or duplicate  original  lender's title policy and
       all riders thereto or, any one of an original  title binder,  an original
       preliminary  title  report or an  original  title  commitment,  or a copy
       thereof certified by the title company.

                                      F-1
<PAGE>

              Based on its review and  examination  and only as to the foregoing
documents,  (a) such documents  appear regular on their face and related to such
Mortgage Loan, and (b) the information set forth in items (1), (2), (7), and (9)
of the  Mortgage  Loan  Schedule  and items  (1),  (9) and (17) of the Data Tape
Information accurately reflects information set forth in the Custodial File.

              The Trustee has made no  independent  examination of any documents
contained  in each  Mortgage  File  beyond  the  review  of the  Custodial  File
specifically required in the Pooling and Servicing Agreement.  The Trustee makes
no   representations   as  to:   (i)  the   validity,   legality,   sufficiency,
enforceability or genuineness of any of the documents contained in each Mortgage
File of any of the Mortgage Loans  identified on the Mortgage Loan Schedule,  or
(ii) the collectability,  insurability, effectiveness or suitability of any such
Mortgage Loan.  Notwithstanding anything herein to the contrary, the Trustee has
made no  determination  and  makes  no  representations  as to  whether  (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as Noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or sufficient to effect the assignment
of and  transfer  to the  assignee  thereof,  under  the  Mortgage  to which the
assignment relates.

              Capitalized   words  and  phrases   used  herein  shall  have  the
respective meanings assigned to them in the Pooling and Servicing Agreement.

                                         U.S. BANK NATIONAL ASSOCIATION,
                                             as Trustee

                                         By:____________________________________
                                         Name:__________________________________
                                         Title:_________________________________

                                      F-2
<PAGE>

                                    EXHIBIT G

                               TRANSFER AFFIDAVIT

            Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3,
                       Mortgage Pass-Through Certificates,
                                 Series 2001-NC3

STATE OF                            )
                                    ) ss.:
COUNTY OF                           )

              The  undersigned,  being  first duly  sworn,  deposes  and says as
follows:

              1. The  undersigned  is an  officer  of  ___________________,  the
proposed  Transferee  of an  Ownership  Interest in a Class R  Certificate  (the
"CERTIFICATE")  issued  pursuant to the Pooling and  Servicing  Agreement,  (the
"AGREEMENT"),  relating  to the  above-referenced  Series,  by and among  Morgan
Stanley  Dean Witter  Capital I Inc.,  as  depositor  (the  "DEPOSITOR"),  Ocwen
Federal Bank FSB, as servicer, NC Capital Corporation, as Responsible Party, and
U.S. Bank National  Association,  as Trustee.  Capitalized  terms used,  but not
defined herein or in Exhibit 1 hereto,  shall have the meanings ascribed to such
terms in the Agreement.  The  Transferee has authorized the  undersigned to make
this  affidavit on behalf of the Transferee for the benefit of the Depositor and
the Trustee.

              2. The  Transferee  is, as of the date hereof,  and will be, as of
the date of the Transfer,  a Permitted  Transferee.  The Transferee is acquiring
its Ownership  Interest in the Certificate  for its own account.  The Transferee
has no knowledge that any such affidavit is false.

              3. The Transferee has been advised of, and understands  that (i) a
tax will be imposed on  Transfers  of the  Certificate  to Persons  that are not
Permitted Transferees;  (ii) such tax will be imposed on the transferor,  or, if
such  Transfer  is  through  an agent  (which  includes  a  broker,  nominee  or
middleman) for a Person that is not a Permitted  Transferee,  on the agent;  and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent  Transferee furnished to such Person an affidavit that
such  subsequent  Transferee  is a  Permitted  Transferee  and,  at the  time of
Transfer,  such Person  does not have actual  knowledge  that the  affidavit  is
false.

              4. The Transferee has been advised of, and understands  that a tax
will be imposed on a  "pass-through  entity"  holding the  Certificate if at any
time during the taxable year of the  pass-through  entity a Person that is not a
Permitted  Transferee  is the record  holder of an interest in such entity.  The
Transferee  understands  that such tax will not be imposed  for any period  with
respect to which the  record  holder  furnishes  to the  pass-through  entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual  knowledge that such  affidavit is false.  (For this
purpose, a "pass-through entity" includes a

                                      G-1
<PAGE>

regulated  investment  company,  a real estate  investment trust or common trust
fund, a partnership,  trust or estate,  and certain  cooperatives and, except as
may  be  provided  in  Treasury   Regulations,   persons  holding  interests  in
pass-through entities as a nominee for another Person.)

              5. The Transferee  has reviewed the provisions of Section  5.02(c)
of the Agreement and understands the legal consequences of the acquisition of an
Ownership  Interest  in  the  Certificate  including,  without  limitation,  the
restrictions on subsequent  Transfers and the provisions  regarding  voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to  abide  by the  provisions  of  Section  5.02(c)  of the  Agreement  and  the
restrictions  noted on the face of the Certificate.  The Transferee  understands
and agrees that any breach of any of the  representations  included herein shall
render the Transfer to the Transferee contemplated hereby null and void.

              6. The Transferee agrees to require a Transfer  Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate,  and in  connection  with any  Transfer  by a  Person  for whom the
Transferee is acting as nominee,  trustee or agent,  and the Transferee will not
Transfer  its  Ownership   Interest  or  cause  any  Ownership  Interest  to  be
Transferred  to  any  Person  that  the  Transferee  knows  is  not a  Permitted
Transferee.  In  connection  with  any  such  Transfer  by the  Transferee,  the
Transferee  agrees to deliver to the Trustee a certificate  substantially in the
form set forth as Exhibit H to the Agreement (a "TRANSFEROR CERTIFICATE") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.

              7.  The  Transferee  does not have the  intention  to  impede  the
assessment or collection of any tax legally  required to be paid with respect to
the Certificate.

              8. The Transferee's taxpayer identification number is __________.

              9. The  Transferee  is a U.S.  Person as defined  in Code  Section
7701(a)(30).

              10.  The  Transferee  is  aware  that  the  Certificate  may  be a
"noneconomic   residual  interest"  within  the  meaning  of  proposed  Treasury
regulations  promulgated  pursuant  to the Code and  that  the  transferor  of a
noneconomic  residual interest will remain liable for any taxes due with respect
to the income on such residual  interest,  unless no significant  purpose of the
transfer was to impede the assessment or collection of tax.

              11. *[The Transferee has computed any consideration  paid to it to
acquire the Class [R][LR]  Certificate in accordance with proposed U.S. Treasury
Regulations Sections 1.860E-1(a)(4)(iii) and 1.860E-1(c)(5) (or, after they have
been  finalized,  the final  regulations)  by computing  present  values using a
discount rate equal to the applicable Federal rate prescribed by Section 1274(d)
of the Code, compounded semi-annually.]

              [The  Transferee  has  computed  any  consideration  paid to it to
acquire the Class [R][LR]  Certificate in accordance with proposed U.S. Treasury
Regulations Sections 1.860E-

----------
*   Insert appropriate paragraph, if applicable.

                                      G-2
<PAGE>

1(a)(4)(iii) and 1.860E-1(c)(5)  (or, after they have been finalized,  the final
regulations) by computing present values using a discount rate at least equal to
the rate at which the Transferee  regularly  borrows,  in the ordinary course of
its trade or business,  substantial  funds from  unrelated  third  parties.  The
Transferee  has  provided  all  information  necessary  to  demonstrate  to  the
transferor that it regularly borrows at such rate.]

              [The  transfer  of the Class  [R][LR]  Certificate  complies  with
Section 6 of Revenue Procedure 2001-12 (the "REVENUE PROCEDURE"),  2001-3 I.R.B.
335  (January 16,  2001) (or  comparable  provisions  of  applicable  final U.S.
Treasury Regulations) and, accordingly,

              (i)    the Transferee is an "eligible  corporation," as defined in
                     Section  860L(a)(2)  of the Code,  as to which  income from
                     Class [R][LR]  Certificate will only be taxed in the United
                     States;

              (ii)   at the  time  of the  transfer,  and  at the  close  of the
                     Transferee's  two fiscal  years  preceding  the year of the
                     transfer,  the  Transferee  had gross assets for  financial
                     reporting  purposes  (excluding  any obligation of a person
                     related  to the  Investor  within  the  meaning  of Section
                     860L(g)  of the  Code) in excess  of $100  million  and net
                     assets in excess of $10 million;

              (iii)  the Transferee will transfer the Class [R][LR]  Certificate
                     only to  another  "eligible  corporation,"  as  defined  in
                     Section  860(a)(2)  of  the  Code,  in a  transaction  that
                     satisfies  the  requirements  of  Section 4 of the  Revenue
                     Procedure; and

              (iv)   the Transferee  determined the consideration  paid to it to
                     acquire the Class [R][LR]  Certificate  based on reasonable
                     market   assumptions   (including,   but  not  limited  to,
                     borrowing  and  investment   rates,   prepayment  and  loss
                     assumptions,  expense  and  reinvestment  assumptions,  tax
                     rates and other factors specific to the Transferee) that it
                     has determined in good faith.]

              [Reserved]

              12. (i) [Class A, Class M, Class B. The Transferee qualifies as an
accredited  investor  as  defined  in  Rule  501(a)(1)  of  Regulation  D of the
Securities Act.]

              (ii)  [Class  P,  Class X.  The  Transferee  either  (i) is not an
employee  benefit  plan  which is subject to ERISA or a plan which is subject to
Section 4975 of the Code,  or a plan subject to any federal,  state or local law
that is  substantially  similar to Section  406 of ERISA or Section  4975 of the
Code,  and the Transferee is not acting on behalf of or investing plan assets of
such a plan or (ii) is an  insurance  company  using the  assets of its  general
account  (within  the  meaning  of PTCE  95-60) to effect  such  purpose  and is
eligible for and satisfies all of the conditions set forth in Sections I and III
of PTCE 95-60 or (iii) the  purchase  or holding  of this  Certificate  will not
result in the  assets of the Trust  Fund being  deemed to be "plan  assets"  and
subject  to the  prohibited  transaction  provisions  of  ERISA  and the Code or
similar  violation  of  Similar  Law and will not  subject  the  Trustee  or the
Servicer to any  obligation  in addition to those  expressly  undertaken in this
Agreement or to any liability.]

                                      G-3
<PAGE>

              (iii)  [Class R. The  Transferee  is not an employee  benefit plan
that is subject  to ERISA or a plan that is subject to Section  4975 of the Code
or a plan  subject  to any  Federal,  state or local  law that is  substantially
similar to Section 406 of ERISA,  and the  Transferee is not acting on behalf of
or investing plan assets of such a plan.

                                      * * *

                                      G-4
<PAGE>

                  IN WITNESS WHEREOF,  the Transferee has caused this instrument
to be executed on its behalf,  pursuant to authority of its Board of  Directors,
by its duly  authorized  officer and its corporate seal to be hereunto  affixed,
duly attested, this ___ day of __________, 20__.

                                         _______________________________________
                                         Print Name of Transferee

                                         By: ___________________________________
                                             Name:
                                             Title:

[Corporate Seal]

ATTEST:

_________________________________________
[Assistant] Secretary

                  Personally  appeared  before  me the  above-named  __________,
known  or  proved  to me to be  the  same  person  who  executed  the  foregoing
instrument and to be the ___________ of the Transferee, and acknowledged that he
executed  the  same as his  free  act and  deed and the free act and deed of the
Transferee.

              Subscribed and sworn before me this _____ day of __________, 20__.

                                         _______________________________________
                                                 NOTARY PUBLIC

                                          My Commission expires the __ day
                                          of _________, 20__

                                      G-5
<PAGE>

                                    EXHIBIT H

                         FORM OF TRANSFEROR CERTIFICATE

                                                                __________, 20__

Morgan Stanley Dean Witter Capital I Inc.
1585 Broadway
New York, New York 10036
Attention:  Gregory Walker

U.S. Bank National Association,
as Trustee,
U.S. Bank Trust Center
180 E. Fifth Street, Mezzanine Level
St. Paul, MN  55101

              Re:    Morgan  Stanley Dean Witter  Capital I Inc.  Trust,  Series
                     2001-NC3,   Mortgage  Pass-Through   Certificates,   Series
                     2001-NC3, Class ___

Ladies and Gentlemen:

              In connection  with our  disposition of the above  Certificates we
certify that (a) we understand  that the  Certificates  have not been registered
under the Securities Act of 1933, as amended (the "ACT"), and are being disposed
by us in a transaction that is exempt from the registration  requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any  Certificates  from, any person,  or otherwise  approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other  action which would result in, a violation of Section 5 of the Act and
(c) to the  extent  we are  disposing  of a  Residual  Certificate,  we  have no
knowledge the Transferee is not a Permitted Transferee.

                                         Very truly yours,

                                         _______________________________________
                                         Print Name of Transferor

                                         By:____________________________________
                                                     Authorized Officer

                                      H-1
<PAGE>

                                    EXHIBIT I

                            FORM OF RULE 144A LETTER

                                                              ____________, 20__

Morgan Stanley Dean Witter Capital I Inc.
1585 Broadway
New York, New York 10036
Attention:  Gregory Walker

U.S. Bank National Association,
as Trustee,
U.S. Bank Trust Center
180 E. Fifth Street, Mezzanine Level
St. Paul, MN  55101

              Re:    Morgan  Stanley Dean Witter  Capital I Inc.  Trust,  Series
                     2001-NC3,   Mortgage  Pass-Through   Certificates,   Series
                     2001-NC3, Class ___

Ladies and Gentlemen:

              In connection  with our  acquisition of the above  Certificates we
certify that (a) we understand that the  Certificates  are not being  registered
under  the  Securities  Act of  1933,  as  amended  (the  "ACT"),  or any  state
securities laws and are being  transferred to us in a transaction that is exempt
from the  registration  requirements  of the Act and any such laws,  (b) we have
such  knowledge and  experience  in financial  and business  matters that we are
capable of evaluating the merits and risks of  investments in the  Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor  concerning the purchase of the  Certificates and all matters relating
thereto or any  additional  information  deemed  necessary  to our  decision  to
purchase the Certificates,  (d) either we are purchasing a Class A-1 Certificate
or we  are  not an  employee  benefit  plan  that  is  subject  to the  Employee
Retirement  Income  Security Act of 1974, as amended,  or a plan or  arrangement
that is  subject  to  Section  4975 of the  Internal  Revenue  Code of 1986,  as
amended,  nor are we acting on behalf of any such plan or arrangement  nor using
the assets of any such plan or arrangement to effect such  acquisition  or, with
respect to a Class X Certificate,  the purchaser is an insurance company that is
purchasing  this  certificate  with funds  contained  in an  "insurance  company
general  account"  (as  such  term is  defined  in  Section  V(e) of  Prohibited
Transaction  Class  Exemption  95-60  ("PTCE  95-60") and that the  purchase and
holding of such Certificates are covered under Sections I and III of PTCE 95-60,
(e) we have not,  nor has  anyone  acting on our  behalf  offered,  transferred,
pledged,  sold or otherwise  disposed of the  Certificates,  any interest in the
Certificates or any other similar  security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Certificates, any interest
in the Certificates or any other similar security from, or otherwise  approached
or negotiated with respect to the Certificates, any interest in the Certificates
or any

                                       I-1

<PAGE>

other  similar  security  with,  any person in any  manner,  or made any general
solicitation  by means of general  advertising or in any other manner,  or taken
any other action, that would constitute a distribution of the Certificates under
the  Securities Act or that would render the  disposition of the  Certificates a
violation of Section 5 of the  Securities Act or require  registration  pursuant
thereto,  nor will act, nor has  authorized or will authorize any person to act,
in such  manner  with  respect to the  Certificates,  (f) to the extent that the
Certificate  transferred  is a Class X Certificate,  we are a  bankruptcy-remote
entity and (g) we are a "qualified  institutional buyer" as that term is defined
in Rule 144A under the Securities Act and have completed  either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates  for our own  account  or for  resale  pursuant  to Rule  144A  and
further, understand that such Certificates may be resold, pledged or transferred
only (i) to a person reasonably  believed to be a qualified  institutional buyer
that  purchases  for  its  own  account  or  for  the  account  of  a  qualified
institutional buyer to whom notice is given that the resale,  pledge or transfer
is being made in reliance on Rule 144A,  or (ii)  pursuant to another  exemption
from registration under the Securities Act.

                                      I-2
<PAGE>

                                                            ANNEX 1 TO EXHIBIT I

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

              The undersigned  (the "BUYER") hereby  certifies as follows to the
parties  listed  in  the  Rule  144A   Transferee   Certificate  to  which  this
certification relates with respect to the Certificates described therein:

              1. As indicated  below,  the  undersigned is the President,  Chief
Financial  Officer,  Senior Vice  President  or other  executive  officer of the
Buyer.

              2. In  connection  with  purchases  by the  Buyer,  the Buyer is a
"qualified  institutional  buyer" as that term is defined in Rule 144A under the
Securities  Act of 1933, as amended  ("RULE  144A")  because (i) the Buyer owned
and/or invested on a discretionary basis  $____________(1) in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being  calculated  in accordance  with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.

              ____   CORPORATION,  ETC. The Buyer is a corporation (other than a
                     bank, savings and loan association or similar institution),
                     Massachusetts  or similar business trust,  partnership,  or
                     charitable  organization  described in Section 501(c)(3) of
                     the Internal Revenue Code of 1986, as amended.

              ____   BANK.   The  Buyer  (a)  is  a  national  bank  or  banking
                     institution   organized   under  the  laws  of  any  State,
                     territory  or the  District of  Columbia,  the  business of
                     which  is   substantially   confined   to  banking  and  is
                     supervised by the State or territorial  banking  commission
                     or  similar  official  or is a foreign  bank or  equivalent
                     institution,  and (b) has an audited  net worth of at least
                     $25,000,000 as demonstrated in its latest annual  financial
                     statements, A COPY OF WHICH IS ATTACHED HERETO.

              ____   SAVINGS  AND LOAN.  The  Buyer  (a) is a  savings  and loan
                     association,  building  and loan  association,  cooperative
                     bank, homestead  association or similar institution,  which
                     is supervised and examined by a State or Federal  authority
                     having  supervision  over  any  such  institutions  or is a
                     foreign   savings  and  loan   association   or  equivalent
                     institution  and (b) has an  audited  net worth of at least
                     $25,000,000 as demonstrated in its latest annual  financial
                     statements, A COPY OF WHICH IS ATTACHED HERETO.

------------
(1) Buyer must own and/or invest on a discretionary  basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.

                                      I-3
<PAGE>

              ____   BROKER-DEALER. The Buyer is a dealer registered pursuant to
                     Section 15 of the Securities Exchange Act of 1934.

              ____   INSURANCE COMPANY.  The Buyer is an insurance company whose
                     primary and predominant business activity is the writing of
                     insurance  or  the  reinsuring  of  risks  underwritten  by
                     insurance  companies and which is subject to supervision by
                     the insurance  commissioner or a similar official or agency
                     of a State, territory or the District of Columbia.

              ____   STATE OR LOCAL PLAN.  The Buyer is a plan  established  and
                     maintained by a State, its political  subdivisions,  or any
                     agency or  instrumentality  of the  State or its  political
                     subdivisions, for the benefit of its employees.

              ____   ERISA PLAN.  The Buyer is an employee  benefit  plan within
                     the meaning of Title I of the  Employee  Retirement  Income
                     Security Act of 1974.

              ____   INVESTMENT  ADVISOR.  The  Buyer is an  investment  advisor
                     registered under the Investment Advisors Act of 1940.

              ____   SMALL  BUSINESS  INVESTMENT  COMPANY.   Buyer  is  a  small
                     business  investment  company  licensed  by the U.S.  Small
                     Business  Administration under Section 301(c) or (d) of the
                     Small Business Investment Act of 1958.

              ____   BUSINESS   DEVELOPMENT   COMPANY.   Buyer  is  a   business
                     development company as defined in Section 202(a)(22) of the
                     Investment Advisors Act of 1940.

              3. The term  "SECURITIES"  as used  herein  DOES NOT  INCLUDE  (i)
securities of issuers that are affiliated  with the Buyer,  (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a  dealer,   (iii)   securities   issued  or  guaranteed  by  the  U.S.  or  any
instrumentality  thereof,  (iv) bank deposit notes and  certificates of deposit,
(v) loan participations,  (vi) repurchase agreements, (vii) securities owned but
subject  to a  repurchase  agreement  and  (viii)  currency,  interest  rate and
commodity swaps.

              4. For purposes of determining the aggregate  amount of securities
owned and/or invested on a discretionary  basis by the Buyer, the Buyer used the
cost of such  securities to the Buyer and did not include any of the  securities
referred to in the preceding  paragraph,  except (i) where the Buyer reports its
securities  holdings in its  financial  statements  on the basis of their market
value,  and  (ii) no  current  information  with  respect  to the  cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market.  Further,  in determining such aggregate
amount,  the Buyer may have included  securities  owned by  subsidiaries  of the
Buyer,  but only if such  subsidiaries  are  consolidated  with the Buyer in its
financial  statements  prepared in accordance with generally accepted accounting
principles  and if the  investments of such  subsidiaries  are managed under the
Buyer's direction.  However, such securities were not included if the Buyer is a
majority-owned,  consolidated  subsidiary of another enterprise and the Buyer is
not itself a reporting  company  under the  Securities  Exchange Act of 1934, as
amended.

                                      I-4
<PAGE>

              5. The Buyer  acknowledges  that it is familiar with Rule 144A and
understands  that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements  made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

              6. Until the date of  purchase  of the Rule 144A  Securities,  the
Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions  herein.  Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification  as of the date of such purchase.  In addition,  if the Buyer is a
bank or  savings  and loan is  provided  above,  the Buyer  agrees  that it will
furnish to such parties updated annual financial  statements promptly after they
become available.

                                         _______________________________________
                                         Print Name of Transferor

                                         By: ___________________________________
                                             Name:
                                             Title:

                                         Date:__________________________________

                                      I-5
<PAGE>

                                                            ANNEX 2 TO EXHIBIT I

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

              The undersigned  (the "BUYER") hereby  certifies as follows to the
parties  listed  in  the  Rule  144A   Transferee   Certificate  to  which  this
certification relates with respect to the Certificates described therein:

              1. As indicated  below,  the  undersigned is the President,  Chief
Financial  Officer or Senior Vice  President  of the Buyer or, if the Buyer is a
"qualified  institutional  buyer" as that term is defined in Rule 144A under the
Securities  Act of 1933,  as amended  ("RULE  144A")  because Buyer is part of a
Family of  Investment  Companies (as defined  below),  is such an officer of the
Adviser.

              2.  In  connection  with  purchases  by  Buyer,  the  Buyer  is  a
"qualified  institutional  buyer" as  defined in SEC Rule 144A  because  (i) the
Buyer is an investment  company  registered under the Investment  Company Act of
1940,  as amended  and (ii) as marked  below,  the Buyer  alone,  or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the  excluded  securities  referred  to below) as of the end of the Buyer's
most recent fiscal year.  For purposes of  determining  the amount of securities
owned by the Buyer or the Buyer's  Family of Investment  Companies,  the cost of
such  securities  was used,  except (i) where the Buyer or the Buyer's Family of
Investment Companies reports its securities holdings in its financial statements
on the basis of their market value, and (ii) no current information with respect
to the cost of  those  securities  has been  published.  If  clause  (ii) in the
preceding sentence applies, the securities may be valued at market.

              ____   The Buyer owned  $_______________ in securities (other than
                     the excluded securities referred to below) as of the end of
                     the Buyer's  most recent  fiscal  year (such  amount  being
                     calculated in accordance with Rule 144A).

              ____   The Buyer is part of a Family of Investment Companies which
                     owned in the aggregate  $_____________ in securities (other
                     than the excluded  securities  referred to below) as of the
                     end of the  Buyer's  most recent  fiscal year (such  amount
                     being calculated in accordance with Rule 144A).

              3. The term "FAMILY OF INVESTMENT  COMPANIES" as used herein means
two or more  registered  investment  companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned  subsidiaries  of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

              4. The term  "SECURITIES"  as used  herein  does not  include  (i)
securities  of  issuers  that are  affiliated  with the Buyer or are part of the
Buyer's Family of Investment Companies,  (ii) securities issued or guaranteed by
the  U.S.  or  any  instrumentality   thereof,  (iii)  bank  deposit  notes  and
certificates of deposit, (iv) loan participations, (v) repurchase

                                      I-6
<PAGE>

agreements,  (vi)  securities  owned but subject to a repurchase  agreement  and
(vii) currency, interest rate and commodity swaps.

              5. The Buyer is familiar with Rule 144A and  understands  that the
parties  listed  in  the  Rule  144A   Transferee   Certificate  to  which  this
certification  relates are relying and will  continue to rely on the  statements
made  herein  because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

              6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee  Certificate to which
this  certification  relates of any changes in the  information  and conclusions
herein.  Until such notice is given,  the Buyer's  purchase of the  Certificates
will constitute a reaffirmation  of this  certification by the undersigned as of
the date of such purchase.

                                         _______________________________________
                                         Print Name of Transferor

                                         By: ___________________________________
                                             Name:
                                             Title:

                                         IF AN ADVISER:

                                         _______________________________________
                                                   Print Name of Buyer

                                         Date:__________________________________

                                      I-7
<PAGE>

                                    EXHIBIT J

                               REQUEST FOR RELEASE
                                  (for Trustee)

To:  [Address]

     Re:

              In connection with the  administration  of the Mortgage Loans held
by you as the  Trustee  on  behalf of the  Certificateholders,  we  request  the
release,  and acknowledge receipt, of the (Custodial  File/[specify  documents])
for the Mortgage Loan described below, for the reason indicated.

MORTGAGOR'S NAME, ADDRESS & ZIP CODE:

MORTGAGE LOAN NUMBER:

SEND CUSTODIAL FILE TO:

REASON FOR REQUESTING DOCUMENTS (check one)

____1. Mortgage  Loan  Paid in Full.  (The  Company  hereby  certifies  that all
       amounts  received  in  connection  therewith  have been  credited  to the
       Collection Account as provided in the Pooling and Servicing Agreement.)

____2. Mortgage Loan  Repurchase  Pursuant to Subsection 2.03 of the Pooling and
       Servicing  Agreement.  (The Company hereby  certifies that the repurchase
       price has been  credited  to the  Collection  Account as  provided in the
       Pooling and Servicing Agreement.)

____3. Mortgage  Loan  Liquidated  By  _________________.  (The  Company  hereby
       certifies that all proceeds of  foreclosure,  insurance,  condemnation or
       other  liquidation  have  been  finally  received  and  credited  to  the
       Collection Account pursuant to the Pooling and Servicing Agreement.)

____4. Mortgage Loan in Foreclosure.

____5. Other (explain). ________________________________________________________

       If box 1, 2 or 3 above is  checked,  and if all or part of the  Custodial
File was previously  released to us, please  release to us our previous  request
and  receipt  on file  with you,  as well as any  additional  documents  in your
possession relating to the specified Mortgage Loan.

                                      J-1
<PAGE>

              If box 4 or 5 above  is  checked,  upon our  return  of all of the
above  documents  to you as the  Trustee,  please  acknowledge  your  receipt by
signing in the space indicated below, and returning this form.

                                         OCWEN FEDERAL BANK FSB

                                         By: ___________________________________
                                             Name:
                                             Title:
                                             Date:

                                      J-2
<PAGE>

                                    EXHIBIT K

                         CONTENTS OF EACH MORTGAGE FILE

                  With respect to each  Mortgage  Loan,  the Mortgage File shall
include each of the following items,  which shall be available for inspection by
the  Purchaser  and which shall be retained by the  Servicer or delivered to and
retained by the Trustee, as applicable:

              (a)    The  original   Mortgage   Note  bearing  all   intervening
                     endorsements,  showing a complete chain of endorsement from
                     the  originator to the last  endorsee  endorsed "Pay to the
                     order  of  _________________without  recourse"  and  signed
                     (which may be by  facsimile  signature)  in the name of the
                     last endorsee by an authorized  officer. To the extent that
                     there  is no room on the  face of the  Mortgage  Notes  for
                     endorsements,  the  endorsement  may  be  contained  on  an
                     allonge,  if state  law so  allows  and the  Trustee  is so
                     advised by the Responsible Party that state law so allows.

              (b)    The original of any guaranty  executed in  connection  with
                     the Mortgage Note.

              (c)    The original  Mortgage,  with evidence of recording thereon
                     or a certified  true copy of such  Mortgage  submitted  for
                     recording.  If in connection  with any Mortgage  Loan,  the
                     Responsible  Party cannot  deliver or cause to be delivered
                     the original Mortgage with evidence of recording thereon on
                     or prior to the Closing  Date  because of a delay caused by
                     the public  recording  office where such  Mortgage has been
                     delivered for recordation or because such Mortgage has been
                     lost or because such public  recording  office  retains the
                     original  recorded  Mortgage,  the Responsible  Party shall
                     deliver  or  cause  to  be  delivered  to  the  Trustee,  a
                     photocopy of such  Mortgage,  together with (i) in the case
                     of a  delay  caused  by the  public  recording  office,  an
                     Officer's   Certificate  of  the  Responsible  Party  or  a
                     certificate  from an escrow  company,  a title  company  or
                     closing  attorney  stating  that  such  Mortgage  has  been
                     dispatched to the appropriate  public  recording office for
                     recordation  and that the original  recorded  Mortgage or a
                     copy of such  Mortgage  certified by such public  recording
                     office  to be a true  and  complete  copy  of the  original
                     recorded Mortgage will be promptly delivered to the Trustee
                     upon receipt thereof by the  Responsible  Party; or (ii) in
                     the  case of a  Mortgage  where a public  recording  office
                     retains the original recorded Mortgage or in the case where
                     a Mortgage is lost after  recordation in a public recording
                     office,  a copy of such  Mortgage  certified by such public
                     recording  office  to be a true  and  complete  copy of the
                     original recorded Mortgage.

              (d)    The    originals   of   all    assumption,    modification,
                     consolidation  or extension  agreements,  with  evidence of
                     recording   thereon  or  a  certified  true  copy  of  such
                     agreement submitted for recording.

                                      K-1
<PAGE>

              (e)    The original  Assignment of Mortgage for each Mortgage Loan
                     endorsed in blank.

              (f)    Originals of all  intervening  assignments  of mortgage (if
                     any)  evidencing a complete  chain of  assignment  from the
                     applicable originator to the last endorsee with evidence of
                     recording   thereon  or  a  certified  true  copy  of  such
                     intervening   assignments   of   mortgage   submitted   for
                     recording,  or if any such  intervening  assignment has not
                     been returned from the applicable  recording  office or has
                     been lost or if such public  recording  office  retains the
                     original recorded assignments of mortgage,  the Responsible
                     Party  shall  deliver  or  cause  to be  delivered  to  the
                     Trustee,  a  photocopy  of  such  intervening   assignment,
                     together  with  (i) in the  case of a delay  caused  by the
                     public recording  office,  an Officer's  Certificate of the
                     Responsible  Party or a certificate from an escrow company,
                     a title  company or a closing  attorney  stating  that such
                     intervening  assignment of mortgage has been  dispatched to
                     the appropriate public recording office for recordation and
                     that  such  original  recorded  intervening  assignment  of
                     mortgage  or a  copy  of  such  intervening  assignment  of
                     mortgage  certified  by the  appropriate  public  recording
                     office  to be a true  and  complete  copy  of the  original
                     recorded   intervening   assignment  of  mortgage  will  be
                     promptly  delivered to the Trustee upon receipt  thereof by
                     the   Responsible   Party;  or  (ii)  in  the  case  of  an
                     intervening  assignment  where a  public  recording  office
                     retains the original recorded intervening  assignment or in
                     the case  where an  intervening  assignment  is lost  after
                     recordation in a public  recording  office,  a copy of such
                     intervening  assignment  certified by such public recording
                     office  to be a true  and  complete  copy  of the  original
                     recorded intervening assignment.

              (g)    The original mortgagee title insurance policy or attorney's
                     opinion of title and abstract of title.

              (h)    The original of any security agreement, chattel mortgage or
                     equivalent   document   executed  in  connection  with  the
                     Mortgage (if provided).

              (i)    Residential loan application.

              (j)    Mortgage Loan closing statement.

              (k)    Verification of employment and income, if applicable.

              (l)    Verification of acceptable evidence of source and amount of
                     downpayment.

              (m)    Credit report on Mortgagor.

              (n)    Residential appraisal report.

                                      K-2
<PAGE>

              (o)    Photograph of the Mortgaged Property.

              (p)    Survey of the Mortgaged Property.

              (q)    Copy   of   each    instrument    necessary   to   complete
                     identification  of any exception set forth in the exception
                     schedule  in  the  title   policy,   I.E.,   map  or  plat,
                     restrictions, easements, sewer agreements, home association
                     declarations, etc.

              (r)    All required disclosure statements.

              (s)    If required in an  appraisal,  termite  report,  structural
                     engineer's    report,    water    potability   and   septic
                     certification.

              (t)    Sales Contract, if applicable.

Evidence   of  payment  of  taxes  and   insurance,   insurance   claim   files,
correspondence,  current and historical  computerized  data files (which include
records of tax receipts and payment history from the date of  origination),  and
all other  processing,  underwriting  and closing  papers and records  which are
customarily contained in a mortgage loan file and which are required to document
the Mortgage Loan or to service the Mortgage Loan.

                                      K-3
<PAGE>

                                    EXHIBIT L

                      FORM OF CERTIFICATE INSURANCE POLICY

                            (AVAILABLE UPON REQUEST)

                                      L-1

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